Freeland says reform will unlock billions for Canadian businesses
The federal government has announced plans to remove the long-standing cap that restricts Canadian pension funds from owning more than 30% of voting shares in a Canadian entity, finance minister Chrystia Freeland revealed during a press conference in Toronto on Friday.
This change, part of Monday’s fall economic statement, is part of a push to increase domestic investment and leverage the vast resources of Canadian pension funds.
“Canadian pension funds have over $3 trillion in assets and some of the world’s best investment expertise,” Freeland told reporters. “Our pension funds invest Canadian money. They’re run by Canadians who live here, who love Canada, and who would love to invest more here, closer to home.”
The decision comes after a review led by former Bank of Canada governor Stephen Poloz, which focused on catalyzing domestic investment by Canadian pension funds. The federal government plans to consult provinces on the implications for provincially regulated pension plans as part of the regulatory amendments.
With the cap lifted, pension funds like the Canada Pension Plan Investment Board (CPPIB) and the Public Sector Pension Investment Board (PSPIB) may have more freedom to invest in Canadian industries and entities.
Recent performance in real estate, however, has posed challenges for major Canadian pension funds. CPPIB reported a 5% loss on its property portfolio last fiscal year, while PSPIB faced a sharper 16% decline—the worst since the global financial crisis.
Rising borrowing costs and structural shifts in the sector have prompted pension funds to reconsider their investment strategies.
In addition to removing the 30% cap, the government is rolling out other initiatives to spur economic growth:
- Venture capital catalyst initiative: A fourth round of funding worth $1 billion is planned for 2025-26, with terms designed to attract pension funds and institutional investors.
- Mid-cap growth companies: Up to $1 billion will be available to support mid-sized Canadian companies looking to expand.
- Artificial intelligence projects: The government is unlocking $45 billion in loans and equity investments for AI-focused data centre projects.
- Utility ownership rules: Ottawa is considering lowering the limit on private sector ownership in municipal utilities, allowing pension funds to hold larger stakes.
- Airport investments: Consultations will explore ways to incentivize investment in airport lands by adjusting airport authority ground leases.
Freeland emphasized the urgency of these measures, citing increased competition for investment globally and new economic policies from the incoming US administration under Donald Trump.
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She described the Trump administration as “economic nationalist” and said it is trying to create uncertainty outside the United States to discourage investment abroad.
“We have to be candid about the reality of the incoming US administration,” Freeland said. “This is an administration that believes in America first. Canada is going to fight for Canada. Our government is fighting for Canadian jobs.”
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