09-06-2025
Canada has ‘ambition deficit' and regulations that are scaring away investment, Sabia says
Michael Sabia, former head of Quebec's powerful pension fund and current chief executive officer of Hydro‑Québec, warns Canada has long lacked the willpower and grandiose thinking needed to spur national projects, and he believes this must change fast in order to transform the country's economy.
'We have an ambition deficit,' he said on stage Monday at Globe and Mail's conference designed to foster conversation around building a stronger Canada.
Fixing the economy, he argued, will involve shrinking layers of regulation that discourage foreign investment and changing how businesses and governments partner with Indigenous communities.
'We've got a lot to fix on the regulatory side', Mr. Sabia said, arguing that many rules, such as regulations around energy emissions, were likely implemented with good intentions, but they've piled on top of each other like 'a stack of pancakes.'
Because there are now so many, they can be tough to navigate and can discourage private capital from making investments, he said.
'We need to stand back and say, 'There's got to be a simpler, better way,'' he said.
As for relationships with Indigenous communities, Mr. Sabia said there needs to be a new approach to partnerships – something that is starting to materialize.
In his role as Hydro‑Québec's CEO, he's spent a lot of time visiting with Indigenous communities in the province and he now appreciates even more that it is crucial for leaders to show up in person when trying to negotiate business partnerships.
'There is no substitute when working on these transactions for human presence,' he said. 'Human presence leads to trust. And we don't have a lot of that right now.'
Because there hasn't been much trust, 'First Nations understandably have become very good at taking projects and governments to court,' he said. 'What happens in court? You lose decades.'
'If we keep doing things the old ways, it's not going to work,' he added.
Mr. Sabia also stressed that Canada must reconsider how it will finance national resource and power projects.
For so long, the hope has been that major pension funds such as Canada Pension Plan Investment Board and the Caisse de dépôt et placement du Québec, which Mr. Sabia ran, will help fund new developments. But he said there's a major mismatch between what these funds require to meet their investment criteria and what these projects will deliver in their early years.
'Big institutional investors, they think about infrastructure as a set of financial characteristics,' he said, such as stable healthy cash flows for decades.
Early-stage infrastructure projects, however, are extremely risky because of variables such as cost overruns.
'Asking that source of capital to take all sorts of risk? That's a crazy question,' he said. 'It doesn't work.'
Instead, he said Canada needs to think about a form of bridge capital that comes in early, takes some risk, and then once the projects have operating cash flows, major investors such as pension funds can be brought in.
