Finance Minister Chrystia Freeland faced questions from senators this week regarding the government’s planned $15-billion Canada Growth Fund – specifically the lack of detail in the legislation to create the new body.
The fund was first announced in the 2022 budget, and the government released a technical backgrounder on Nov. 3 alongside the fall economic update, explaining that it will aim to attract private capital investment in projects that contribute to reducing Canada’s greenhouse gas emissions.
Ms. Freeland told senators the fund will be key to Canada’s response to the recently approved U.S. Inflation Reduction Act, which includes US$369-billion in new climate and energy spending.
“The Inflation Reduction Act is a game changer, and Canada needs to be ambitious and move quickly,” Ms. Freeland told the Senate national finance committee during a Wednesday evening hearing. She described the new fund as a policy option complementing traditional government grants and tax credits.
“The Canada Growth Fund is a third and very important and innovative measure that fills the remaining gap. What it is able to do, again on a project-by-project basis, is de-risk private-sector investments in new technologies – in exactly the kind of technologies we’re going to need to build the jobs of the future in Canada and to get the emissions reductions we need,” she said.
Senators raised concerns as part of their review of Bill C-32, the Fall Economic Statement Implementation Act, which has already been approved by the House of Commons.
Independent Senator Tony Loffreda, the sponsor of the bill in the Senate, told Ms. Freeland that questions about the fund have been a recurring theme in the committee’s hearings.
“During our past few meetings, we have had many discussions about the creation of the new Canada Growth Fund, and as you have seen, there is a bit of concern among some senators about signing off on initial capitalization of $2-billion for the Canada Growth Fund to make its first investments and to help with start-up costs, particularly since the government structure and its operations are not yet confirmed,” Mr. Loffreda said.
He said details provided in the November technical backgrounder allayed some concerns he had, but he asked Ms. Freeland why the government felt the need to create an entirely new fund, which will involve start-up costs, prompting her comments about the U.S. legislation.
In an interview Thursday, Mr. Loffreda, a former vice-chairman and executive at Royal Bank of Canada who was appointed to the Senate in 2019, said he was satisfied with the government’s answers and is confident the fund is sound policy.
“It’s an important fund. I think it’s essential that we put one together in Canada,” he said. “The United States raised its game, and we know that we have to do the same.”
However, Conservative Senator Elizabeth Marshall, a former auditor-general of Newfoundland and Labrador, said Thursday that she remains concerned about the fund after questioning the minister Wednesday.
Ms. Marshall pointed out that just three paragraphs of Bill C-32, a 164-page piece of legislation, concern themselves with the fund.
Those paragraphs say it will be a wholly owned subsidiary of the Canada Development Investment Corporation, which will administer the fund. The bill also approves the transfer of $2-billion to the fund, with more funding in the future through spending bills.
Ms. Marshall said that while the minister and officials have provided additional details about what the fund will do, those details should have been included in the legislation.
“There’s nothing in legislation showing what the mandate of the corporation is. There’s nothing about the board. There’s nothing about the financial controls,” she said. “Where’s the $2-billion going? … I think it’s terrible.”
While she won’t be supporting the bill, Ms. Marshall said she expects it will be approved by the Senate.
Mr. Loffreda said he hopes it will be passed into law before Parliament rises later this month.
During the Senate committee’s hearings, Alberta Federation of Labour president Gil McGowan said he likes the idea of the growth fund but asked: “Why are we outsourcing all the decision-making to a bunch of industry types?”
When asked about the fund this week, Benjamin Dachis, associate vice-president of the C.D. Howe Institute, told senators: “We have to be careful about the degree to which government actors are picking specific winners.”
He said the fund’s governance should have clear rules in place.
“When governments are making explicit decisions about who is getting what, lobbying and other concerns about that process of the final decision worry me,” he said.