Getting to the bottom of teh problem as you ask Matt, may actually mean or require the political class to do their freakin job, wouldn't that be something to see!
Mark Carney said they would “recycle “ assets. Is that code for asset stripping ? Isn’t this what Mark Carney’s corporate history has taught him to do?
The Trudeau Liberals liked to respond to complaints that they hobbled the energy industry with "we built you the Transmountain Pipeline with public money!" Yes, but they neglect to mention (or perhaps don't understand) that public money was necessary because regulatory and legal dysfunction caused the private sector proponent to walk away.
Not only did the Trudeau government end up paying for something that should've been built with private money, the final government-run project ended up costing $30.9 billion vs. the Kinder-Morgan initial estimate of $5.9 billion. Big projects like this can easily exceed their budget: this pipelines crosses mountainous terrain, there were torrential floods in 2021, but a lot of cost increase seems to fall under "project enhancements". Those *don't* seem to have been aimed at mitigating risks of the project that were the pretext for many of the legal challenges.
This "sovereign wealth fund" seems like an acknowledgement by the Liberals that big infrastructure projects are required, but they can't figure out how to streamline the regulatory process without driving a split right through their party. They also can't expect private sector proponents to bear the risk, particularly when the government can't resist larding up such projects with superfluous spending or maintain cost discipline. Finally, I suspect that this is probably a hack-y way to try to keep a mountain of new debt off the government books, an acknowledgement that the public debt is already reaching unsustainable levels.
Sigh. Another bureaucracy. Every one launched with an obscene budget and no performance metrics. The money is spent but nobody can tell the PBO how. Start another one.
This is how $80B has disappeared down the housing rabbit hole in the last 10 years. Even AI can only shrug if you ask how many houses were built.
Great column explaining the spin cycle (not media spin although that will inevitably be part of it ) this country is going through trying to do projects. We are going to stay in this endless loop of creating yet more expensive and duplicate bureaucracy until
the governments at all levels get the hell out of the way and let investors create projects and build houses and all those other things instead of a) virtue signaling climate and ESG at the expense of reality
b) putting ludicrous development fees on housing
c) forcing project developers/ investors to jump through endless, arcane, bureaucratic hoops
If a supposed economic genius and saviour like Carney can’t see the forest for the trees - which he’s adding to - at this time where he has carte blanche to actually do something productive and the best he can do is create a Major Projects Office and now taking a $25 fucking billion loan to create a sovereign wealth fund. I am old enough to remember and lived in Alberta when we actually had a sovereign wealth fund one that was based on royalties (like Norway) it was great while it lasted
The purpose of the country is to pay for a bureaucracy, but truly wealthy elites must also benefit, lest they stir up unrest. Borrowing to create a fund used to build uneconomic projects with massive rakeoffs for insiders is an excellent way to pre-spend the money so that a future government can't do anything about it.
A thousand times this. I don't want to hear another word about Orange Man and those brutish Americans screwing us over until we start seeing some tangible indicators that we are getting our own act together. This is the straw that breaks the camel's back for me.
Relatedly, Rudyard Griffiths and Sean Speer had a good podcast at The Hub last week discussing the very real possibility that the insane worldview of so many of our compatriots is going to help take us right over the edge of the cliff - with those same compatriots cheering it on all the way.
This government and our illustrious Prime Minister will do anything and everything EXCEPT repeal onerous regulations and cut red tape and get out of the way. This is not a rhetorical statement, it is a simple fact.
I’m cautiously optimistic. A debt-capitalized sovereign wealth fund is so dumb and so downright magical that people are bound to see through it, eventually. Either that, or it’ll blow up like the Green Slush Fund before it. Like, even if the federal government could borrow at preferentially low rates, the government would simply use those funds to build infrastructure directly. That is, take on debt to build a railroad, with the idea that the railroad would eventually pay for itself (and the financing costs) via improved growth and thus tax revenue. Sure, the CBC will cheerlead for the sovereign debt fund, till it’s dying day. But I refuse to believe that everyone else is as stupid.
So this is right. However Carney IS trying to make us more investment friendly and to attract foreign investment. See September meeting in Toronto. What I hope the Sovereign Wealth Fund will do is not have governments pick winners (never works, not their own skin in the game), but come in with foreign private sector investors with something to lose (and therefore qualified to evaluate opportunities)to maintain some Canadian ownership and control.
Along with regulations, we have another in my view bigger problem getting traction in a timely manner. Trade deals, major projects and wealth funds may well deliver good results but they are long term thinking.
In the short term, the new economy businesses, eg software, generated by Canadian publicly subsidized education products, can’t scale because our market is too small. Many good companies are in niches too small to do without the US market, too small for their to be any deep sector specific expertise in Canada to help them scale, and much more likely to succeed if they seek out US capital. With 80% of Canadians in the private sector working for companies under 100 employees, finding ways to address this and get some doubles and triples and occasional Shopify home runs would get traction in our productivity and GDP a lot faster than these other noble endeavours we also need.
