Carney’s Wealth Fund Bombs: Even Experts Don't Understand It

Help me understand this. Like, what are we talking about here?

I think that individual investment thing is more of a gimmick, frankly, for public relations purposes. I'll be looking for the details tomorrow.

You know, we really only heard those words today.

What was Francois-Philippe Champagne doing

standing up in question period after burying this thing? Yesterday, Mark Carney announced his sovereign wealth fund that he says it's going to help make Canada strong by taking $25 billion in debt and soliciting what little money Canadians have left to make Canada rich. The problem is, is that nobody seems to have any idea on what he's planning. And that includes his own finance minister, who made a complete fool of himself trying

to defend it.

Let's take a look.

This prime minister is just another liberal. This liberal government doubled the debt, doubled housing costs, doubled food bank lineups, and left the previous prime minister left behind an outrageous $31 billion deficit for this fiscal year. Since that time, the new Liberal Prime Minister has been spending at even higher rates and putting it on the national credit card. That means the bankers make more and Canadian workers and seniors keep less. Will the Prime Minister at least cap the deficit at Trudeau's $31 billion,

or will he break through that limit and put it on the credit card?

The Honourable Minister of Finance.

Mr. Speaker, I know the Leader of the Opposition is looking for good news. Well, well, well, I have good news, Mr. Speaker. You'll have to update his QP cards, because, Mr. Speaker because we announced their first Canadian sovereign wealth fund. A fund to build Canada strong, a fund that will allow Canadians to build this country like never before, to invest in projects across this country, to allow Canadians to invest alongside the government,

to make sure that we all benefit. This is the essence of a Canada for all. We're building together, we'll benefit together. Mr. Speaker, let's build Canada strong together.

The Honourable Leader of the Opposition.

The question was for the Prime Minister, who is again in hiding, and mean that's, I don't know if it's metaphorical, if it is, it's a bit of a stretch, but I just want to warn the Honourable Member who knows better, to avoid those kinds of illusions. He may continue. Mr. Speaker, you need to actually have wealth for a sovereign wealth fund. What this Prime Minister, this Liberal Prime Minister, is proposing to do is use the credit card in order to take $25 billion and put it into a Liberal slush fund. This after the Liberal government doubled the debt and gave us the worst inflation in 40 years. This Prime Minister is spending more, more taxes, more costs, more of the same.

Will he put it all on the nation's credit card again tomorrow?

The Honourable Minister of Finance.

Mr. Speaker, let me help the Leader of the Opposition. After all, it's Monday. Let me help him, Mr. Speaker. Mr. Speaker, the International Monetary Fund just said last week that Canada is the strongest fiscal position of the G7.

Mr. Speaker, the Canadian economy has the second fastest growth in the G7, growing almost as twice as the one in Germany, almost twice as much as Japan, almost three times as our colleagues in Italy. Mr. Speaker. Canadian economy is strong, Mr. Speaker. We're gonna build Canada strong together. We're gonna have our Canada strong fund.

Canadians will benefit.

So for those that don't know, we put out quite a detailed video on the Sovereign Wealth Fund yesterday and compared what Mark Carney is trying to do to what other countries have done, revealing that just about every other,

well, put it this way, every sovereign wealth fund that we looked into yesterday, and there were as many of them, all of them had investments in, you know it, Brookfield. So you can check out that video that will be linked at the end of this one.

But isn't it funny that Francois-Philippe Champagne, he's the one who brought up the sovereign wealth fund in question period and he can't even say anything about it. All he's going to say is that, oh, well, you know, it's going to make everybody strong. It's going to make Canada strong and everyone should celebrate. There's nothing there.

If you're going to bring something up, at least say why it's great, but he can't even say why it's great. So you've got to wonder, did Mark Carney even discuss it with them? Is he still in the inner circle? Or if he is, what are they even talking about when it comes to the sovereign wealth fund? Or is it because they know what it's actually going to be used for and that's the reason they're not telling everybody? I guess we'll find out soon and maybe later today.

