In April, Prime Minister Mark Carney announced the “Canada Strong Fund”, ostensibly meaning Canada is joining countries like Norway in creating a sovereign wealth fund. That sounds impressive but this pot of money will be a sovereign wealth fund in name only.
To understand the vast gulf between what Carney announced and what Norway has achieved, we need to unpack the story of how this small Nordic nation amassed its $2 trillion oil-based nest egg. In contrast, Canada has salted away virtually nothing from our vast resource wealth, and sadly seems constitutionally and culturally incapable of doing so.
Canada is almost unique among developed democracies in granting provinces exclusive control over natural resource policy and rent collection.
This means that Ottawa, unlike Norway, has essentially zero resource revenue with which to start a sovereign wealth fund. Hence the only money in the new Canada Strong Fund fund is $25 billion that the federal government borrowed.
Carney also announced in April that future contributions will come largely from individual Canadians. “If you have a bit of extra money, we’ll make it easy for you to invest in the fund to help build Canada strong for all,” said the prime minister apparently, papering over the fact that the federal government has essentially no royalty revenue to replicate the Norwegian success story.
