Mark Carney’s plan for our money is nothing without our trust

Public policy wonks descended in waves upon Toronto this past couple of weeks, bombarding anyone who would listen with their brightest ideas for enhancing Canada’s economy in the face of American intransigence.

If there was a common caveat amidst all the optimism and conference brainstorming, it was this: for any initiative to succeed, policymakers and business leaders alike need to ensure there is trust — with the public, with customers, with business and among decision-makers.

“If I were you, I would put trust at the centre of your export strategy,” said Fatih Birol, executive director of the International Energy Agency, boiling down his advice for a crowd at a Public Policy Forum conference. “Because the world needs trust.”

Yes, it does, and trust is in short supply — hard won, easily lost, especially at a time when fakery and betrayal are commonplace.

That’s why the recent Parliamentary Budget Officer’s assessment of the federal government’s spring fiscal update is particularly troubling. The new Parliamentary Budget Officer, Annette Ryan, just days into her new appointment, hit the ground running with a packet of analyses on the fiscal update — and she didn’t hold back.

She pointed out that the marquis measure in the fiscal update, the $25-billion Canada Strong Fund, lacks so many details that it’s impossible to know how it will attract private-sector investment, mitigate risk or measure success.

Prime Minister Mark Carney is still riding high in public opinion polls, able to maintain the public’s faith that he will somehow figure out a way to lessen Canada’s economic dependence on the United States, boost business investment in Canada and enhance the country’s prosperity.

But it would be folly for his government to assume that just because they say it’s so, the public will believe them indefinitely. Maintaining the public’s trust is paramount for economic policy to take hold.

The new “sovereign wealth fund,” as Carney calls it, has parallels to the Canada Growth Fund and the Canada Infrastructure Bank. They are all set up to use public seed money to attract private capital by mitigating some of the risk involved in investing in big, long-term projects that the government figures Canada needs in order to thrive.

The Canada Infrastructure Bank struggled with governance for years, refined its scope and mandate a couple of times, and has, only now, begun to gain some traction, 10 years after it was first announced. The $15-billion Canada Growth Fund was announced in 2022 to offset risk for investment in emissions reduction. It’s still too early to assess its success.

While the concept of using a smaller amount of federal money to attract much, much more private money for public goods is intriguing, the Canadian public hasn’t yet seen that it can work well. Nor are we able to understand how the new $25-billion fund connects to or overlaps with the other two funds, or what best practices the government has learned from running those two funds over the past few years.

The spring update itself points to the need to align with existing financing vehicles at Export Development Canada and the Business Development Bank, and the Parliamentary Budget Officer suggests Parliament keep an eye on regional development agencies, federal grants and contributions, and lending done by the private sector.

It’s puzzling to see Ottawa plow billions of dollars into hammers and nails, oil and gas, construction and manufacturing without a corresponding focus on the other half of the Canadian economy — services, the care economy, and the community-based projects that knit us together.

In short, it’s unclear why Carney and Finance Minister Francois-Philippe Champagne felt the need to launch a new fund, unclear how it will leverage private-sector investment, and unclear whether taxpayers will see a return that offsets the cost of the government borrowing money to start the new fund.

What is clear, on the other hand, is that Carney is determined to aggressively use the public balance sheet to redirect the Canadian economy, fully embracing industrial policy in his long-term ambition to entice $1-trillion in new investment in Canada.

Maintaining trust needs to be central if key economic actors are going to show up and participate in this approach to economic policy. If it’s going to work, the government needs their money, their investments, their understanding and especially their patience — because mistakes will be made, failures will occur and time will pass.

In the face of such disruption, the government should absolutely be trying bold new approaches to reset our economy. But it needs to bring the public along for the ride.