Time to put trillions of dollars in Canadian savings to work kickstarting the Canadian economy and stop going cap in hand to foreign sources
Over the past few weeks, both Alberta Premier Rachel Notley and Canadian Prime Minister Justin Trudeau have travelled to the United States to drum up interest in the energy industry and promote investment in the Canada.
Why do Canadian politicians go to the U.S. for investment capital?
Conventional wisdom says Wall Street (and, to a lesser degree, Bay Street) controls all the investment capital in North America. The premier and prime minister are simply following standard protocol: if you want money, go where the money is.
What’s wrong with this picture?
For starters, it’s humiliating. Notley stands cap in hand in a room full of titans of the oil industry. She sings Alberta’s praises for frontier investment. She points out some facts to show that money invested in Alberta is relatively safe and will provide investors with substantial returns.
In fact, there’s plenty of money in Alberta that could and should be used to develop the province. Alberta’s public sector institutions and Albertans’ savings accounts and RRSPs/TFSAs hold massive amounts of money for investment.
Consider that between AIMCo. (Alberta Investment Management Corp.), ATRF (Alberta Teachers’ Retirement Fund), the City of Edmonton Legacy Fund and Albertans’ TFSA and RRSP accounts alone, there’s about a quarter of a trillion dollars. Yet almost all of these savings circulate through Toronto and/or New York to be invested around the world. Virtually none of this money is invested in or directed to the Alberta economy.
On the federal side, the numbers are even greater. In funds like the Canada Pension Plan, the federal government pension plans, and Canadian TSFA and RRSP savings, over $1.5 trillion of investment capital languishes in low-return investment accounts.
Why are Canadian politicians going to the United States to raise investment capital when Canadians have plenty of savings?
And why should Americans invest in Canada if Canadians won’t invest in their own country?
Clearly, we Canadians need to get our heads out of the sand. If there are investment opportunities in Canada and Alberta, surely the first people who should get the right to invest in them should be Canadians and Albertans.
To do that, we need to rid ourselves of some outdated thinking. Canadians (and particularly politicians) have accepted an unsustainable status quo when it comes to finance. We seem to think people from afar should be in charge of our capital and that they’re more able to recognize a good investment strategy than we can.
Surely after 150 years Canadians have enough firepower and experience to control our own destiny.
But maybe Canadians need to be reminded of the social responsibility of money. Consider these words from Saker
Nusseibeh, a member of the prestigious 300 Club and CEO of Hermes Investment Corporation of London:
“I would like to suggest that the reason we ‘invest’ our savings goes beyond the simple quest for the accumulation of wealth.
If we accept this assertion, then we arrive at two main reasons as to ‘why’ we invest. The first is the straightforward accumulation of wealth, by trying to plug into economic growth. But the second, and I would suggest equally important reason, has to do with the shaping of our social economy.”
What’s missing today is the self-confidence of Canadians to take charge of their own destiny, and the infrastructure to direct Canadian’s savings to appropriate investments in Canada.
We need to act now. We don’t need a Royal commission to review this and if we did, the commission would be loaded with established biases.
Now is the time to shape our own future. Start demanding much more from your investments and your advisers. Let’s create a better and more prosperous future for Canada.
By Joe Batty
Joe Batty, Chief Financial Officer for Troy Media Digital Solutions Ltd., is an accountant with a specialty in new asset management. Joe has more than 40 years of experience in finance and accounting.