How Carney’s new sovereign wealth fund could backfire on the economy

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That argument raises some difficult questions. Does participation imply mandated profit sharing as a condition of federal regulatory approval or support? What form would that participation take in reality: equity stakes, revenue participation or implicit economic rents layered into approvals? And why would private capital accept an open‑ended framework when it can deploy funds globally under more favourable and transparent regimes?

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For the Canadian energy sector, this simply adds another layer of uncertainty at the worst possible time. If profit sharing becomes embedded in project approval, it begins to resemble a discretionary profit tax layered onto an already overly complex fiscal and regulatory environment.

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The risk is that Canada quietly removes itself from opportunities just as global energy conditions elevate the value of reliable supply.

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Russian production is being reduced as sanctions, infrastructure damage and logistical constraints translate into durable output declines rather than short-term adjustments. Tensions involving Iran continue to destabilize the broader Middle East, a region that remains central to energy pricing. Co-ordination within the Organization of Petroleum Exporting Countries (OPEC) has weakened, a shift underscored by the United Arab Emirates signalling its intention to leave the organization after decades of membership.

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It bears remembering that OPEC discipline is the primary reason oil prices avoided a collapse over the past several years, preserving a price environment high enough to sustain long-term reinvestment. Fractures in that discipline point toward significantly higher volatility, and volatility carries consequences for producers and consumers alike. Canada needs to be prepared for that environment.

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The broader concerns surrounding this sovereign wealth fund extend well beyond resources. Canada has spent decades reinforcing oligopolistic structures in groceries, banking, asset management and telecommunications, sectors that already exhibit weak competition and persistently high product and service prices.

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A sovereign wealth fund that exerts influence without clear market discipline risks entrenching that concentration rather than disrupting it.

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Canada needs fewer outcomes such as the Rogers Communications Inc. acquisition of Shaw Communications Inc., where a combined workforce of roughly 30,000 fell to about 25,000 within three years, with management offering packages to reduce that number by even more.

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A sovereign wealth fund could play a constructive role in Canada’s future if it operates with rigour, transparency and an understanding that capital responds to incentives rather than narratives. It also needs to be funded out of a surplus situation rather than debt.

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Without that discipline, the risk is that the fund becomes another well-intentioned structure that concentrates power, discourages private investment and delivers far less than promised. Markets have seen this story before, and they will also remember how it ends.

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For investors, especially those who view Canadian bonds as a safe asset class, the relevance is straightforward: a debt‑funded sovereign wealth fund raises the cost of capital, widens risk premiums and introduces governance uncertainty at a moment when global capital is already more selective.

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If not implemented and managed correctly, the structure of this fund could shape not only public finances, but also mark the beginning of a repricing of Canadian assets, of which many conservative Canadian investors are unprepared for.

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Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc., operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning. The opinions expressed are not necessarily those of Wellington-Altus.

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