TORONTO — The Liberal government is putting up billions and considering significant rule changes to entice Canadian pension funds to invest more domestically, Finance Minister Chrystia Freeland announced Friday.

The Liberals’ fall economic statement, to be delivered Monday, will seed three new programs designed to attract money from major asset managers. As The Logic first reported on Thursday, that will include a $1-billion renewal of the Venture Capital Catalyst Initiative (VCCI), which helps increase funding for startups, as well as a new $1-billion initiative to back mid-cap growth companies. 

The third program is designed to encourage pension funds to take stakes in and make loans to data centre operators. Finance Canada has set a $45-billion target for the scheme, with investors required to put in twice as much capital as the public funding they receive. The department claims it’s already in discussions with seven pension funds to participate in the program.  

Freeland said bolstering investment in Canadian companies is especially important after the U.S.’s re-election of Donald Trump, who has promised an “America First” economic strategy.  

“This is an administration which openly has a strategy of creating economic uncertainty outside the United States as a strategy to discourage investment anywhere other than the United States,” she said. “Canada is in a global fight for capital. That has always been the case. It is more true today than ever.” 

Ottawa is also promising to remove a cap that prevents pension funds from owning more than 30 per cent of any Canadian business. “This will make it easier for Canadian pension funds to make significant investments in Canadian entities,” said a government press release announcing the move. 

And the government is considering reviewing its leases with airport authorities and lifting the cap that limits private investment in municipal power utilities to 10 per cent, moves to make it more attractive for pensions to invest in Canadian infrastructure.

Tech founders have long argued it’s hard to raise the big investments they need to scale up their firms in Canada, complaining that the country’s sizable pension funds in particular don’t invest enough domestically. 

This is not the first time Ottawa has tried to attract the pension funds to domestic projects and assets—both the Canada Infrastructure Bank and Canada Growth Fund were set up with similar mandates to “crowd in” private cash.

The Liberals’ April budget signalled a renewed push. Freeland appointed former Bank of Canada governor Stephen Poloz to study how to encourage pension fund investment at home. In September, The Logic reported that Brookfield Asset Management had held talks with other investors about a proposed $50-billion fund that would seek $10 billion in federal financing.

Friday’s announcement is the result of consultations with Poloz and pension funds, Freeland said. 

Ottawa’s renewal of VCCI would represent a significant cash injection into the technology sector. The federal government last renewed the program—which primarily provides seed capital to asset managers that then back venture funds—in the April 2021 budget. But delays in rolling that money out and tepid market conditions meant the first of the firms it chose to invest the money only closed their funds this year.

The federal government has already offered significant funding to increase Canada’s computing capacity for artificial intelligence. Its $2-billion strategy for the field includes $700 million in financing for projects to build or expand data centres, with firms required to secure significant provincial and private capital to unlock the federal cash. 

The program Freeland announced Friday, which could cost up to $15 billion in public money based on the matching ratio, marks a significant escalation of that approach. “This is about securing Canada’s AI advantage,” Freeland said, citing the country’s cold climate and clean-energy generation as assets for data-centre operators.