Social Policy in Ontario

Toronto will host the world’s investors this fall. But will any investment end up in health care, education or transit?

Posted on May 6, 2026 in Governance Debates

Source: TheStar.com — Authors: David Olive

TheStar.com – Opinion
May 6, 2026.   By David Olive, Star Business Columnist

In September, not long after the excitement has faded from the FIFA World Cup games in Toronto, the city will host one of history’s biggest gatherings of international financiers.

They will be here at the invitation of Mark Carney. The prime minister, a former central banker and private-sector investment banker, is intent on shaking the global money tree for investment in Canada from abroad.

Let’s hope the visiting financiers — about 100 global solons of finance are expected — are not unduly swayed by the local conventional wisdom on where in Canada to spend the up to $1 trillion Carney hopes to attract.

That wisdom finds expression in a recent influential report by researchers at the Royal Bank of Canada that has won acclaim in the financial press. Its talking points will soon be parroted by politicians who’ve already bought into RBC’s view that Canada needs to bolster its industrial prowess and requires a massive capital infusion to do it.

Canada’s leadership class is in fear of a rogue U.S. and still suffers an inferiority complex, though Canada has long punched above its weight in economic development.

As it happens, and as RBC acknowledges, Canada does not lack for money. RBC calculates that Corporate Canada, financial services excluded, has more than $1 trillion of idle cash on its balance sheet — what Carney has called “dead money.”

And Canada’s pension funds and asset managers together command another nearly $10 trillion in capital.

But for the past decade, a period RBC describes as “an unprecedented capital recession,” more money has been draining out of Canada than pumped into it, a total shortfall of about $1 trillion since 2015.

A great deal of the Canadian pension funds and asset managers’ money is invested offshore.

And a lack of competition in a Canadian economy dominated by oligopolies (including banking, RBC take note) helps account for weak business investment in everything from productivity-enhancing modern equipment to R&D and worker upskilling.

That deficiency is real. “The core problem is that business investment in Canada has been flat for the last decade,” Carney said in a Toronto speech in November. “We have stopped taking risks.”

But that challenge won’t be adequately addressed by RBC’s immodest proposal to “shape a new and prosperous Canada” by directing $1.8 trillion of domestic, foreign and state money into six selected industrial sectors over the next decade.

The biggest of RBC’s favoured sectors, oil and gas, accounts for $705 billion, or about 40 per cent, of its proposed capital infusion.

But in calling for new oil pipelines, increased oil and gas production, and more liquefied natural gas (LNG) terminals, RBC would have Canada double down on the same volatile petroleum sector that is largely responsible for the capital drain.

International investment in the sector fell after 2015 when the world oil price dropped and as offshore investors shifted away from fossil fuels, shedding their Canadian oilsands investments.

RBC also lauds Canada’s pledge to boost defence spending to five per cent of GDP by 2035 — a near tripling of military expenditures. Among other benefits, a much bigger defence budget “enables Canada to contribute to NATO’s collective defence,” says RBC.

Here again there’s reason for doubt.

Defence spending is notoriously underwhelming as a source of economic stimulus.

And NATO, basically a branch of the Pentagon, has been ineffectual in the two current conflicts most alarming to Canada — Russia’s invasion of Ukraine and America’s provocation of Iran, in partnership with Israel, to bottle up more than one-fifth of the world’s oil and gas production in the Persian Gulf. The Middle East crisis has driven up Canadian food and fuel prices, worsening our cost-of-living crisis.

RBC makes a commendable case for increased investment in electricity capacity, agricultural and food processing, metals and minerals, and space, in which Canada can build on existing strengths.

But the investment sums it proposes for those sectors are small compared to oil and gas save for building a 21st-century power system ($670 billion).

What’s most disappointing about the prevailing preoccupation with making Canada an industrial and energy superpower is that this vision of Canada’s future ignores necessary investments in social goods — namely, health care, education, affordable housing and public transit.

All of those are essential to Canada’s future prosperity. And all are underfunded.

The six sectors highlighted by RBC together account for less than 10 per cent of the economy. By contrast, public sector activity accounted for almost half of nominal GDP (47.2 per cent) in 2024.

The public sector, and non-profit organizations and volunteerism that aren’t captured in GDP statistics, have the added benefit of being beyond the reach of U.S. tariffs.

Striving for greater industrial sovereignty is a worthwhile ambition. But it can’t come at the expense of social investments that underpin Canadians’ well-being.

The visiting financiers won’t be scouting for investment opportunities in Canadian health care, education, housing and daycare. A summit on those pressing needs is long overdue.

https://www.thestar.com/business/opinion/the-worlds-largest-investors-are-coming-to-toronto-lets-hope-they-see-beyond-conventional-wisdom/article_cd05af7c-1c1e-4688-a1e9-120a750f40c1.html

Tags: budget, Education, Health, ideology, standard of living

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