But this is where we have to actually point back to François-Philippe Champagne. How is it that Mark Carney, who is supposed to be a less skilled politician, can at least provide more detail, if you will, regarding this sovereign wealth fund that was announced earlier in the day than François-Philippe Champagne, who's trying to use this as a rebuttal to Pierre Paglia, but just makes himself looking like a complete fool. And you don't have to take my word for it. Take a look at what the Toronto Star

Robert Benzies and former NDP leader Tom Mulcair said when they were talking about this on the CTV

question panel. Yeah there's still I think to Brian's point Benzie like there still are though a lot of questions for example if you look at the Norway Norwegian example everyone can sit back and go great you have all these oil companies but many of which are state-owned or at least have a state ownership stake. We take all the revenues of the profits and everyone benefits and it's worth $2 trillion

and they invest in global markets. They've already said this won't invest globally, it's going to invest in Canada. There are no oil companies with state ownerships at this point. Those resources are owned by the provinces. There's a lot of sort of grey matter here.

Vassy, on the Norwegian Sovereign Wealth Fund, which is one of the greatest financial instruments in the world, you can go on their website and it shows you in Krona how much it's increasing every minute. It's like 20 trillion Krona, Norwegian Krona, 2.2 trillion US dollars, something like that. And it's because, as you say, the government of Norway owns one of the major oil companies and controls I think 60 odd percent of one of the other major oil companies.

So I don't imagine that Prime Minister Carney is going to be nationalizing Alberta oil companies. I just don't think that's going to sell very well. No one's clamoring for an NEP part deux. So I don't think that's what this is about. I think the idea of it is a good one, but I'm not, I was a bit surprised, like you were, Vashi, at the vagueness, frankly. And we already, as Amanda Lang pointed out earlier, we already have some versions of

this in Canada. So I'm not sure what, how is this, is this not going to replicate the pension board? So I don't know. I mean, it's a good idea and I like the name, I guess, if I'm them, because it sounds like your campaign slogan. But it also makes it much more of a political vehicle

than anything else. So I don't know. I'm, colour me dubious.

It does really feel know. I'm, I'm, I color me dubious.

It does really feel like I was, I think I said to you on radio earlier, Tom, like last week when I was talking to people in the finance minister's office, they want this economic statement tomorrow to say our plan is starting to work and then they want to have a vehicle in there to be able to say, as Brian sort of alluded to, like everyone can have a piece of it. It's going, As Brian sort of alluded to, like, everyone can have a piece of it. We heard the Prime Minister talk about this in his last few press conferences. All Canadians can benefit from what we're trying to advance.

Does today's announcement land that message from where you sit?

Interestingly enough, today's announcement, that's your question, yes, it landed it. Carney was superb. It was a masterclass in political communication. His Q&A with the journalists, because a lot of the predictable questions came up, are you picking the winners and the losers, and what about affordability issues, and aren't you forgetting about this? Carney was great.

Which leads one to ask the following musical question, what was François-Philippe Champagne doing standing up in question period after, burying this thing, drilling it into the ground, repeating the same really lousy line over and over again, which gave no substance whatsoever. So I don't blame

people for saying, oh we're lacking details. Okay, so when you have Robert Benzies saying, okay this is nothing like the Norway Fund, and we showed you pieces of the of the Norway Fund yesterday, and he's right, there is a counter, and you can see it here on their website where it just ticks up, and people can see, oh look, there's our wealth going up,

in terms of our National Sovereign Wealth Fund. But Pierre mentioned this yesterday, Mario for the North, he mentioned this on his video he put out yesterday. We talked about it yesterday. Virtually everyone who understands what the goal of these things are talked about it. And they've all said the same thing.

Sovereign wealth funds don't come from debt. They come from existing surpluses, existing points of wealth. And that's how you should be doing your investing. You take extra money that you have that you're not going to do anything with and then you put it away and you invest it so that money starts to make money for you. That's the whole point of this.

It doesn't work when you literally go into more debt to try to then make money because what you're doing then is you're saying, okay, I'm immediately starting behind the eight ball so you have to get a return on the initial money that you've borrowed to even justify even investing it in the first place. So if it's going to take you, what, 10, 15 years to earn back the initial investment

that you've put in the first place, the argument is, well, the interest that you've then lost on borrowing that doesn't even cancel it out. And this is where this comes into play. So even Benzies is like, yeah, this is pretty dubious. This doesn't make any sense and I don't understand what they're trying to do here. And Tom Mulcair, despite being Kearney's biggest cheerleader, he even said, what the heck was Francois Philippe Champagne doing? He just completely

buried this in the sand. Now he may think that this landed. I don't think this landed at all because nobody understands what he was even talking about. And this leads us now to CBC, where David Cochran had two guests on, and even they were saying, I don't get it.

