The Politics of Money: An IFSD Podcast

Welcome to The Politics of Money,

the official podcast of the IFSD at the
University of Ottawa.

This is Investor Summit Edition.

I'm here with Dr. Mostafa Askari our chief
economist.

Kevin Page is away. So it'll only be the
two bald men of public finance today.

We have some ~ special guests today who
both have hair,

so it'll be very interesting and a
departure from our normal broadcast.

But ~ we're lucky today to be joined with
Bud Locklear,

who spent

20 years in the US Embassy, dual national,

talking about the hinge moment of what it
means for Canada to start to chart

its own path ~ as a preferred destination
for investment and growth.

And then we have Michelle Leslie,

who spent ~ a career ~ particularly in the
energy sector and nuclear,

taking us down to the transaction level.

What's required to turn these ideas and
broad allocations of capital

~ into shovels in the ground, into jobs
for Canadians and change in

our standard of living. So really an
exciting podcast today,

we hope, ahead of the Investor Summit in
Toronto next week.

Mostafa, lots of talk about this investor
summit takes me back to

the Jean Chrétien Team Canada missions
overseas to kind of boost exports.

Does it have that kind of feel for you?

Really I was I was actually very surprised
today when I learned how much effort they

have put into this and how big this is
this is going to be in terms of

the type of people that they have invited
and how many have accepted.

I'm hoping I'm hoping that this will
result in something really,

really important for Canada and for for
the government to be able

to pursue that further.

Hard to kind of talk about Canada as a
destination for investment without talking

about the United States. So foreign direct
investment,

really important for Canadian economy,

a sign that we're doing a lot of things
right if we get it,

it means the economy

private viewed positively, good stable
institutions,

regulatory environment that's sufficiently
transparent,

and a public ~ government architecture
that allows for things to kind of get
done.

Compared to the US, not not an easy
undertaking,

right? Like it's not automatic that we're
you know,

we don't attract capital as easily,

say the United States can. I mean maybe
maybe explain why.

I mean US is completely different.

I mean they have a very dynamic

Private Sector, which we do not have.

You have to accept that. Not yet.

Hopefully we'll have it in the future,

but we don't have that. They have a
different tax system,

and it's a big country. It's a big country
with a huge population,

and their focus is on domestic production
and domestic ~ activity,

whereas ours is mostly on exports.

So these are these are completely
different kinds of environments.

And also we have other issues that we can
we can talk about in terms

of the our regulations or the the
different sort of the ways that

our provinces ~ operate, the independence
of the provinces in many many respects

that everybody has to approve things.

So, there are differences there.

And I don't think it's always fair to
compare us with with with with the US.

But we have to try. We have to try as as
much as we can.

To attract foreign direct investment in
Canada in areas that have larger

productivity results and the higher impact
on overall well-being of Canadians.

I think the investment summit is a very
good sort of the first step in trying

to get people to understand what we have,

what kind of things they can and cannot do
here.

We'll see well what the results are going
to be,

but it is an important first step.

So I'll take your first point.

Democracy really gets in the way,

slows things down in Canada. But but but
we need consensus.

And I I think that's a realization that ~
this isn't ~ an afterthought.

You we there's a lot of work that has to
be done to build consensus.

Once we get it, we can move quickly.

Tell us about investment and how a
conference like this impacts investor,

what it could mean to the economy.

As you said, I mean, there are essentially
three parts to to what our sort

of gross domestic product consists of.

It's consumer spending, it's investment,

whether it's by Canadians or by
foreigners,

it doesn't really matter. It's investment
in Canada.

And then we have exports and imports.

These are the sort of the main items that
affect overall economic growth in Canada.

Now, investment definitely has a has an
important impact because it

it leads to generation of jobs and
generation of activities that will will
result

in income for people and it allows
consumers,

those who work to spend money.

They're all linked together. So we need
investment to generate activities in
Canada.

Whether the activities will be on the
service side,

will be on the manufacturing side.

It doesn't matter. It's the activities
that are generated,

create jobs, and then that will help the
economy.

And correct me if I'm wrong, but you know,

we we have struggled on the investment
side historically,

particularly

with respect to productivity, right?

Is this an opportunity for us to kind of
tackle that issue at the same time?

Absolutely. I think, I think we have had
issues because of uncertainty,

because of some of the other issues that
we mentioned earlier in terms of

~ in terms of ~ sort of the system that we
have,

the process for approving investment that
has not really been very encouraging

for investors, even Canadian domestic
investors.

And we know that domestic investors in
Canada had

they're they're sitting on a huge amount
of cash,

but they're not using them to actually
create new ideas and new

new activities in Canada. Hopefully this
this kind of a summit that

we are talking about could could start a
process where we are going

to have more incentive even for domestic
investors to get more into the market.

And a start actually using their cash that
they already have and and

try to invest and we've already tried,

we we've got very favorable tax treatment
for for new investment in Canada,

right? Yes, we do. But and and so it's
sustained whatever level we have.

So this is a catalyst kind of on top of
that,

right? Absolutely.

There's kind of this prevailing wisdom
that,

you know, you hear about data centers and
AI that it's been drawing investment into

the United States and an unprecedented
rate.

And maybe that kind of masks, you know,

~ some of the uneven success they're
having in FDI.

Where does Canada actually stack up?

What what do the numbers tell us about ~
foreign direct investment

in Canada per capita compared to the
United States?

Actually, we're not doing that badly.

I think if you look at the data both on
the flows of investment

and actually the stock of foreign direct
investment.

We're not doing that badly, actually.

Relative to GDP, we are actually probably
have a higher level in terms

of percent of GDP than than the US and
some than most of the European countries.

You also look at the the composition of
our investment position.

The largest item in that the the stock of
foreign direct investment

in Canada is manufacturing. And the
manufacturing which has the

highest productivity results. And that by
itself is is a good sign that foreigners

actually have that kind of confidence in
the Canadian economy that they

can come in and invest in manufacturing,

despite all these issues with the trade
and everything else,

we still have that opportunity.

Over time, whatever comes out of the the
summit,

I think we should not forget that

Canada is not only about natural
resources.