I suspect they politicians don't get to the root of the problem because they don't want to address what they would find. They know we have a bloated bureaucracy across all levels of government. Getting to the root would mean streamlining the bureaucracy, forcing each and every institution to define their core mandate and strip out all the suprulfuos DEI bs, cutting huge parts of it out, fighting with the unions that protect it. Or addressing that the tangle of 300 independent nations all requiring consultation, veto and respect is unworkable as a regulatory environment.
The solutions are fairly obvious. Nobody wants to have the argument required to implement them.
There's a real aversion in Canada to have elected politicians just decide to spend money on things. For some reason our governing class insists that every major spending decision be inter-mediated by some quasi-private/independent financing structure. This is why the disastrous P3 projects came into vogue and why the feds keep inventing new infrastructure banks. Don't increase the deficit, just set up some ridiculous financing vehicle that produces fat sinecures for financiers and builds nothing.
The Bank Of Canada exists exactly to avoid this problem. It will finance anything that the government decides to do. Mackenzie King said about the Bank Of Canada:
“The Liberal Party believes that credit is a public matter, not of interest to bankers only, but of direct concern to every citizen. The Liberal Party declares itself in favour of the immediate establishment of a duly constituted national bank for the control of the issue of money in terms of public needs. The flow of money must be in relation with the domestic, social, and industrial needs of the Canadian people.”
How far the Liberal Party has fallen. Just spend money on things! Stop trying to incentivize private financiers to fund your projects! Use the tools that your predecessors gave you! Stop tying your own hands!
This is, of course, the great question. How do you undo what is in place, while still trying to protect the environment, honour treaties with Native Canadians, and deal with the politics of both NIMBY's and provincial calculus? Wouldn't it be great if it was easy?
You protect the environment less. You honour existing treaties (i.e. follow the law) and are careful when writing new ones. And you grow a spine and tell the NIMBYs and provinces where to get off, putting your votes and power at risk to demonstrate the courage of your convictions.
That's the logical answer, if not the politically palatable one.
The problem we are trying to solve here is that there is some wealth in this country that is, as yet, unlooted by Liberal cronies and clients.
Canadians are a fantastically honest, clever, and hardworking people. Stealing everything they built is a big job.
This is Matt Gurney at his best.
Well-done.
Getting to the bottom of teh problem as you ask Matt, may actually mean or require the political class to do their freakin job, wouldn't that be something to see!
Mark Carney said they would “recycle “ assets. Is that code for asset stripping ? Isn’t this what Mark Carney’s corporate history has taught him to do?
The Trudeau Liberals liked to respond to complaints that they hobbled the energy industry with "we built you the Transmountain Pipeline with public money!" Yes, but they neglect to mention (or perhaps don't understand) that public money was necessary because regulatory and legal dysfunction caused the private sector proponent to walk away.
Not only did the Trudeau government end up paying for something that should've been built with private money, the final government-run project ended up costing $30.9 billion vs. the Kinder-Morgan initial estimate of $5.9 billion. Big projects like this can easily exceed their budget: this pipelines crosses mountainous terrain, there were torrential floods in 2021, but a lot of cost increase seems to fall under "project enhancements". Those *don't* seem to have been aimed at mitigating risks of the project that were the pretext for many of the legal challenges.
This "sovereign wealth fund" seems like an acknowledgement by the Liberals that big infrastructure projects are required, but they can't figure out how to streamline the regulatory process without driving a split right through their party. They also can't expect private sector proponents to bear the risk, particularly when the government can't resist larding up such projects with superfluous spending or maintain cost discipline. Finally, I suspect that this is probably a hack-y way to try to keep a mountain of new debt off the government books, an acknowledgement that the public debt is already reaching unsustainable levels.
Sigh. Another bureaucracy. Every one launched with an obscene budget and no performance metrics. The money is spent but nobody can tell the PBO how. Start another one.
This is how $80B has disappeared down the housing rabbit hole in the last 10 years. Even AI can only shrug if you ask how many houses were built.
And yet we still insist on assuming good intentions. Why?
Great column explaining the spin cycle (not media spin although that will inevitably be part of it ) this country is going through trying to do projects. We are going to stay in this endless loop of creating yet more expensive and duplicate bureaucracy until
the governments at all levels get the hell out of the way and let investors create projects and build houses and all those other things instead of a) virtue signaling climate and ESG at the expense of reality
b) putting ludicrous development fees on housing
c) forcing project developers/ investors to jump through endless, arcane, bureaucratic hoops
If a supposed economic genius and saviour like Carney can’t see the forest for the trees - which he’s adding to - at this time where he has carte blanche to actually do something productive and the best he can do is create a Major Projects Office and now taking a $25 fucking billion loan to create a sovereign wealth fund. I am old enough to remember and lived in Alberta when we actually had a sovereign wealth fund one that was based on royalties (like Norway) it was great while it lasted
The purpose of the country is to pay for a bureaucracy, but truly wealthy elites must also benefit, lest they stir up unrest. Borrowing to create a fund used to build uneconomic projects with massive rakeoffs for insiders is an excellent way to pre-spend the money so that a future government can't do anything about it.
