Prime Minister Justin Trudeau’s government is set to end a rule that currently limits pension fund stakes to 30% of Canadian entities, as part of a plan to spur more domestic investment.
“At a time of rising economic nationalism, the fight for capital has never been more fierce,” Finance Minister Chrystia Freeland said in a statement Dec. 13. “Canada needs to fight harder than ever for capital, including facilitating and supporting the investment of Canadian capital here at home. This is key to the future prosperity of all Canadians.”
The government said it’s also unlocking up to C$45 billion ($31.8 billion) in loan and equity investments for artificial intelligence data centers. Seven pension funds have expressed interest in working with the government, it said.
In the broad set of measures, there are also plans to launch a fourth round of the Venture Capital Catalyst Initiative, including C$1 billion in funding in 2025-26, which “will include more enticing terms for pension funds and other institutional investors.”
Freeland also announced that the government would provide up to an aggregate C$1 billion to invest in midcap growth companies, which would be “structured to be concessional” and equal 25% of net new private investments.
The government also is looking at lowering the 90% threshold that currently limits municipal-owned utility corporations from allowing more than 10% private-sector ownership, which the government says would allow pension funds “to acquire a higher ownership share in these entities,” and pointed to electricity utilities as an example.
Freeland said she’ll also examine ways to encourage investment in airports, including “potential changes to airport authority ground leases.”
In April, former Bank of Canada Governor Stephen Poloz was tasked with assessing how to “catalyze” the country’s pension funds to invest more in the country. The removal of the 30% limit for pension funds was floated as one of the moves the government would be exploring.
Freeland also announced an expansion of the government’s tax incentives for scientific research and development. That includes increasing the annual expenditure limit on which Canadian-controlled private corporations are entitled to earn an enhanced 35% investment tax credit, to C$4.5 million from C$3 million.
Next week, Freeland is set to provide a fiscal update in the form of a so-called fall economic statement.