Canada could be also about manufacturing,

could be about the high tech as well.

So this is so interesting point you make
we see this in defence.

So we can have a big policy shift and
decide one,

we're going to increase the level of
defense spending,

two, we want to do some of this
domestically.

Is a point you're making that we whether
we're looking at natural resources,

we're looking at energy extraction,

forestry. We have to also leverage kind of
the balance of the value chain.

So does does that, you know, does that
feel right right now that this investor

summit is targeting that full value chain?

Or are we going for the quick hits right
now?

I hope they they look at this whole ~
value chain for for Canada.

I think I think even even in the resource
sector,

why not invest in the downstream areas?

Why not invest in refineries for our oil
and gas?

We have the capacity, we have the
know-how.

And we have probably even even the skill
set and the people that can

can actually do that. It's just a matter
of investors wanting to do that,

that kind of a thing in Canada.

We have to be ready to actually provide
the opportunities for them to be able

to do that. So this is beyond just
headline opportunities and saying there's,

you know, a mine here infrastructure
project.

There's an onus on us to make sure that we
have done a lot of the homework

on the regulation, on the consultation.

Absolutely. Right. And and what will the
government do in terms

of concessional financing. So we know that
these transactions get

to be more addressable than just,

you know, theoretical.

Absolutely. I think following the summit,

what the prime minister needs to do is get
the premiers around the table

and figure out exactly how they can
actually speed up the process for these

investments.

So avoiding duplication. Yeah,

absolutely. I think that is really one of
the problems that has been

in Canada for many years. There are
different,

different steps that you have to go
through.

And that slows down the whole process.

Some of these big investors don't like
that.

And one big step is

We don't want to have indigenous
consultation at the end.

Absolutely. We want to have at the
beginning.

Yeah. And and a stake for communities in a
way that,

you know, premiers and mayors have always
argued for community benefits agreements

so that they're seeing value beyond just,

you know, the the economic activity
generally being accrued to the economy,

but what's being actually accrued to the
communities themselves.

Yeah. So how will we know we come out of
this this summit,

clearly, you know, I mean.

I imagine the prime minister spending
personal capital to get investors here

to to Canada. It's probably not easy.

It's a competitive market out there.

But I imagine one part of this that's
going to be really critical

is our trade agreements. So we're we're
suffering on one front with

the United States, but if if you're coming
to Canada and your point

is we're coming to export, it's a lot of
pressure on those trading relationships

that have to kind of be developed
concurrently,

right?

We really don't have any idea because of
the changes that are made in the US,

we don't really have any idea of how
things are going to develop

in Canada economically. I mean,

every day there's a new new change that
President Trump decides suddenly.

I'm actually surprised that despite that,

this summit.

can actually attract 120 top,

the top largest investors in the world to
come in Canada

and actually consider investing in Canada.

That by itself is a good sign.

That we do have that opportunity,

despite all the problems that we have with
trade.

The market could be the whole world for
for those investors.

So so a massive shift for corporate Canada
to consider that,

you know, if we end up with permanent
tariffs with the United States,

and and that is a risk, right?

Because you know, the Republicans are
supposed to be the free traders,

right? So if we have Democrats who're
still looking for support in,

you know, in the Midwest and swing states
— who need vehicle assembly jobs,

this pressure is not going away even if
Gavin Newsom is President,

right?

So lots of pressure there. But ultimately,

when do we start to see results of of this
type of activity?

When does it start to show up in the data?

And part two of this, when do Canadians
start to get a benefit from these types

of efforts? How long does this take?

I think this is gonna this is a long term
issue.

It's it's not, it's not, we're not gonna
see results in the next two or three,

four years. As long as we can show that
things are starting.

Right.

That the the the projects have been
approved the shovels in the ground,

and we are moving in that direction.

This obviously is a political problem for
the government because

the election cycle is such that for the
current government to to

see all these investments through,

they need to get re-elected. So that may
actually cause some problems

and some slowdown in the process because
of that that political issue.

But I think

to to the extent that people are convinced
that these are the real investments that

is going to have huge impact on the on the
Canadian economy over time,

not in the next two or three years,

maybe in the 10 years. Right. We we can
see the we can see the actual results

in terms of the increase in overall
income,

increase in the in the per capita income
of Canadians and higher productivity.

Is there a risk that these the government
ends up biasing the project that could

demonstrate

Shovels in the ground and ribbon cuttings
before the next election?

~ that's a possibility. I hope that is not
going to be the main factor for them.

So we're so we're really counting on
politicians to just say

the politics don't matter. Yeah.

It's about the long term. Well,

it could yeah. I mean, that's maybe too
much to ask,

but ~ it is possible.

Something I think we've asked,

you know, ~ publicly, at least to for the
Minister of Finance.

is at some point there's got to be your
point about this dashboard.

Like we've got to see what the universe of
project starts to look like

and where are we? Because there is a
sense,

at least here at the IFSD that the
plumbing of government still really hasn't

fundamentally changed. And it's not a bad
thing.

We we've got a really good civil service
and good stable institutions,

but sometimes have a harder time finding
that that next gear that

we need when there's a crisis,

we to act really quickly. And that's a
different skill set,

sometimes a different culture.

When is it realistic for the government to
start to talk about so how

are we doing on this path towards better
FDI numbers?

Yeah, I hope there will be some
information in the budget,

even before the budget. Out of the summit,

if the Prime Minister sees really there
interest in in these projects that they're

gonna put on the table, then he may
actually provide some

some information to the public and to to
parliament that these are

the projects that we are working on.

These are the projects that people have
shown huge interest in.

And the some of these may have even moved
beyond that.

To the point where they can actually say
we we have an approval to

go ahead with these.

I remember when we were both in the PBO
and the Harper government was putting

up you know stimulus projects.

And there was a lot of signage.

Yeah. I I think one of my quips was the
one industry which definitely stimulates

the sign industry. But from a PR
perspective,

it was very effective. It was right.

Like they were able to communicate,

we are doing something, watch this space.

Something's going in here. And you got a
sense of momentum.

