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Each week I usually have one or more topics I plan to cover in my report to local citizens. However, Ottawa is a fast‑moving place, and events do not always unfold as planned. Sometimes a new government announcement or development arises that requires immediate attention and replaces what I originally intended to discuss.

That was the case last week. Because of the release of the Liberals’ Spring Fiscal Update, my report focused on that document instead of an earlier announcement concerning a so‑called “sovereign wealth fund.” This is an important issue in its own right and deserves closer examination.

On April 27, Prime Minister Mark Carney announced that his government plans to create what he described as Canada’s first “sovereign wealth fund.” That raises a basic but important question: what exactly is a sovereign wealth fund? The answer matters because what the Prime Minister has proposed is very different from how true sovereign wealth funds operate.

To understand a real sovereign wealth fund, we can look to Norway, which operates the world’s largest and most well‑known example. Norway created its fund in 1990 using surplus revenues from its oil and gas sector. Those funds are invested globally in stocks, bonds, and real estate located outside of Norway. This is done on purpose, so the investments do not distort the domestic economy or crowd out private sector investment at home.

The proposal announced by Prime Minister Carney differs from this model in several important ways.

First, Canada does not have surplus revenues. After eleven years of Liberal government, Canada continues to run large deficits. Despite promises to reduce spending, current plans call for even higher government spending. The $25 billion proposed to establish this fund would be borrowed, adding directly to Canada’s deficit and national debt.

Second, unlike Norway’s fund, this proposal would not invest internationally. Instead, the government plans to use the fund to support private investment in Canadian infrastructure and resource projects. The government has said it will do this by launching a retail investment product.

In practical terms, this means Canadians who can afford to invest in these projects may benefit from protected or enhanced returns, while taxpayers bear much of the risk. If projects underperform, government guarantees mean taxpayers are ultimately responsible, including many Canadians who do not have the means to invest in the first place.

When you look at it in this light, the proposed fund looks far less like a sovereign wealth fund and more like a debt‑financed domestic investment vehicle designed to shift risk from private investors to the public.

Even the Parliamentary Budget Officer (PBO) has raised serious concerns. The PBO has noted that creating a sovereign wealth fund without a fiscal surplus result in a leveraged investment for taxpayers. The PBO also warned that it is unclear whether the interest costs associated with borrowing the money will be properly included when calculating the fund’s returns.

In addition, the PBO observed that key details have not been explained. These include how the government will measure whether the fund attracts new investment, how risks will be divided between investors and taxpayers, and whether this approach offers better value than existing programs.

In my view, the Prime Minister can choose whatever name he likes for this fund. However, presenting it as a true sovereign wealth fund, comparable to those built on surplus revenues and invested globally, is misleading.

I would like to hear from you. Does this proposed fund sound like something you would want to invest in?

Your feedback helps me do my job. You are welcome to share your thoughts on my Facebook page, by email at [email protected] (mailto:[email protected]) , or by calling toll‑free at 1‑800‑665‑8711.

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Dan Albas is the Member of Parliament for the riding of Okanagan Lake West - South Kelowna, Shadow Minister for Transport and the Vice Chair of the Standing Committee on Transport, Infrastructure and Communities, Dan's riding includes the communities of Kelowna (Mission, South Kelowna & East Kelowna within specific boundaries), West Kelowna, Peachland, Summerland.
You can reach Dan by calling 1-800-665-8711, emailing [email protected] or please visit: DanAlbasMP.ca
Our mailing address is:
Dan Albas MP
101-3731 Old Okanagan Hwy
West Kelowna, British Columbia V4T 0G7
Canada

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