Tapping into a renewed sense of national pride, Ottawa is calling on everyday Canadians to put their savings to work alongside a new $25 billion public fund designed to bankroll major projects. 

More information on the seed capital is expected to be released released in Tuesday’s economic update, but Finance Minister François-Philippe Champagne suggested it will involve borrowing. 

“[Canada] is one of the only two countries in the G7 with a AAA credit rating,” he said. “Canada can borrow on the international market at some of the lowest rates that you could see.” 

Prime Minister Mark Carney says the new sovereign wealth fund will be professionally managed and will operate as a Crown corporation at arm’s length from the government. 

It is the fourth major public investment vehicle to be created by the Liberals, with the Trudeau government launching the $35B Canada Infrastructure Bank, the $15B Clean Growth Fund or the $10B Indigenous Loan Guarantee Program in the past decade.

But Carney says the sovereign wealth fund will differ in being focused on equity as opposed to loans and debt, and by providing more of an opportunity for long-term returns on investment. 

“When you lend money, you hope to get it paid back, and then you move on … You don’t get the returns, which are substantially higher than the returns for debt. 

“That’s what this does. This comes in on a commercial basis.” 

The fund’s focus, criteria and risk profile have yet to be determined, but Carney says the focus will be on investing in Canada, and mentions that other sovereign wealth funds around the world began with a domestic focus before scaling up to global investments.

Asked if the fund would only allow investments in projects the federal government has deemed to be in the national interest under the Building Canada Act, Carney said he doesn’t think it “will be that restricted” but there will be consultations on that. 

READ MORE: Head of MPO expects only ‘one or two projects’ will obtain national interest status

But that does not mean the fund couldn’t be limited to the 15 projects and 6 transformative strategies referred to the Major Projects Office for consideration of a national interest status.  These include critical mineral, port, nuclear, LNG, road and hydro projects.

None have received a national interest designation under the Building Canada Act.

Language in the energy deal between Ottawa and Alberta suggests that a new bitumen pipeline to the West coast could be among the first to obtain the status.

Jay Khosla, director of economic and energy policy with the Public Policy Forum, says the sovereign wealth fund will fill a gap that other public investment vehicles could not. 

“Some projects need regulatory help, others need loan guarantees, some need debt, others need equity… and this is an equity play on the balance sheet,” he said.

Citizens invited to ‘co-invest’

The federal government says the new fund will provide an “easy and accessible” way for every day Canadians to invest alongside the private sector. 

Champagne told a Montreal crowd on Monday that investing in the fund is like setting up a joint bank account with the government, and is akin to being “maîtres chez nous,” a wink to a political slogan from the Quiet Revolution that ushered in a period of economic development in the 1960s.

“There’s no obligation to invest,” he said, adding that the initiative is for people who have savings to spare and who want to participate financially in these projects. 

Asked if individual investors will be able to pick which projects they support as part of their contribution to the sovereign wealth fund, Champagne said these details will be sorted out at a later date. 

He also hinted that any tax credit information related to these investments would be included in Tuesday’s economic update. 

Carney also said the government will look at mechanisms it could deploy to protect investments from everyday Canadians into the sovereign wealth fund.

Khosla says there is a lot of nationalism in Canada right now, although he’s not sure how that will translate into citizens investing their money in major projects. 

“But just look at people not travelling to the United States, or wondering where their groceries come from,” he points out. 

“People are watching… Maybe they will step up for this.”

READ MORE: Changes to Canada Infrastructure Bank could open up public funding for oil and gas projects

Champagne suggests it will take time to lead consultations and set up the sovereign fund, but that it could be operational within months.

More to come…