And something you've talked about in the
past that you know,

when economies are slower, the psychology
matters,

confidence matters.

I think one of the things the Harper
government did following the

the 2008-9 crisis is to have these
quarterly reports on these projects.

Right. the same thing can be done here

When they start, they should provide these
sort of the ~ quarterly,

maybe or or twice a year, kind of a report
that shows where they are,

are we going to do this in two years,

three years, four years, whatever,

whatever time frame is. And now you're
giving parliamentary committees something

to actually talk about, right?

Like this is start tracking it,

you know, where.

Where's the money going from it through
the appropriation bills?

How are they getting financed?

Interesting work for for the PBO.

Mostafa, thank you for that overview.

Thank you.

We have with us Bud Locklear, 20 years
with the US Embassy here in Ottawa,

dual Can Canadian American National,

actually was in the Canadian Foreign
Service.

But ~ for us at the IFSD one of our go-to
people on US Canada relations,

everything from trade, investment,

defense. ~ so really happy to have you
here,

Bud.

As you know, big conference coming up
September 14th,

15th. Prime Minister, Cabinet Ministers
hosting an investor conference in Toronto.

Obviously this is being done ~ under the
shadow of the hinge moment,

the deterioration of the US Canada trade
relationship.

~

Obviously that's a trade relationship
doesn't really affect the rest of

us who have family like both of us on both
sides of the border.

~ but it is something that certainly,

you know, is an important part of the
context ~ of of this conference.

And but I want to maybe get your views l
starting with ~ Canada's opportunity today

at this hinge moment and and how you see
this conference as an opportunity

and what you think we're up against
relative to the US as an attractive place

to do business.

Well it's a pleasure to be here,

Sahir and ~ happy to have this discussion.

Canada is in a unique position at the this
moment.

Canada's well known for having a ~ a vast
endowment of natural resources that that

the world wants. ~ issues ~ issues such as
the geopolitical situation that's

in turmoil,

our

Our bedrock economic relationship and
political relationship with

the United States is is in great turmoil,

unclear what the resolution will be there.

So we have to be, as the Prime Minister
and the government and Canadians across

the board are doing, is thinking about
what are the alternatives.

One of the key things that we bring,

a key attribute, in addition to our
natural resources,

we're we're recognized as a trustworthy
partner.

Canada is a trustworthy partner,

whereas the primary economic giants,

~ the primary economic giant, ~ is less so
of a trustworthy partner.

That's why I think there's so much
interest in the the the

investment ~ summit. Canada potentially
has a lot to offer.

It has a lot of capital that's deployed
around the world.

Could that come back home? Are other
entities with lots of capital willing

to put money into Canada? So this is a
moment that's make or break.

This situation, this opportunity for
Canada won't endure necessarily.

~ And

It's because of the situation with the
United States,

the US administration's position on so
many so many different issues make people

say, well, what's another avenue where we
can invest?

But that's not really going to be enough.

So let me maybe ~ pick up on some of the
some of the points you made.

You know, bond rating agencies,

our friends in the bond rating community
said,

you know, institutions are important,

good fiscal health is important,

solid public pensions are important.

So Canada, check, check, check.

Our neighbors to the South don't get the
three check marks.

But if we look at the last 10 years of
foreign direct investment,

it hasn't really affected them.

And if we can argue that, you know,

the US President building kind of this
tariff wall is forcing some companies

to try to get inside of it, which will,

in theory, drive additional investment.

To be fair, I think we've seen it in some
narrow sectors in the United States really

dominating.

foreign investment, particularly the tech
sectors,

data centers, AI, and less so outside of
it.

So what are they going to invest in
Canada?

What projects do we have that makes us
attractive in spite of

the Americans having this this lure of a
of a massive market?

I think certainly there is cr critical
minerals.

in Quebec, for example, there's some

Very interesting heavy rare earths.

That's the kind of project which generates
global interest.

Big capital project, that's one one
possibility.

At the end of the day, uranium.

~ if we're talking about beyond natural
resources,

we're talking about a technical,

technologically based engineering sector,

nuclear power, the CANDU system.

natural, low enriched uranium rather than
having to re require enrichment is

a is a huge positive ~

For a variety of reasons, including non
proliferation.

those are areas that are

I guess natural resource adjacent that are
technical and engineering,

that those are areas that I think could
attract investment.

I I think that what we saw maybe ~ eight
years ago with money going into

~ battery plants for automotive,

that was a little bit of a ~ a flash in
the pan,

a bit of a mirage because Canada doesn't
necessarily have a natural advantage

in these things. We need to talk about
where there is natural advantages

~ that Canada can really start to move
quickly

on.

That's a lot of natural resource
extraction,

but it's the those technologies that are
adjacent to that,

power, ~ power generation and power
supply.

So you you're you're giving me a picture
that we've got a couple

of really important buckets, right?

Natural resources, extractive industries,

I think we would argue the infrastructure
that's kind of adjacent to that

or allied to that. And then some specific
kind of

areas around technology manufacturing,

others that are kind of critical to us
maintaining not just sovereignty,

but also probably some of the engine for
the defense industrial strategy,

I would imagine. We are gonna have to have
a capability in that area.

So how does Canada present itself as a
target for investment

~ beyond natural resources, for example?

Yeah. Well let me go back to your your
your previous question and then I'll draw

from that. Despite all these

putative natural advantages Canada has.

Why does the United States, even though it
is in a tremendously more challenging

fiscal situation, ~ garner all this
capital,

garner the investment? And it's it's the
speed of decision making,

I think. It's the get out of the way and
make things happen rather than process.

Process, process, process seems to be ~
something which certainly in w when

I was a at the embassy,

But also ~ in the private sector ~
consulting,

one of the challenges was the the glacial
pace of decision making,

right, on the part of the federal
government to to choose to support

a project or not support it. And sometimes
that was the the provincial level that

was was slow rolling things. So the the
speed of decision making,

I think, in the United States is something
which

Which is gives gives the US that
advantage.

And plus just being a generally much
larger economy,

it's easier to if you make a capital
investment,

~ it's it's the world's largest consumer
economy.

