Ottawa’s $1-trillion target for new investment is a big number that means everything and nothing

Danny Parys is a strategy and governance consultant, and a fellow at Social Capital Partners.

At the height of the Vietnam War, the now infamous U.S. Secretary of Defense, Robert McNamara, became infatuated with top line quantitative metrics. The Harvard MBA, and former Ford president, believed the war could be understood, and won, by focusing on a few key numbers.

And according to his spreadsheets, Americans were winning the war. On-the-ground realities, however, painted a much grimmer picture.

Years later, this over reliance on quantifiable metrics was given a name: the McNamara Fallacy.

Today, the federal government, on a self-described “wartime footing” to shore up economic sovereignty, risks falling victim to the same fallacy when it comes to investment.

Catalyzing $1-trillion of investment in Canada over the next five years seems to have become this government’s North Star, and to that end, it has organized the first-ever Canada Investment Summit.

Read the full transcript of Mark Carney’s speech at the Canada Investment Summit

But a hyper-focus on investment volume could have negative impacts on both our economy and sovereignty.

That’s because not all investment is created equally. Some builds new capacity, creates jobs and lifts wages, and some just changes whose balance sheet the assets sit on and, ultimately, who controls them.

By focusing on investment volume as the key metric, the federal government’s strategy puts us at risk of selling off productive assets for little gain in order to meet arbitrary targets.

And it’s already happening.

The Prime Minister was eager to highlight a surge in foreign investment in 2025 as evidence of a strengthening economy.

But nearly half of that investment came from acquisitions of existing Canadian businesses.

Worse still, much of this acquisitive investment was debt-funded, such as in the case of oil and gas giant Parkland, sold to U.S.-based Sunoco, who financed the transaction with US$2.65-billion in debt.

Foreign investors saddling a local firm with debt is hardly the type of investment that drives job and wage growth.

The deals and dealmakers to watch at the Canada Investment Summit

And while it is true that stagnant wage growth and productivity has been attributed to weak business investment since 2015, certain sectors have been buzzing with investment that has done little to contribute to new capital formation, giving us insight into what happens when we fail to privilege building over buying.

Consider the Canadian veterinary industry. In recent years, major investors, many foreign-owned and controlled, have poured millions into the sector acquiring vast swaths of existing clinics.

While governments may have celebrated the improvement in investment figures, these buy-outs have largely been detrimental for workers and consumers, leading to rampant consolidation, price rises and decline in care quality.

A similar trend of acquisition-driven investment can be seen in industries across the country, from disaster restoration to pharmacies to insurance brokers, with similar impacts on workers and consumers.

And as foreign investors have focused their efforts on small- and medium-sized businesses, many of these acquisitions have gone under the radar, rarely triggering the Investment Canada Act’s “net benefit” test, which only applies on foreign investments over $2-billion, for most transactions.

Admittedly, the federal government is unlikely to be pitching mom-and-pops at their investment summit.

Though this raises the question, what kinds of deals will the federal government be able to make?

With more than 160 projects at varying stages of development showcased to attendees, it remains to be seen if the major investors will direct their investment into projects already under construction, or into brand new developments.

Though after just one day of mingling with the world’s biggest asset managers, the government detailed plans to open Canada’s four largest airports to private investors, suggesting that the federal government is chasing investment volume over productive capital formation.

And the track records of many of the attendees, such as BlackRock and Blackstone, suggests that investors in attendance are more comfortable buying than building.

The Canadian Venture Capital and Private Equity Association has taken note.

The association is holding their own conference at the same time as the Canada Investment Summit, undoubtedly looking to showcase mid-market firms for acquisition to the same major investors the federal government will be courting.

This should raise alarms for Canadians worried about economic sovereignty, particularly as Ottawa said it would sell stakes in airports, and foreign ownership in Canada’s economy is already at worrying levels.

As of 2023, nearly a quarter of assets in Canada’s non-financial corporations were foreign controlled.

In key sectors, such as oil and gas, only 67 per cent of assets were Canadian-owned. In the wholesale trade sector, Canadians risks becoming a minority partner in their own country, with 49 per cent of assets held by foreign entities.

Failure to differentiate and incentivize investment that builds new capacity, over acquisitive investment that erodes sovereignty, could be our Silent Surrender.