JAY GOLDBERG: Liberals’ sovereign wealth fund is just a massive pile of new debt

Borrowing money to invest it is a risky venture.

Published May 08, 2026  •  Last updated 1 hour ago  •  3 minute read

Canada's Prime Minister Mark Carney speaks to journalists before a Liberal caucus meeting on Parliament Hill. Photo by Blair Gable /Postmedia Network

Does it make sense to create a new sovereign wealth fund on borrowed dollars?

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That seems to be Prime Minister Mark Carney’s plan. Ahead of last week’s spring economic update, Carney announced plans to create a “Canada Strong Fund,” with an initial federal contribution of $25 billion.

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A sovereign wealth fund is a state-owned investment fund that normally uses government surplus reserves to invest in financial assets, such as stocks and bonds, and is independently financially managed. Alberta has such a fund, called the Alberta Heritage Savings Trust Fund, which was established some 50 years ago.

The new Canada Strong Fund will, according to Carney, “focus on investing in Canada.” In other words, the federal government already plans to direct this fund, or at least strongly guide it, in terms of where to invest.

That should raise an immediate red flag for taxpayers. Sovereign wealth funds are generally designed to get the most bang for the taxpayer’s buck and are arm’s length for that very reason. Most countries, like Norway, also require such funds to be invested abroad to try to avoid politicization, something Carney is clearly failing to do.

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But beyond that, there’s a more fundamental question at stake: Does it make financial sense to try to create a sovereign wealth fund through borrowed cash?

Carney tried to compare his Canada Strong Fund to Norway’s sovereign wealth fund, but Norway’s fund invests its direct oil and gas revenues and isn’t funded through government debt.

The federal government is currently awash in red ink. The federal deficit remains well over $65 billion, with no sign of a surplus on the horizon. In fact, Ottawa has been running budget deficits for more than a decade.

The Montreal Economic Institute’s Emmanuelle Faubert hit the nail on the head.

“The Norwegian model is not funded on debt. Right now, we have increasing deficits. We have increasing debt, both federally and provincially, and the funding model in Norway [would] work better because it’s funded through surpluses,” said Faubert.

Borrowing money to invest it is a risky venture. Any sane financial advisor would tell a private individual that it isn’t a good idea to borrow a chunk of money just to invest it, as borrowing money means paying interest on that borrowed money.

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The federal government should adhere to that same logic.

Conservative Leader Pierre Poilievre seems to recognize the risk as well.

“Norway, Singapore and Saudi Arabia run big budget surpluses, which they accumulate and put into their sovereign wealth funds,” said Poilievre. “Canada has no surplus, and therefore no wealth to put in such a fund.”

Poilievre went on to mock Carney’s plans, calling the fund a “sovereign debt fund.”

Creating a sovereign wealth fund in and of itself is not a bad idea. It makes sense to take extra money and invest it for the sake of future generations. But doing so on borrowed money is a risky scheme that will likely generate very limited, if any, returns. And encouraging that fund to be invested in Canada, even if that’s not where the best returns might be generated, is yet another reason why borrowing money to fund this scheme is ill-advised.

Yes, Canada should have a sovereign wealth fund. But this is something that the Chrétien government ought to have set up in the late 1990s or early 2000s, when the government was consistently posting budget surpluses. It would have made sense, for example, to commit to putting any oil revenue into such a fund back when the books were balanced and a fund could have been started on surplus cash.

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What Carney is doing is not creating a sovereign wealth fund. He’s borrowing money on your dime to create a risky new scheme that any good financial advisor would advise against.

If Carney truly wants to set his sights on creating a sovereign wealth fund like Norway’s, he should focus on balancing the books first. Once the federal government’s books are in order, Carney could then look at setting up a genuinely arm’s-length fund that invests abroad rather than at home to ensure depoliticization. Anything short of following the Norwegian model is a mistake.

When it comes to the Canada Strong Fund, the Carney government ought to go back to the drawing board.

– Jay Goldberg is a fellow with the Frontier Centre for Public Policy.

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