It just seems like that's the place where
you're likely to to get a quicker return

~ and a shorter period of determination
and permitting,

etc.

You talked about Canada needing to present
itself as an effective host

for foreign direct investment and kind of
on two dimensions.

One is making itself, you know,

as big of an economy as it can be to
counter,

you know, the massive internal economy of
the United States.

And second, to present itself as a simpler
place to do business when it you know,

it's a federal state like the United
States,

but somehow they they still manage to get
things th through a lot quicker.

So maybe talk about

that prerequisite to changing our FDI
numbers.

Yeah, absolutely. We are pretty familiar
with pipelines,

~ one of the issues, of course,

is if you want to increase your exports of
crude oil,

you're gonna have to have some more
pipelines,

pipelines to tidewater. So TMX got
expanded,

Transmountain got expanded, and proposals
for other oil pipelines benefited,

I think, from the Federal Government's

interest in that. The challenge is ~
there's a political barrier in

the province of ~ British Columbia if you
want to move to the Pacific,

right? And so suddenly you have ~ not just
the political decision making

and the bureaucratic ~ permitting that are
required for this ~ national project,

you need to address the political concerns
in

an individual province. And sometimes
there's additional

~ permitting requirements and very local
issues are added on to that.

And so I'm not saying this doesn't exist
in the United States or other countries,

but it's particularly powerful right now,

and has been for a couple of decades,

I guess, in Canada. So this is this is the
challenge is how do you have

a one-stop shop where you can address
financing,

where you can address

all the permitting, all the other issues
that come up.

If you have a project proponent who
independently has to go to one

or two federal departments, has to go to
several provincial departments.

Has to deal with Indigenous rights holders
in different communities that have

different structures and interests.

This is an enormous drain on anyone who
wants to deploy $100 million,

$400 million in some project. And it takes
a long time.

It would be great if the MPO, for example,

was somehow empowered to be that one-stop
shop.

So one place you go, you have one person
that manages

this relationship. It's where the the
monies happen,

it's where the navigating, permitting,

et cetera, happens. It's where the
partnerships are elaborated

and exposed and fostered.

That's I think what what could be one
solution.

So the prerequisite is that, you know,

we're not just presenting a pipeline of
projects,

including pipelines, but we're saying we
need to define the addressable ones.

if you're going to look at this project
and invest in it,

we've done all the the the homework
required so that we can close quickly.

Absolutely it's not enough to to put a
press release,

you know, we we have 17 projects,

these are all great. That's where maybe
the idea is...

we don't really have seventeen projects.

Yeah. We we we have some much smaller
group and that's where a dashboard

could come in ~ where you're you're
providing some kind of clarity

to project proponents and potential
investors,

but you're also letting the public,

including ~ folks who are a little bit
more isolated,

let's say Indigenous rights holders in an
area,

do they have access to this information?

There's a standard that's being ~ set and
exposed for public scrutiny.

So maybe let's let's pick up on this point
you made about the speed

of decision making. And you know,

we also have clients who talk about the
comparison machine you doing a deal

in the US and

Obviously dealing with the the federal
government is positive because it's

predictable, it's steady. But the argument
our clients make is that when things have

an urgency, there's some imperative,

we have a hard time finding that other
gear.

And the United States, you know,

will bring the you know, the weight of the
White House and whoever they need

to get from Wall Street, investment
bankers to ~ start to move things more
quickly,

to process complex transactions more
quickly.

Do we need to find that other gear?

And how does the Canadian government go
about finding that gear?

Well, let's take an example of what is
being done,

the major projects office,

I think the problem is the scope of
decisions at some point ends and it goes
into

~ a particular ministry. Department of,

you know, Environment and Climate Change
or Natural Resources and Energy

or whatever department it might be,

Fisheries and Oceans. And once things move
from a political action-oriented lens,

let's say that's MPO (Major Projects
Office),

to

the bureaucracy, then processes that have
existed for decades that serve many

purposes, including the ability to just
say we're proceeding on a certain process,

certain path, and you can't move us off
that because if we move off that then
we're

not fulfilling our duty. So that's...

Or or we're taking on risks that we're not
comfortable with.

Exactly. Yes. We want to stay in our lane,

we know our lane, we're comfortable with
it.

You know, we don't need to move out.

No matter how much the whip is being you
know lashed upon us by people higher

up the political food chain. Here's a
critical difference,

I think, that allows the United States to
have the ability to move more quickly.

So in the United States, cabinet
secretaries are appointed by the
President,

of course, ratified by the Senate.

The deputy secretaries, the
under-secretaries,

the deputy assistant secretaries...

you know, all the all the way down...

And and just for Canadians, that's almost
all the way down to like an EX2,

EX3 in the Canadian federal system.

Senior Director, Director General,

they're all appointed.

So these political appointees of which
there's I think potentially

up to 16,000 political appointees that the
President can can push through,

That

provides a political lens and political
levers deep into the departments,

which means that if you want to have
something done,

first of all, you if you're the executive
branch.

You go to your friends in the legislative
branch and maybe you tweak a ~ a bill.

Or you just push out an executive order
and you have your hand-picked people

in Department X, Y, or Z push to have
things happen more quickly.

In the United States, you just don't have
the immovable object

of monolithic bureaucracy that is
protected.

And acts in certain ways that are
necessary for a fundamentally sound

and respectful democracy and the political
organs that govern the country.

But in the US, there's a more naked
political ability to pull the levers of
power.

And that's what we see, of course,

with the current Trump administration in
the kinds of people that

are appointed and the types of policies
that are being pursued.

And and of course that can create a
volatility,

which we've seen, but it can also create a
speed of decision making.

Right. So if you're an investor and you're
you're a beneficiary,

then that's a great environment.

We have some of the institutions designed
to kind of pull

departments and bureaucratic leadership
together like the Privy Council Office.

I think we both know there was a time when
if something had to go through

and the Prime Minister really wanted it,

officials would gather their counterparts.

And, you know, my own experience is we'd
get in a room and it would

get done pretty quickly. What does it take
to kind of get back to that?

