Deborah Orida, the CEO of the Public Sector Pension Investment Board, says that PSP Investments owns and operates seven airports in places such as Germany and Scotland. She says the fund would like to apply its expertise in Canada.Sammy Kogan/The Globe and Mail
The chief executives of Canada’s major pension funds are reviving a years-long campaign to persuade Ottawa and the provinces to sell key infrastructure such as airports, days before the release of a federal budget geared toward building up Canada’s sovereignty.
For years, Canada’s pension funds have lamented what they say is a lack of big-ticket infrastructure opportunities in Canada, as governments at all levels have held on to assets that would draw institutional investors’ interest if put up for auction.
The message to finance ministers about how to create the fiscal capacity for new investments in Canada is clear: “Look at your balance sheet and sell assets,” Gordon Fyfe, CEO of British Columbia Investment Management Corp., said at an event in Toronto held by the Economic Club of Canada on Thursday.
Mr. Fyfe cited airports, hydroelectric power and transportation assets such as highways as the sort of opportunities that grab attention from BCI, which manages $295-billion of assets, and other large funds.
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That’s because they are existing assets with cash flows from stable contracts that deliver the steady but unspectacular returns that could help pay pensions.
“Especially with the deficits governments are running today, why wouldn’t they sell some of those assets to balance sheets like ours where we can hold those assets, and finance them?” Mr. Fyfe said. “They’re still in Canada. And I promise you we would compete like hell with each other, so the governments would get a very good price.”
The government could then use the proceeds from those sales to seed new projects developed from scratch, as outlined in Ottawa’s push to fast-track major nation-building projects, which often carry “much higher risk than a pension fund needs,” he said.
Deborah Orida, the CEO of the $300-billion Public Sector Pension Investment Board, said that PSP Investments owns and operates seven airports in places such as Germany, Scotland and Greece through its AviAlliance subsidiary.
“We have expertise. We’d love to apply it to our country,” she said.
The government has shown “some” interest in that pitch, she added. “We’ll see.”
All four CEOs who spoke at Thursday’s event – Ms. Orida, Mr. Fyfe, Ontario Municipal Employees Retirement System (OMERS) CEO Blake Hutcheson and Healthcare of Ontario Pension Plan (HOOPP) CEO Annesley Wallace – said they are hopeful they will be able to invest more money in Canada.
“There’s no issue with that at all, but don’t ask us to buy more public equities,” Mr. Fyfe said.
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Canada’s major pension funds, which collectively manage $2.5-trillion of capital, have come under pressure from senior business leaders and finance ministers to invest more in Canada. The eight largest pension fund managers each have between 12 per cent and 50 per cent of their total assets invested domestically, according to the latest company filings.
Mr. Hutcheson of OMERS said that criticism ignores the fact that “it has been a supply problem, not a demand problem.”
“The biggest recognition the government has to make is, it’s okay for a Canadian pension fund to own a bridge or a port or an airport,” he said at Thursday’s event.
Ms. Orida and Mr. Fyfe also sounded a warning about the potential consequences for the funds’ members if Ottawa were to encroach on their independence to direct more investment to Canada.
Asked what keeps him up at night, Mr. Fyfe replied: “Interference.”
As government deficits swell, governments at all levels have turned their gaze to the vast pools of capital that pension funds manage as a potential catalyst to help spur growth and productivity with new business investment.
But “those pools of capital are there to support retirement, not government policy,” Mr. Fyfe said.
Ms. Orida also said that “losing that independence, I think, is what keeps me up at night.”
She cited the $15-billion Canada Growth Fund, which Ottawa entrusted to PSP Investments to manage in 2023, as an example of an arrangement that has worked. At its launch, pension experts raised questions about the CGF’s governance and independence.
But the fund has since committed $4.75-billion to new projects, and Ms. Orida said it shows there are ways pension funds can “help the country without having it forced upon us.”