Business Brief: Kickstarting ‘Canada Strong’

ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountGood morning. The new sovereign wealth fund announced yesterday by Mark Carney adds another layer to Canada’s funding ecosystem. Where it fits – and what we know so far – is in focus today. Plus, how long can consumers “look through” price shocks?Up firstIn the newsTelecoms: Rogers Communications Inc. is offering voluntary buyouts to half of its work force – excluding those in its Maple Leaf Sports & Entertainment division – as revenue growth slows.Deals: Shell is set to buy Canadian producer ARC Resources in a US$16.4-billion deal. Trade: Quebec furniture maker South Shore is shutting down as tariffs bite into business.Open this photo in gallery:Norway supporters rejoice at this year's Winter Olympics. (We assume for petroleum.)Kacper Pempel/ReutersIn focusHow to scale up a countryAt a glance: “Canada Strong” is a sovereign wealth fund – a state-owned investment account that is independently managed. How it works: The fund is linked to planned federal support for what the government describes as nation-building projects, including ports and natural resources projects.Where the money comes from: The fund will open with an initial budget of $25-billion, seeded by the government over three years.Carney said the fund will then grow through “asset recycling” – building projects like power lines or data centres, selling them once they mature, and ploughing the money into the next round of projects.The size of the fund will grow over time through returns and “other assets” the government may allocate to it.Canadians will also be able to invest – a direct option that would be “something consistent with buying a government bond,” Carney said. Maybe they’re still workshopping that pitch.Sovereign wealth funds of resource-rich nations are typically seeded with windfall earnings, Campbell Clark notes. Canada will have to borrow more to invest more.Case study: Taking the NorwayIn announcing the fund, Carney cited the Scandinavian country as among similar countries that are “blessed with natural resources” – but which run successful sovereign funds.How Norway is the same: Norway, like Canada, has a massive oil and gas sector. Its “Government Pension Fund Global” – often just called “the Oil Fund” – invests surplus petroleum revenues on behalf of the state, and at roughly US$2-trillion is the largest sovereign wealth fund in the world.How it’s different: Norway runs consistent surpluses, built on oil revenues that seeded its sovereign wealth fund. Canada, meanwhile, is projected to run a deficit flirting with $80-billion. (Although Carney has suggested it will come in lower in today’s revised outlook.) The BBC reported in 2024 that some Norwegians are feeling a sense of guilt over their relatively comfortable lives.In any event, The Globe’s Andrew Willis argues Carney shouldn’t look to Norway as a blueprint for success, but to Quebec.How this fund fits with the othersNext up for the Canada Strong Fund is the Canada Strong Fund Transition Office, which will lead months-long consultations on how it will work. The announcement comes just a couple of years after the launch of the Canada Growth Fund.You can see how this might give opposition ammo to argue Carney is creating more layers of consultation even as he vows to run a more responsive and austere government.But the other tools at Canada’s disposal are meant to absorb political and logistical risks markets won’t take.…

This excerpt is published under fair use for community discussion. Read the full article at The Globe and Mail.