Well, there has to be ~ an understanding
of what the problem is.

Decisions are fragmented, too slow,

there's not enough energy ~ into achieving
them.

I think that's an emerging recognition.

What we're seeing is some of the
appointees who've come in from

the private sector to run certain of ~
special operating agencies

or special entities within the Government
of Canada are,

you know, probably scratching their head
about why why can't I get things done?

I think there needs to be ~ a recognition
that probably there just needs to

be a a more defined ~

here's of operations that's this higher
pressure in terms of what

you want to achieve. And say, okay,

here's the the projects we're we're
interested in.

What are the more complex, challenging
ones?

~ And do we put those aside and go for the
the easier high impact ones?

Or do we have a different set of
processes?

I'm not talking about setting up a new set
of organizations.

It's really about critically evaluating
what you've set up right now.

And is it actually working, right?

And then what are the few tweaks we can
make so that at least we push

a few things out the door? Canada is
widely recognized as having

a very capable public service.

But it's also increasingly if we look at
the last couple of decades,

it's a public service that is not making
decisions as fast as the markets want them

to. And we could end up with a bunch of
people coming to the Summit.

There's announcements, yes, we had $11
trillion worth of ~ assets in the room.

But at the end of the day, it's about
making decisions on a timeline.

It's the speed of decision making to
arrive at a building permit,

you know, not just an announcement of an
investment.

How can we with laser like focus

on

I don't know, a half dozen things to get
them out the door.

Let's have some kind of public transparent
ability for the government to say,

these are the projects we're focusing on.

We anticipate by X date, this will be done
by this date.

So there's kind of a public accountability
that the government could propose,

~ which then would presumably ~ percolate
across the...

You're almost like, we we need a second
conference after the first conference

to say, okay, we've got all this interest.

How do we convert interest into into
capital?

Into capital and into shovels in the
ground,

which you know, without that last step on
the execution of the government side,

you know, we can even make announcements
and cut ribbons,

but we're not getting shovels in the
ground.

And and we're not gonna get the jobs and
see the results that Canadians need
without

all those steps kind of being in place.

Bud, You presented a case that Canada
needs to offer the investment community,

vetted deals, right?

Bread and butter, good natural resource
projects,

infrastructure, targeted manufacturing
tech.

But one sector's got a lot of attention
recently,

which is, you know, AI, artificial
intelligence,

the tech side, but also on the data
centers.

And that's attracting capital,

it's driving a lot of FDI numbers in the
US.

Should that be part of the mix in Canada?

My characterization of the AI data center
build out

and its association with NVIDIA and the
you know and the rest of the the sort

of big seven, magnificent seven,

I am absolutely I'm absolutely convinced
that this is a a gigantic,

you know, ~ ****** ****** bubble,

right, in terms of the financing.

It just simply is going to implode.

I mean, you can watch dozens of economic
analysis that suggests that this

is not going anywhere good.

I think there's a second issue.

So we we could you know dig into the
likelihood that Open AI is going to

you know be cash poor and failing within a
year.

Are these other companies gonna make
something?

Maybe one or two are gonna succeed.

Are they gonna need these kinds of huge

data center build outs pulling gigantic
numbers of gigawatts you know from

the system. And I saw some analysis that
in 10 years you know data centers will

be eating you know more than three times
the the sort of actual gross

~ consumption of electricity in the United
States.

These preposterous notions ~ that are
driving ~ preposterous valuations

of these companies.

I don't think Canada should jump on that
train.

I think that train's headed off a cliff.

There's another whole issue here,

which is ~ if you're building data centers
in Canada,

it has to serve a local, it really has to
serve a local

community. I mean it made great sense to
have a data center up at Lac Saint Jean

or something because cold water,

it's cold, there's a lot of energy being
used,

but that heat is the problem. ~ The
problem is latency getting it to where

you know the users are. There's other
issues in terms of probably we're going

to be able to see people use you know,

the inference on a home computer to get
the answers that and not have

to be relying on full data centers.

The data centers are really just for the
training.

I think a lot of people who are observing
this say this this AI data center stuff

is a mirage. Technology's changing,

the players are changing and might be
going bankrupt in a you know,

within two or three years. So let's not
get involved in that.

I know we ask you this all the time,

I know your clients do. I know it's a
freebie for our viewers and listeners,

but you're an expert on this.

What what should we be looking for post
conference,

midterms?

Let me start with the midterms question.

A lot of people are hopeful that the
midterms will allow a rethinking

in the United States of ~ how to get
things done.

~ maybe produce less of an offensive
rhetoric coming out of the White House.

I don't think that's the case.

I don't think it's necessarily ~ a sure
thing that that anything will change

in the House or the Senate.

Who knows what the results will be.

That's a very pessimistic view.

I know it's not widely shared.

One can't just wait out for a difference
in the midterms or in ~ 2028.

But okay, but you said something to me in
the past actually struck with me.

You know, the Republicans were meant to be
the free traders that we deal with,

right? This is not Ronald Reagan,

right? Gavin Newsome still has to get
those swing states in the Midwest onto

his side. So he might be nicer to us.

He won't may not use the the rhetoric,

but he still needs those auto assembly
jobs,

right? That the you know the current
administration is desperately trying

to move from Canada to the United States.

I imagine it's probably the easiest shift
in production you could possibly have

between two countries. So in some ways,

nothing really changes with the Democrats.

I agree one hundred percent. Some of the
choices made by the current President will

be choices that are ~ beneficial for any
follow on President.

Including the way executive orders are
used or or or things are structured,

but just politically having to address a
major concern of the American electorate.

What can Canada do in this moment?

I think the first thing is not to believe
that the shining night

of democratic renewal or something is in
the United States is on

the horizon that's gonna save Canada's
bacon and we'll go back to some,

you know, primordial condition of economic
partnership.

That's the first assumption. I think the
Prime Minister's been pretty clear that

that's his sentiment the world is
ruptured,

significantly changed. What has to happen,

I think, in the Canadian political
environment is a recognition that

the structures which allowed Canada to be
a super well-regarded economic entity,

but a little bit of a player on the side.