Stanford, on this, help me understand this. What is the value proposition for someone like me to invest in a crown corporation run sovereign wealth fund if I'm looking to, you know, have a better retirement rather than like going

to S&P 500 index funds or something that is pure private sector and pure capitalism?

Well, to be honest, David, I think that individual investment thing is more of a gimmick, frankly, for public relations purposes. It will not be the essence of the Sovereign Wealth Fund nor should it be. You know, if it makes people feel good that they're investing as part of an effort to build Canada's economy, fine. But the real action is going to be from the direct public equity and capital that gets put in and then other partner investments that come in as well. The gold standard for a sovereign wealth fund is not just to have

money to invest. It's to use it as a tool to transform and diversify the economy. That's what they've tried to do in Norway. That's what they've done in Singapore. The idea is use public capital as a lever to help develop industries, diversify the economy, build high tech capacity rather than just carrying on, you know, with the day-to-day affairs, particularly for a resource-dependent economy like Norway or like Canada. So I think the the ultimate goal of this should not be to

just help up a private project get going. You mentioned the pipeline that can't stand on its own two feet. The goal of this should be precisely to help diversify Canada's economy and protect the high-value industries we've got, particularly given

the the trouble we're having with Donald Trump. Okay, Jim, first of all I'm a little bit hurt that you don't think the success and failure of this depends on my investment, but what problem do you think this is solving in the economy right now? Like if you're going to create this, it has to be a solution to something or filling a gap that's there. Where does this fit in based on the little we know as of right now?

Yeah, the problem is our economy is fundamentally too dependent on two things. Number one, selling stuff to America. Number two, digging stuff out of the ground and selling it abroad, period. We're very resource dependent. And, you know, there are certain jobs and benefits that come from extracting non-renewable resources, but to become a fully-fledged industrial economy, you need to do much more than that.

You need to add value to your resources. And a sovereign wealth fund, because you're using a public interest criteria to help guide those investments, you can develop industries that might not develop otherwise. That's exactly what they've done in Singapore. The Temasek Fund in Singapore has been a tool of active industrial policy to help that country develop high-tech industry and become a leader in so many other industries that they weren't

before. So, in that regard, combined with the other policy levers that the government has, it could play a very important role. But we will have to see. They've got these consultations coming up and if it just becomes a way to channel public money into more private projects that couldn't stand on their own two feet

and flip assets rather than build public wealth over time, then it will be a boondoggle.

Okay, so some interesting points there. So Jim says, yeah, this is not something that Canadians should be pouring their money into so you know we're not giving investment advice take that for what it is and you know number two if the CBC even has to say what problem is this trying to solve and Jim's response is well you know we're too dependent on our resources and we're too dependent on the

United States. No, I completely disagree with how you're characterizing the problem that this is trying to solve. You may agree that those two are problems but the issue is not that we're too dependent on our resources, the issue is is that we're actually not getting our resources out of the ground. He talks about, well, you know, we should be building up more industry to process those resources. Yeah, I don't think any Canadian disagrees with you, Jim. The

problem is is when you have all this regulation and bureaucratic tape that is preventing you from getting these resources out of the ground, you can't then turn around and then move to the second stage of that supply chain, which is then process them, now can you? That's why we don't have industry. And this is what Pierre Polyev and the conservatives

have been screaming about for the last four years. They're saying, listen, get more resources out of the ground and the minute you do that, now there is also a business case which can spur foreign investment, spur local investment, to stand up companies in Canada to then process those materials to then turn them into other things.

This is the whole issue that we've been covering down in Windsor where they're turning raw material into molds and tools that then industry uses those to make the actual products that we consume on a day-to-day basis. So that's the actual problem that this is trying to solve. And the fact that people don't even know what problem this is trying to solve

is another indictment on this. But the number one problem this is trying to solve, and this has been talked about on the National Post and some other folks out there, the problem this is trying to solve is that nobody wants to invest in Canada.

