Terence Corcoran: The all-new industrial dictatorship

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So here’s the latest from the Great Canadian Industrial Innovation Strategic Planning Development Science Infrastructure International Policy Trade Minister, François-Philippe Champagne. Speaking at a Bloomberg video conference last week, Champagne laid out his one-man plan to remake the Canadian economy: “My” ambition is to be the green supplier to the world; “I’m” working on green batteries; “I’ve” felt sometimes “I’ve” been a matchmaker; “My” vision for Canada is to have a complete suite of critical minerals refining capacity to supply the multibillion-dollar battery plants that will be needed to power the millions of electric vehicles that my government has mandated. When “I” talk to CEOs in Europe, a number of them reach out and say we really want to do business in Canada.

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One of Champagne’s comments made news, when he said “I’ve” been looking into “whether we can have our pension funds basically finance some of the construction. You see, a battery plant is around $5 billion … we will need dozens of them. So what I’ve been trying to discuss with them is whether we can use, for example, pension funds” in Canada. These pensions funds, under Champagne’s plan, could use their government-created money storage tanks to support Ottawa’s electric vehicle industrial policy, which mandates that all new cars must be zero-emission by 2035.

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Champagne continued, “I think we can be creative in financing these assets and providing stable returns to these pension funds and at the same time ensuring access to these critical minerals in a jurisdiction of choice,” that jurisdiction being Canada.

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The model for these pension fund investments, he said, is a recent deal between Brookfield Infrastructure Partners of Toronto and U.S. semiconductor giant Intel Corp. to fund new Intel fabrication facilities. Champagne said “I’ve” been talking to pension fund managers “to see if we can replicate” the Brookfield/Intel deal, in which Brookfield’s infrastructure arm will invest up to $15 billion for a 49 per cent stake to help Intel fund its new chip factory structure in Chandler, Ariz.

It is surely no coincidence that a few days after Champagne hailed the Brookfield/Intel deal Mark Wiseman, the former CEO of the Canada Pension Plan Investment Board (CPPIB) produced a commentary calling for exactly the same strategy. “In Canada, institutional investors and pension funds are at the forefront of the wave of private capital that has become available for financing corporate infrastructure, as demonstrated by Brookfield Infrastructure’s recent US$15-billion investment with chipmaker Intel.”

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Interestingly, Wiseman is also currently chair of AIMco, which manages the Alberta government’s $170-billion pool of pension and endowment funds. While in this role as AIMco chair, Wiseman acts as a senior adviser at Lazard Ltd., the major New York investment house, which in turn advised Brookfield Infrastructure on its deal with Intel.

That cozy arrangement leads to another angle on what amounts to a growing insider cabal of jockeying political and government players to dictate industrial policy and strategy for the Canadian and U.S economies.

The statist takeover of business decisions

Intel is not merely receiving money from a private infrastructure-funding company. The chipmaker is also one of the key recipients of up to $52 billion in subsidies from the U.S. government’s protectionist industrial manufacturing policy known as the CHIPS Act, signed by President Joe Biden last month and described in one report as a kind of corporate coup. “After more than two years of Congressional wrangling — and at least $100 million in lobbying expenditures — the chip industry is poised to receive tens of billions of dollars in federal tax breaks and subsidies to build more semiconductors inside the U.S.”

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Subsidized protectionism apparently does not bother Wiseman, who portrayed Biden’s CHIPS Act as a model for Canada that would allow for the “pooling of private capital efficiently for infrastructure projects.” Sounding like he might be advising Champagne, Wiseman added: “Canada cannot afford to sit on the sidelines of this industrial revolution.” Renewable energy, the electric-vehicle industry, digital infrastructure — they all need “creative infrastructure financing arrangements” between corporations and investors.

Which “investors” would those be? Again, Wiseman and Champagne are on the same statist page. Brookfield is mentioned, but the real source of Canadian megabucks are Canada’s government-organized pension giants, members of the Maple Eight cabal. Formed two years ago, the M8 represents Canada’s pension giants — 2020 assets $1.6 trillion — including Wiseman’s AIMco along with the CPPIB, Ontario teachers and municipal workers pension plans, Quebec’s Caisse de dépôt and the Public Sector Pension Investment Board, which manages the pension assets of federal government employees.

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The M8’s objectives include a commitment “to allocate capital to investments best placed to deliver long-term sustainable value creation” using environmental, social and governance (ESG) criteria.

In summary, under the Champagne/Wiseman industrial strategy, Ottawa should provide government subsidies to certain industries that will be mandated into existence. These state-fostered firms should in turn receive massive investment backing from government-created pension funds organized into a lending collective.

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Champagne, a lawyer by training, explained his strategic industrial strategy to Bloomberg. “It really doesn’t make sense to mine in Africa, to refine in Asia, and to build batteries with coal.” Champagne would prefer that everything be done in Canada. But that’s just old-fashioned mercantilism, aptly described on Wikipedia: “Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal.”

As Champagne might say, that is exactly “My” plan.