Those are not sufficient conditions

to take Canada to the next level where it
aspires to be,

and allows it to meet the the moment.

A moment that will endure for the next
decade in terms

of ~ fundamental restructuring of economic
and geopolitical partnerships

and a change in how capital flows.

And Bud, so for those people who say,

you know, well, Canada should just be
nicer and more compliant and just sign

a deal. ~

I take it you're saying that's all
nonsense.

Agreed. Signing a bad deal with with
someone who's likely to ~

use it for opportunity to make it worse is
not a sound process.

So as you open the the stakes are pretty
high for this conference.

We really appreciate you sharing this.

I know your your clients benefit from your
twenty years at the embassy

and having a unique expert perspective in
US–Canada relations and we're really

thankful that you're able to share it with
our our viewers and listeners.

So thanks again for joining us at Politics
of Money.

My pleasure.

really glad to have Michelle Leslie here
with us today.

Michelle, thanks for joining us.

Thank you for having me. All right.

Investment conference coming, lots of
attention on Canada.

I think the prime minister has probably
done a lot more than a lot of

his kind of predecessors to bring

attention to Canada's investment
opportunity.

~ Certainly at a macro level, right?

And ~ stable institutions, good economy,

educated workforce,

on paper a lot of kind of investable
projects,

right? Your expertise at the transaction
level,

having worked both on the public side,

private side, maybe if you could help us
on understand what does it take

to turn interest at that high level into
projects that can actually be turned...

financed, public and private, and then
turned into shovels in the ground and
jobs.

What what's required to do that?

It's really interesting. So I think it was
about three days ago that

the Global Mail did an article and and
they talked about how,

you know, Canada is a nation that has a
lot of private sector

and and overall investment interest,

but it is our ability to actually prove
that we can do the projects that

I think is going to help to convert some
of that interest into those opportunities.

And

One of the pieces that I've been thinking
about a lot lately is the people part

of the equation, right? You need the
workforce,

you need the people who are actually going
to build the projects.

You need, yes, you need your skilled
workers,

but you also need your skilled trades.

And one of the pieces that is missing
right now in the NAFTA visas

is you actually need a bachelor's degree.

You need some type of university education
in order to get those visas.

Well, if we really want to not just
attract investment here.

To build out projects domestically,

but really increase the export
opportunities for our country,

we need to make sure that we have the
workforce and that that workforce

is exportable.

So getting, for example, making
adjustments to what those NAFTA visas look
like

so that we can get those tradespeople
moving is one way where I think

you turn ambition into reality because you
need the team,

right? And so we can't we can't do this
without making sure immigration's actually

lined up. That's right. To make sure we
have the right talent in place.

~

But you're also talking about being
attractive and providing a

a a low-risk environment conceptually at
at that kind of high level.

Tell me what that looks like when the
private sector has to confront regulation,

consultation at three orders of
government,

~ First Nations, ~ other Indigenous
obligations of Canada.

How do they navigate that? How do we tell
them that come to Canada and then not

worry about getting mired in something
more complicated than they bargained for.

Well, that's such an interesting point
because a few years ago,

I had the privilege of working for Invest
Alberta.

And so we were can we were confronted with
these issues almost on a regular basis.

And one of the things that the government
of Alberta did was they introduced

the Red Tape Reduction Act. I do think,

you know, and just in my experience,

whether, you know, it's it's in my
professional life or with the

the mining science committee or

wherever it is. We do see that the
regulatory duplication is one of

the things that reduces investor appetite
and also prolongs projects from actually

getting out the door, right? So instead of
doing ~ you know,

the different types of processes
sequentially,

why can't we implement them concurrently,

right? And reduce the duplication from the
federal to the provincial level

if you're looking at, for example,

engagement, environmental assessments.

There's a lot of places where we can
synthesize some of those efforts.

And we have to present,

I believe, to investors the full package.

So it can't just be here's the,

here's the technology or here's the
company,

but here's the full package, here's what
the financing package looks like,

here's that workforce component.

And then we've worked our way through the
regulations.

It's hard to do time bound, but I think we
have to get as close to it as we can.

I think people need to know if they make
an investment today that

the shovels are going to be in the ground
in X period of time and that it's

not just a black box.

So you're talking about not just a a ~
large pool of projects,

but an addressable pool that's been kind
of pre-vetted.

Who's doing that pre-vetting? Who's doing
the homework to make a project that could

be interesting conceptually to one that
actually

meets a risk return relationship that that
investors need.

Well, I think you and I have talked about
this before.

I think if you're looking at it from a
government perspective,

I think you need whether that's the Privy
Council office or whether that's,

you know, a line department. I think that
for each of these major for for the files,

somebody has to own it all and they have
to own all of the pieces.

That are required in order to make the
investment go.

So whether that's the policy piece,

the regulation piece, the financing piece.

For example, we would get a lot of
questions from investors that were looking

at Canada as an investment destination,

say, okay, I see that there's these
programs here federally.

This province is offering these programs,

this province is offering these.

How do these stack together? How do they
interplay?

How much do I qualify for?

I think you need that coordinating
function that sits across

the top that understands all those
different variables and can easily walk

an investor through them. But are you
suggesting something more than just

coordination though? Because you should
use the word ownership.

I want to maybe push you on this a little
bit.

Okay. I think ownership means that they've
got more of a single window

and that that owner is actually doing a
lot some of the heavy lifting

on coordination. Is that what you're
actually pushing for?

Yes.

Somebody has to be accountable.

I think I think the the roles and
responsibilities of the accountability

has to be quite clear. If it is,

let's say, PCO, they also need to be given
that authority

to actually oversee and direct the
different pieces beyond just bringing
everyone

together

so that things can move fluidly and
efficiently and investors aren't getting
caught

up in

different approvals processes and
different regulations

and different requirements from different
departments.

The Prime Minister ~ you know,

launched his major project office and in
the hopes of trying to get some

of that coordination done. Are you arguing
that you need PCO or somebody that kind

of has the imprimatur of the prime
minister and cabinet to actually drive
some

of this? Is that...

Those central agencies are central
agencies for a reason.

