The Holy Roman Empire wasn’t an empire, or Roman, and its behaviour definitely wasn’t holy. But the title sounds impressive.

Prime Minister Mark Carney’s seems to be using that marketing technique from the Middle Ages with the federal government’s latest way to borrow money and hand out corporate welfare.

Carney announced the creation of the Canada Strong Fund that he’s billing as “Canada’s first national sovereign wealth fund.”

Here’s the problem. Carney isn’t saving wealth. He’s borrowing more money.

Real sovereign wealth funds are a budget guardrail to protect taxpayers from politicians who raid their nation’s wealth. A real sovereign wealth fund saves revenue to generate income for the future. Carney’s fund is built on billions of dollars of borrowed money and will gamble taxpayers’ money on corporate handouts.

To illustrate this point, compare Norway’s sovereign wealth fund with Carney’s Canada Strong Fund.

Norway builds up its fund by saving oil and gas revenues. Instead of saving wealth that has already been created, Carney is borrowing another $25 billion to start his fund. And that’s after the government of Canada borrowed money every year for more than a decade. 

Norway’s fund only invests money abroad. This protects Norwegian taxpayers from politicians who would rather spend the nation’s savings on pet projects in their own backyard. Carney’s fund will spend on Canadian companies the government deems as “nation-building projects.”

Norway’s fund has clear spending rules in place so that politicians can’t pilfer the principle. They can only spend the interest. The plan for Carney’s fund mentions no such guard rails.          

Norway is reaping the benefits of these strict rules. Since the first deposit in 1996, the fund is now worth more than $3 trillion. It’s also the world’s largest single investor. Returns from the fund now cover up to 20 per cent of the Norwegian government budget and Norway has consistently balanced its budget since 2020.

And it’s not just Norway.

Alaska started its heritage fund after it struck oil in the late 1960s. Alaska deposits 25 per cent of its non-renewable resource revenue into the fund. Politicians aren’t allowed to spend the deposits, only the interest. Every Alaska resident got $1,000 last year paid from the investments of its heritage fund. 

Saudi Arabia’s and Singapore’s sovereign wealth funds are also built on actual wealth, not debt.

There are blueprints showing how to build real sovereign wealth funds all over the world, but Carney is doing the exact opposite.

And Canadians don’t have to look far for examples of Carney’s type of plan going wrong for taxpayers.

The Alberta Government used money from its heritage fund to hand out taxpayer-funded loans to local companies, including a paper mill and an oil upgrader, in the 1980s. Taxpayers lost millions on both.

If the only place a company can get cash from is the government, it’s likely a bad deal. Research shows that companies that receive government financing instead of investment privately, perform worse.

And Canada wasn’t lacking ways to hand out corporate welfare before this announcement. There’s the $15-billion Canada Growth Fund, the $35-billion Canada Infrastructure Bank, the seven regional economic development agencies and many other government organizations already doling out subsidies.

Canada needs another corporate welfare fund like a chronic smoker needs one more dart. It might feel good. But there are consequences.

The federal government is already more than $1 trillion in debt and is planning to borrow $65 billion this year, according to the Spring Economic Update. And that staggering debt tab doesn’t even account for the $25 billion Carney is dumping into Canada Strong Fund. The economic update only included $6 million to administer the fund.

Real sovereign wealth funds are a great idea when done right. But that’s not what Carney is creating. Carney knows a sovereign wealth fund polls well, so he took that label and slapped it on another federal government subsidy machine.

This isn’t a sovereign wealth fund, it’s another debt-fuelled corporate slush fund. It needs to be scrapped.