Otherwise, they wouldn't need this, would they? So what they're trying to do is they're trying, oh, you know, we're doing a sovereign wealth fund, the government's investing, come on and join with us. So this sounds like they can't get any money for any of the actual projects they want to get going

because of all of the regulation and red tape. So it is not a safe environment to actually invest in. So rather than remove this stuff, they're trying to say, look, we're going to take on some of that risk with you. Now dump tens of billions of dollars into this fund along with the federal government. That's what Carney's trying to solve here. And this is the issue because when you're talking about investors, they're gonna see right through this.

But as we move along, because there's been virtually no details on this except for some slogans, they still talk about how they have no idea what this is even leading to.

Rebecca, what industries would you suggest? Because right now the focus is on big projects, natural resources, get things moving, jolt the GDP, get to new markets. Where do you think something like this could focus if Jim's prescription is the right one?

I would really look at two directions going forward. So one, I do think that we're realizing there is a strategic value to some projects that may not make commercial sense in last year's terms, but if we look at some critical minerals in rare earths, on commercial terms alone, they may not necessarily look viable.

But what we saw in the US is that US government has now taken stake in some of these companies, in equity stake. So I think that that's an area where we might see, and it is higher risk. So the other area that I'll be looking for in Prime Minister Carney throughout this term, asset recycling, which probably went over the heads of many people, but this idea of taking mature assets and using that as a source of proceeds to capitalize further this new

vehicle. So I think that's interesting because Canada stands way above and beyond other countries in terms of how much infrastructure sits on government balance sheets. So I think there is a way of taking some of that mature infrastructure and bringing private capital in there on commercial terms while using public capital in the riskier stuff

to de-risk it.

So on that, Jim, can you give me an example of that? Like can you translate asset recycling into David terms? Like, what are we talking about here?

What would that practically look like, necessarily? Well, in a way, Rebecca just confirmed one of my fears of how that announcement came out today. Mr Carney did mention asset recycling, and in other countries, that is just a buzzword for privatising public infrastructure,

and I think that is where Rebecca was headed. You know, and in most cases that isn't necessary. We could be investing in these growing industries, high-tech industries, diversifying our economy without selling off the stuff that we have today. And for building public wealth over time, the whole idea that you'll invest with one hand but give stuff away with the other, kind of defeats the purpose of building public equity over time. So frankly I'm concerned about that idea of asset recycling. Mr. Carney's background as an investment banker might

be leading him in that direction but it sounds more like a fund for flipping

assets rather than actually building the capabilities of the economy over time.

But Rebecca does it necessarily have to be public infrastructure or could it be something like the TMX pipeline for example which they initially said that the capabilities of the economy over time. But Rebecca, does it necessarily have to be public infrastructure or could it be something like the TMX pipeline, for example, which they initially said they were going to build it and then look for a buyer. I know it's been a while, but maybe they could do something there. I mean, what do you see going through that recycling?

I'll be looking for the details tomorrow. You know, we really only heard those words today. I think and quite frankly, the federal government doesn't own a lot of infrastructure itself. Most of that sits at subnational levels. So I think that's one component. I think we heard a lot of aspects of what this new sovereign wealth fund will do. So I think we need more clarity and hopefully we get it tomorrow.

So you even have a vice president of economic policy at Scotiabank saying, I don't know what he's referring to. And she speculates and then the other gentleman says, well, if that's what he's talking about, then I'm really concerned about that. Nobody has any idea what Mark Carney is saying. And this, I think, reveals what has been going on

for the last year when it comes to Mark Carney's liberal government. He stands in front of a microphone and he says lots of big words that sound very complicated, that sounds like, hey, this guy's educated, he's really smart. And it dazzles the average Canadian into thinking

that this guy knows what he's talking about, I'm going to trust him over Pierre Polliev who spends his time not trying to use $10 words and not trying to confuse Canadians and he speaks in plain language so that Canadians actually understand what he means and what he says. That way the average Canadian like you and me can sit down and say, you know, I know

exactly what he means. I know what policies he's putting in. I know what it's going to achieve. I know what it's going to do for me. And I also know what the risks are. So this I think reveals what the whole thing is.

Mr. Mark Carney is the wizard of Oz and he's relying on the curtain in front of him. And the projection on the wall to actually present what he wants Canadians to view him as and sooner or later that curtain is going to fall and we're going to see that the Wizard of Oz or the Wizard of Canada is no more than just a European in sheep's clothing as referenced by Mr. Champagne standing in front of question peering trying to

by Mr. Champagne standing in front of question peering trying to actually bring this up and having no idea what he's talking about.