And to to you need that central agency
focus that has that clear communication

and line of sight to the prime minister's
office and what those objectives are.

I mean, we know that the infrastructure
ambition,

if you will, and the capital projects
ambition in Canada,

much like in other Western nations,

is huge.

The sovereign can't fund it all,

right? And at the end of the day,

there are some projects that will move
forward,

and there are others that may also move
forward,

but won't move forward immediately,

right? We're gonna have to stage gate
these things.

You know, my my personal belief is that no
electrons,

no economy. So we should really focus on,

you know, the electricity and the energy
side of the equation.

But you ask somebody else and and they
will have a different,

a probably a different viewpoint.

But I think you need

That central agency to be serving as the
ownership who has that direct line

of sight into what is actually going to be
the focus for these early

in investments now. And then how are we
going to stage gate them out?

So let's talk about that. I think people
have been trying to understand,

what's being put on the table as
addressable projects for for this
conference.

And I guess Canada can't do put everything
and

timing matters, what should be that kind
of that first tranche that

has the most realistic chance of getting
done in Canada?

So I'm biased and I would say energy,

energy, energy as a proud Canadian.

But but I do think our energy sector,

you know, across the value chain,

whether you're talking about, you know,

the poles, the wires, you know,

like the ~ the other components that make
our energy and

our electricity systems work, whether
you're looking at

the materials and metals that go into,

you know, the projects, whether that's,

you know, your your mining investments.

I do think we need to be focused on the
energy piece of the equation.

We have tremendous resources across the
sector,

right? You know, we've got, we are a tier
one nuclear nation.

Alberta is home to 70% of the marketable
natural gas.

We have tremendous hydropower reserves.

We've got, you know,

an enormous amount of critical minerals to
help power not just our economy

but other nations as well. I believe about
90% of our uranium alone is exported.

But I would be focused on the energy
piece,

A, because domestically I think it can
bring jobs and good paying jobs for,

you know, decades to this country,

but also it provides tremendous
opportunity for export because I do think
we're

in we're in an electron race, right?

A lot of grids haven't been

maintained, let alone expanded in a long
time.

And now this need is there. And we need
that in order to grow the economy.

You're hinting at something that I think
the government's kind of picked

up on the defense side is you establish
defense need and then ask yourself,

do we have the full upstream to downstream
kind of range of activities that we're

doing in an industrial sense? So you're
saying don't just build

the plants and power, but consider that
the components that

go into energy production, energy delivery
should also be considered for Canada.

And we need to, right? Like if you look at
look at tungsten prices over,

I think it's like the last 18 months,

they've gone up about 300%. Like tungsten
prices have gone through the roof.

And and you can't get access to it,

right? Like in the springtime,

I was working on a procurement strategy
for an international government

and they could not get their hands on the
tungsten.

And it was simply because all of it had
been consumed for defense purposes.

And when we look at a lot of the mines,

most of the offtakes have been sold.

And we are not the purchasers of those
offtake agreements.

So you can't build the project if you
don't have the raw materials that serve

as the inputs. And, you know, we always
say if you don't mine it,

you grow it. And so as part of that
project planning,

I think we have to get savier all the way
down at that,

you know, what is that initial input into
those projects?

How much of it do you need? Because you
might have enough

for your airport expansion.

But then if we start adding up,

you know, the ambition for a pipeline and
a nuclear power plant and,

you know, maybe some, you know,

new electricity infrastructure,

very shortly we run out of the amount of
materials that we need.

So I guess one of the big issues in a
conference like this is what's

the role of government, right?

And so you've got investors probably
coming in and saying,

Hey, wouldn't it be great to get some free
government money?

Who doesn't like free money?

Free money is good. Absolutely.

And and I and I think that.

This is kind of where when you think about
the limited fiscal resources

the federal government has and even less
so provincially,

the government's gonna have to be very
strategic.

And this is means catalyzing, I hate to
use that word,

but getting projects to the right risk
return profile that just enough,

like that surely that has to be our
criteria,

because if the idea is that this is
something that,

you know, is never gonna find at sea legs
commercially,

and

And is not a like a core strategic policy
element,

~ that's gonna exhaust a lot of funding.

So, how does the government communicate
where that public private line is,

where that interface is? I know you spend
a lot of time your career focus on this.

Is there an understanding in the private
sector of what government can do,

what's reasonable? Because we haven't
always been great at identifying that.

We haven't been great at risk transfer and
public private partners.

There's a lot of dumb deals that have been
done.

How do we build confidence that there's
going to be a good relationship?

At that interface of public and private.

I think I think that's a really good
question.

And it's funny because I was having a
conversation just yesterday with somebody

on this. Very timely. Here at The Politics
of Money.

We bring you the most recent stuff.

I agree. Like the you know, there there is
only so much public money.

And we do need the private sector to
invest.

And so, you know, how much is just enough
in order to draw on that private capital?

I think when you're looking at these big
projects,

of course.

You know, government's role in really
really catalyzing that private capital
really

is in the construction side, right?

And it and it's not just for your energy
investments,

but the construction risk is, you know,

the big risk where, you know, things are
going to run over over budget,

they're going to outrun their schedules.

We have great examples though of success
in Canada,

right? And so, you know, my favorite
industry,

the nuclear sector, if you look at the
refurbishment,

I mean

That is a successful capital project that
was 10 years in the making,

that came in six months ahead of schedule
and about 150 million under budget,

both Bruce as well as Darlington.

~ you've got the first SMRs and the G7
that are being built,

and that project, you know, appears to be
going smoothly.

I think that government can provide
backstops,

and maybe that maybe there's a ceiling to
these backstops at

at the construction phase, but in

The UK last September, it was all about
the RAP,

the regulated asset-based model,

right? And La Caisse made, I think it was
a $3 billion investment into Sizewell C.

But the government is essentially
backstopping that.

So the government is taking on the debt.

Ratepayers are going to pay a pound per
month on their bills before

the project even is finalized,

but that means that investors also see a
return on their investment.

But the thing that came up in this
conversation was that we often talk about

technology risk, but is it technology
risk?

