New $2 Billion Canada Growth Fund Can Buy and Sell Shares Without Public Scrutiny: Federal Documents

Minister of Finance Chrystia Freeland appears as a witness at a Senate committee on national finance in Ottawa on Dec. 7, 2022. (The Canadian Press/Sean Kilpatrick)

A new $2 billion growth fund created to advance Canada’s green transition will be allowed to buy, sell and swap shares in other companies without public scrutiny, says a regulatory notice issued by the federal Department of Finance on Dec. 21.

The Canada Growth Fund (CGF) will be exempted from section 91 of the Financial Administration Act, said the notice, titled “Regulatory Impact Analysis Statement.” The Act requires Crown agencies to seek approval from the Governor In Council (GIC) before acquiring or selling shares in other corporations.

“CGF will need to act swiftly and partner with fast-paced private-sector entities,” wrote the finance department, as first reported by Blacklock’s Reporter. “Delays to obtain GIC approvals for the constitution of new affiliates is likely to lead to many lost opportunities.”

Creation of the new growth fund was inserted in Bill C-32, a budget bill passed by the House of Commons on Dec. 8, followed by the Senate on Dec. 15. The bill received royal assent on the same day.

Starting early 2023, the fund will work at “reducing emissions and achieving Canada’s climate targets” and “scaling up companies that will create jobs, drive productivity and clean growth,” among several policy goals set by the Liberal government.

The finance department said in order to achieve the goals, the growth fund must have the capacity to make “timely” and “independent” investment decisions on its own.

“Private investors may decide to invest in other countries than Canada or other projects if CGF funds cannot be confirmed on a timely basis, preventing the fast delivery of its investment projects,” the department wrote.

“Furthermore, the process and transparency requirements of getting GIC approval may discourage investors who have concerns about sharing sensitive business information with the Government.”

‘No Explanation’

Bill C-32 did not include details on how CGF will be structured or financed.

Concerns for the growth fund were highlighted during a hearing at the Senate national finance committee on Dec. 7—a day before Parliament passed the bill in a 209-105 vote, with the NDP, Bloc Québécois and Green Party supporting it.

“I am just very surprised to see $2 billion with no explanation within the bill over how the $2 billion is going to be controlled,” said Sen. Elizabeth Marshall, a former auditor general of Newfoundland and Labrador for 10 years.

Bill C-32 states that “on the requisition of the Minister of Finance, there may be paid out of the Consolidated Revenue Fund amounts not exceeding $2,000,000,000 in the aggregate, or any greater amount that is specified in an appropriation Act, for the acquisition of shares under subsection (1).”

“The company is not even created. What are you going to buy shares in? There is no company yet,” Marshall asked Finance Minister Chrystia Freeland, who sponsored Bill C-32, and appeared as a witness at the hearing.

“Equally concerning, there is a section there in that part of the bill that says that the $2 billion is not the most that is going to be paid out. It leaves it quite open that there could be future monies coming out of the Consolidated Revenue Fund, and there is no limit on it,” the senator added.

‘Have to Act Quickly’

Freeland responded, stressing the importance of green transition for Canada, and not losing out to the United States.

“We have to act quickly,” Freeland replied. “The Biden administration’s Inflation Reduction Act added to the urgency with which Canada needs to act. They are deploying hundreds of billions of dollars to invest in the green transition. We need to move really fast.”

The minister added that CGF will be managed by professionals. “We understand that we need to have actual investment professionals do this work,” she said.

The regulatory notice on Dec. 21 stated that the federal government will introduce a “permanent, independent structure” for CGF in the first half of 2023.

“This two-phased approach is necessary so that CGF can immediately begin to make investments needed to meet Canada’s climate and economic objectives,” it said.