The federal government unveiled its fall economic statement on Monday, announcing plans to ease investment limits for pension funds in Canadian companies and measures to counter tariff threats from the U.S.
Finance Minister Chrystia Freeland stated that Canada needs to fight harder for capital amid rising economic nationalism. “This is key to the future prosperity of all Canadians,” she said. The government intends to remove the 30 percent rule for investments in Canadian entities, making it easier for pension funds to make significant investments domestically.
Consultations will be held with provinces regarding the treatment of provincially regulated pension plans. The move comes as Canada grapples with lagging productivity and weak business investment. Former Bank of Canada governor Stephen Poloz was tasked with exploring ways to catalyze greater domestic investment opportunities for pension funds.
The government also proposed changes to pension fund operations, including exploring lowering the 90 percent threshold that limits municipal-owned utility companies from attracting private sector ownership beyond 10 percent. This would allow them to acquire a higher ownership share and access more capital.
Easing pension fund investment limits
Additionally, consultations were announced on potential regulations to increase transparency for large federally regulated pensions, requiring the publication of investment distributions by jurisdiction and asset class for plans with assets over $500 million. The government proposed launching a fourth round of the Venture Capital Catalyst Initiative, making $1 billion available next year with more favorable terms for pension funds or institutional investors. The statement also addressed trade tensions with the U.S., with Ottawa focused on countering tariff threats.
Canada plans to enhance border security with a $1.3 billion package over six years for various organizations. Federal and provincial governments are determining how to navigate the threat of 25 percent tariffs on all Canadian imports. Ontario Premier Doug Ford indicated that Ottawa is preparing potential retaliatory tariffs and has threatened to limit electricity exports.
However, Alberta Premier Danielle Smith stated the province would not agree to cut off oil and gas exports. Economist James Orlando acknowledged significant economic concerns, noting that tariffs could negatively impact federal government revenue. “We’re talking about at least a stagnation or even a recession in Canada should the worst tariffs come on,” he said.
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