Or is it that the business plan hasn't
been well thought out?

Are we thinking through things
technically?

Are we actually thinking about this as a
business and a business that

is looking to scale?

Maybe we shift how funds are distributed.

Maybe we say, hey, here's a pot of money,

here's the conditions.

Now now you're a company that that wants
this,

you apply. And then we start to screen
them out.

But okay, but then you're back to this
issue of so who's doing the due diligence?

How good are they? How fast are they?

How do they assess risk? I mean,

I think that's hard when you're assigning
it to separate line departments

who each hold different mandates.

I think you need that expertise to either
sit within a coordinating function

or adjacent to it.

Because you have to be able to assess it
properly.

I don't know. What do you think?

Yeah. ~ okay. Yeah, having done this,

you know, for living on the public and
private side,

it's hard. Like the, you know,

transactional due diligence is actually
really difficult.

And I think it's a lot to ask the public
sector to do this.

It's one thing to do this in New York
where you're trained for it and you

do it all the time and you're paid for it.

And then to come in the public sector,

it's a different skill set. I think we've
got to find ways to get

the private sector engaged, ~ to work for
government and to work

for the private sector, but to assess risk
and to be better at it,

to be faster at it. Because I think one of
the things that slows things down

in government is is that we actually slow
it down long enough to understand it.

We call it risk aversion. I think I think
public servants are are sensible.

If they don't have a handle on it,

the answer is gonna be no until they do
have a handle on it.

That's right.

So I think we have to address that
capacity gap.

And it's not because public servants
aren't smart.

It isn't why they were recruited.

It isn't why they are trained in in in or
how they're trained,

right? And maybe maybe that's part of it,

right? Like there are interchanges,

but maybe it's more strategic interchanges
or upskilling

We were dealing with a line department ~
on a transaction.

I was at the Privy Council office,

and we basically got them to hire an
investment bank for their

end of the transaction.

My team was comfortable doing the analysis
ourselves,

but we got the department to go hire a
banker to do the work,

issue a fairness opinion, and give
ministers confidence on and the prime
minister,

our boss, confidence that this transaction
was sound.

So it can be done. I think we just gotta
find a way to contract,

to procure these services, And then to be
able to do it at scale,

right? Because it's one thing to do it as
a one off.

But if we're trying to execute on this
huge ambition,

we need to be able to scale it.

I think we've gotten a a lot out of you,

Michelle, on on what it takes to turn kind
of this ambition into actual projects

and a lot of these plumbing issues.

Without sounding like this is an
overwhelming challenge,

what can the sub summit actually
accomplish for Canada?

I mean, I think it's a great opportunity
because as we know,

it's not just the summit. I mean,

it feels like everyone's convening.

on Toronto next week. I don't know about
your schedule,

but it feels like there will be no sleep
had for anyone for about three days.

And and I think there's a lot of
opportunities on the margins as well,

right? ~ there will be smaller delegations
in the summit room,

but there are larger delegations of,

you know, government officials,

investors, project proponents coming
together.

And

I'm a big believer in relationships.

I think that there will be, you know,

some relationships that will be formed or
enhanced and strengthened.

But in terms of the the tangible brass
tacks and and I have thought about like
what

does the 30-60-90 execution platform look
like?

So if I'm an investor with a certain
profile,

what are the three targeted investments I
should be looking at?

Not not a not a full book. The book is
great.

But what are the three targeted
investments I should be looking at?

What are the bilateral meetings that I
should be having from the moment that

my plane lands at Pearson so that I'm
walking away with,

you know, the next step in in proceeding
forward and looking at really sitting down

and having a conversation as to how we can
broker a deal.

So a year from now, the prime minister's
communicating to Canadians what what

I'm hoping. I'm hoping.

I would say, and maybe this is overly
ambitious,

but I'm hoping within 120 days we have a
few announcements.

Like we already have announcements for
project commitments,

not MOUs, but projects, and that they're
starting to move forward.

And is it important that Canadians get the
link between an investable project that's

been identified and what it means for
them?

Job, standard of living, Canada's Canada
independence.

And those and and the and the social
impact.

Right. You know, I think a lot of times
when we look at investments,

we look at we look at job numbers and
that's important.

But also what is it bringing to
communities?

I mean, I I don't own any shares,

but I'm and I'm gonna preface it by saying
this,

but I love what Cameco has done in terms
of social investments in

the communities in which they operate for
years.

I remember meeting Mike Nadamagammon at
the time,

who was the mayor of Pinehouse Lake,

Saskatchewan, and he said to me,

you know.

Cameco made an investment in a daycare at
our high school so

our girls could graduate. It's those kinds
of investments that actually change

lives, right? And I think that that part
of this is that part of this piece

too is what does it mean for these
communities indirectly as well and

not just not just the jobs, but what does
it mean for suppliers and

and for people that live and work in these
areas where these projects

are gonna go in? And and what a great ~
promo because if you go

to the IFSD.ca website, we have a paper on
community benefits agreements

and how you structure them.

Did with Armine Yalnizyan. So that wasn't
even scripted.

Way to go, Michelle. Top guest so far.

Michelle, thank thanks for this.

I think it's really helped to put some
context around this event.

It's important, but also what preceded it
that we haven't seen,

you're saying is important. I think what
you're telling us is that what happens

after is even more important, right?

I mean, I'm sure I'm sure you would feel
the same way.

Like it's nice to have.

conversation but what are the actions that
come out of that room?

What are the next steps that everyone's
taking before they board those planes?

You know Michelle thanks for joining us.

Thank you.

Well, that's the IFSD Politics of Money
preview of Canada's Investor Summit next

week in Toronto. Really want to thank you
know,

my colleague Mostafa Askari. Kevin Page is
on holidays this week Kevin,

wherever you are, we miss you.

But also wanna thank Bud Locklear and
Michelle Leslie for providing kind

of really insightful contributions to
discussion.

And we hope for our viewers and listeners
that we gave you a bit of

a preview that you can use ~ as the
headlines come out of the meetings next
week

in Toronto. Thanks for watching.

Thanks for listening.