A thousand times this. I don't want to hear another word about Orange Man and those brutish Americans screwing us over until we start seeing some tangible indicators that we are getting our own act together. This is the straw that breaks the camel's back for me.
Relatedly, Rudyard Griffiths and Sean Speer had a good podcast at The Hub last week discussing the very real possibility that the insane worldview of so many of our compatriots is going to help take us right over the edge of the cliff - with those same compatriots cheering it on all the way.
This government and our illustrious Prime Minister will do anything and everything EXCEPT repeal onerous regulations and cut red tape and get out of the way. This is not a rhetorical statement, it is a simple fact.
Well said! Too many ideologies and vested interests in the system.
I’m cautiously optimistic. A debt-capitalized sovereign wealth fund is so dumb and so downright magical that people are bound to see through it, eventually. Either that, or it’ll blow up like the Green Slush Fund before it. Like, even if the federal government could borrow at preferentially low rates, the government would simply use those funds to build infrastructure directly. That is, take on debt to build a railroad, with the idea that the railroad would eventually pay for itself (and the financing costs) via improved growth and thus tax revenue. Sure, the CBC will cheerlead for the sovereign debt fund, till it’s dying day. But I refuse to believe that everyone else is as stupid.
So this is right. However Carney IS trying to make us more investment friendly and to attract foreign investment. See September meeting in Toronto. What I hope the Sovereign Wealth Fund will do is not have governments pick winners (never works, not their own skin in the game), but come in with foreign private sector investors with something to lose (and therefore qualified to evaluate opportunities)to maintain some Canadian ownership and control.
Along with regulations, we have another in my view bigger problem getting traction in a timely manner. Trade deals, major projects and wealth funds may well deliver good results but they are long term thinking.
In the short term, the new economy businesses, eg software, generated by Canadian publicly subsidized education products, can’t scale because our market is too small. Many good companies are in niches too small to do without the US market, too small for their to be any deep sector specific expertise in Canada to help them scale, and much more likely to succeed if they seek out US capital. With 80% of Canadians in the private sector working for companies under 100 employees, finding ways to address this and get some doubles and triples and occasional Shopify home runs would get traction in our productivity and GDP a lot faster than these other noble endeavours we also need.
I suspect they politicians don't get to the root of the problem because they don't want to address what they would find. They know we have a bloated bureaucracy across all levels of government. Getting to the root would mean streamlining the bureaucracy, forcing each and every institution to define their core mandate and strip out all the suprulfuos DEI bs, cutting huge parts of it out, fighting with the unions that protect it. Or addressing that the tangle of 300 independent nations all requiring consultation, veto and respect is unworkable as a regulatory environment.
The solutions are fairly obvious. Nobody wants to have the argument required to implement them.
There's a real aversion in Canada to have elected politicians just decide to spend money on things. For some reason our governing class insists that every major spending decision be inter-mediated by some quasi-private/independent financing structure. This is why the disastrous P3 projects came into vogue and why the feds keep inventing new infrastructure banks. Don't increase the deficit, just set up some ridiculous financing vehicle that produces fat sinecures for financiers and builds nothing.
The Bank Of Canada exists exactly to avoid this problem. It will finance anything that the government decides to do. Mackenzie King said about the Bank Of Canada:
“The Liberal Party believes that credit is a public matter, not of interest to bankers only, but of direct concern to every citizen. The Liberal Party declares itself in favour of the immediate establishment of a duly constituted national bank for the control of the issue of money in terms of public needs. The flow of money must be in relation with the domestic, social, and industrial needs of the Canadian people.”
How far the Liberal Party has fallen. Just spend money on things! Stop trying to incentivize private financiers to fund your projects! Use the tools that your predecessors gave you! Stop tying your own hands!
This is, of course, the great question. How do you undo what is in place, while still trying to protect the environment, honour treaties with Native Canadians, and deal with the politics of both NIMBY's and provincial calculus? Wouldn't it be great if it was easy?
You protect the environment less. You honour existing treaties (i.e. follow the law) and are careful when writing new ones. And you grow a spine and tell the NIMBYs and provinces where to get off, putting your votes and power at risk to demonstrate the courage of your convictions.
That's the logical answer, if not the politically palatable one.
That sounds like leadership. Does it exist here? :)