Bring These $$ Home

Trump has poked the Canadian bear and has unleashed a level of patriotism that we haven’t seen before – perhaps ever.  So while the tariffs may eventually get  withdrawn and things may seem to go back to normal we can never again leave ourselves this vulnerable. We need to harden our economy.

Ironically this situation presents Canada with some incredible opportunities. This current wave of nationalism must be harnessed.

50 years ago the government of Justin’s father Pierre, created the Canada Development Corp in order to stem the tide of foreign ownership of Canadian companies and a similar idea is needed today but for different reasons. The Canada Development Corporation was created to invest in strategic industries in order to increase Canadian ownership. The CDC had some success but the Mulroney government shut it down when they took office in the mid 80s. The problem of foreign ownership is still there, even more today than in the 1970s, but the bigger problem today is that the integration of supply chains between Canada and the US has created huge challenges in face of the protectionism of Donald Trump.

The CDC was an investment corporation through which individual Canadians could invest in their country and it created a pool of capital to help Canadianize the economy at the time. We need the same sort of thinking today to sort out the supply chain issues we currently face.

Given the current wave of patriotism, I believe Canadians would be eager to invest in their country. While investments from individual Canadians would likely provide a substantial pool, the main source of funding should be Canadian Pension funds.which collectively  hold more than  $3 TRILLION in assets.

For very good reasons pension funds invest widely in order to secure their portfolios and get the best returns; however, a lot of that money is invested in the United States where it is funding American jobs and fuelling growth in the US economy. For example the Canada Pension Plan Fund (CPP, the largest fund) has 46% of its holdings in the US (out of $690 billion). In comparison the CPP fund has only 11% invested in Canada. The 2nd largest Pension (Quebec Pension Board) has 40% invested in the US out of $434 billion.

These ratios are ass backwards especially in the current circumstances. Pension funds need to be investing in Canada and creating growth here. If Pension funds were required to invest, say, 30% in Canada (the current maximum) and limited to 10% in the US, that would bring the better part of a trillion dollars home.

It turns out, this problem was already on the radar of the government’s financial wizards.  In the 2024 Budget, the government tagged Stephen Poloz, former Governor of the Bank of Canada, to “explore how to create greater domestic investment opportunities for Canadian pension funds” – and the  2024 Fall Economic Statement, (the one that Crystia Freeland didn’t deliver) announced that the government is “moving forward with a suite of measures to facilitate increased pension fund investment in Canada.”
(https://www.canada.ca/en/department-finance/news/2024/12/unlocking-pension-investment-in-canada.html)

Peloz succeeded Carney as Governor of the Bank of Canada in 2013 so presumably they know each other quite well and are likely to be on the same page – but the current situation requires that we accelerate the process to get that money out of the US and back to Canada quickly.

Individuals who have personal investment portfolios should be made aware that any investments in the US are helping our adversaries in this trade war.

The withdrawal of a Trillion dollars from the US economy would be only a small dent in their economy but if European pension funds were to do the same, it could cause a run on the markets which would certainly get their attention.

The main issue in the current situation is that we have allowed our supply chains to be fractured across the border. The news has endlessly reported that cars cross the border repeatedly before being completed. We need to quickly develop the capacity to fill the gaps, and investments from the “CFC” – I’m calling it the “Canada First Corp.” – could do that.

Before the Auto pact was created  in the mid 60s, Canada produced complete cars in Oshawa, Windsor Oakville, etc. The assembly plants were all branches of the big 3 American manufacturers and the models of cars were largely the same as those produced S of the border. The auto pact and subsequent free trade agreements changed all that and the industry became dramatically more integrated and more efficient as a result. Also more vulnerable.

Trump wants to consolidate all this in the US but to protect Canadian jobs we need to win this war.

The auto industry is a good place to start but the CFC could also provide investment for the high speed train between Quebec and Toronto. It could accelerate the building of icebreakers for the north or build the millions of homes that Canada needs. 

Perhaps it could finance some new communications satellites to replace Ontario’s (and other’s) cancelled contract with Elon Musk’s Starlink. Canada is a world leader in satellite communications.  In 1972. when we launched Anik A, we were the first country in the world to have a domestic communications satellite in a geostationary orbit. We’ve launched several satellites since using French, Indian and even Russian delivery rockets.

Canada has a new government and we’re headed into an election. Canada is not broken, it is strong and and proud and we need to channel our financial resources to harden or economy.