Let there be no doubt, Mark Carney’s government is focused on catalyzing. You should be forgiven if you’ve never heard this wonky insider term before. According to Cambridge, to catalyze is to “to make something start happening or start being successful.”

Catalysis could barely be found in budgets under Justin Trudeau, but a variant of the word appears 35 times in Carney’s first and only budget to-date, with hundreds of additional recent mentions on the Government of Canada website.

So, the Carney government wants to catalyze investment, or rather, to make investment in Canada start happening or start being successful. A worthy goal: capital flight from Canada over the past decade exceeds $500 billion, and investment is closely tied to economic growth, incomes and living standards.

The major planks of Carney’s catalysis project thus far are as follows: the Major Projects Office (established in 2025), wherein the government will select large investment projects to be exempted from parts of Canada’s burdensome regulatory regime and thus receive expedited approval; and the Canada Strong Fund (established in 2026), a $25 billion initiative wherein the fund (read: the government) “will strategically invest alongside the private sector” in “projects and companies driving our economic transformation.”

The government also recently unveiled the Canada Investment Summit an “ambitious plan” to—you guessed it—“catalyze investment in Canada.” How? The government will summon “the world’s largest investors” to Toronto in September to discuss among other things “the government’s capital investments and incentives in support of third parties, totalling about $280 billion.”

All of this raises an important question: who has the information required to catalyze investment in Canada?

Investment flows to where superior returns can be gained. Executives or pension managers will allocate their capital in a way that maximizes returns for the shareholders and pensioners to whom they are accountable (in fact, they’re bound to do this by law). It naturally follows, then, that the thousands of investors who allocated capital outside of country—to produce capital flight of more than $500 billion—were acting on information that superior returns could be gained by investing there and not here.

Carney’s view, as expressed by his policies, is that Canada’s bureaucracy knows better than entrepreneurs and investors, and what’s been missing (over the last decade of capital flight) is his government’s wisdom. And the aforementioned $280 billion will get the private sector moving to invest in our country again. In other words, $280 billion from taxpayers, directed by government, will do more catalyzing than if that money had been left in the hands of individuals.

Carney doesn’t simply want to deploy capital (again, from taxpayers) to wherever it can generate the highest returns (though this would be problematic in its own right). Rather, the Major Projects Office will explicitly decide which projects are worthy of moving forward according to the government’s priorities. The Canada Strong Fund, an “investment strategy that emphasizes returns,” has already been directed to “build our energy, transportation and telecommunications infrastructure.”

How can the government know if those are the right sectors to maximize returns? Is there any reason to think government has superior information about investment opportunities than individual investors? Moreover, has the problem of the last decade been that governments weren’t sufficiently involved in the economy?

On the contrary, the federal government has advanced a litany of policies that helped drive investment out of Canada including Bill C-48 (the oil tanker ban off British Columbia’s coast), Bill C-69 (the “no pipelines act”), and other various caps, bans and phasing-out of specific sectors and technologies. Not to mention carbon taxes (which increase the cost of doing business in Canada), a large and growing government sector, and the country’s high overall tax burden.

We’re left with two possibilities. The investors bound to maximize returns have been missing something about Canada that can only be found by the government and its superior wisdom, or these investors have been allocating their capital where it’s most wanted. If the government is serious about catalyzing, it must abandon the notion that a handful of bureaucrats in Ottawa know better than the investing public about where to deploy their capital, and focus instead on the regulatory and tax reforms required to make Canada an attractive place to invest again.

Alex Whalen is an economist at the Fraser Institute.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.