Canada is a G7 country, rich in resources, with a booming population. An energy powerhouse, with major nuclear capacity – yet it makes up just 5% of private infrastructure investments. Results from GIIA’s twice-yearly tracker of investor sentiment – Pulse Survey – consistently show Canada as one of the world’s most attractive markets, but persistent barriers prevent that interest from translating into tangible deals.
There’s no shortage of public frustration with the state of Canadian infrastructure, particularly regarding its climate resilience. In GIIA’s latest global survey of citizen satisfaction with infrastructure in 32 countries, conducted by Ipsos, Canada was in the bottom third by percentage of those who said they were very or fairly satisfied.
But change may be afoot. In a surprise snap election this April, former Governor of the Bank of Canada and Bank of England – and former Brookfield Chair – Mark Carney secured an unexpected victory.
During the English-language debate in Montréal, Carney pledged to attract “half a trillion dollars over five years” in private investment. When it comes to infrastructure, a few policy changes could help the new Prime Minister achieve that goal.
Bring back real return bonds
Infrastructure investments often carry inflation-linked revenues, so instruments that protect investors from inflation such as real return bonds (RRBs) are critical to making markets attractive. GIIA members have made it clear: “Bringing back real return bonds would lead to an immediate flow of investment”, to quote one investor outright.
In November 2022, the Department of Finance announced it would cease issuing RRBs, citing a lack of investor demand. Yet institutional investors – particularly pension funds and mid-market players – have pointed to RRBs as essential tools for managing inflation risk. Without them, investors are forced to rely on derivatives or seek inflation-protected assets abroad. Moreover, mid-sized funds often lack the in-house capacity or scale to manage that risk effectively through inflation swaps or foreign hedging.
Compared to its peers, Canada’s capital markets already lag in the availability of inflation-linked instruments. The US has Treasury Inflation-Protected Securities (TIPS), and the UK has Index-Linked Gilts. Removing RRBs further narrows the toolkit for domestic institutional investors. Ultimately, volume at auction isn’t the only indicator of a product’s success.
Create opportunities for investment in airports
Many of Canada’s major airports need a major makeover – and already stretched taxpayers don’t need to be on the hook for costs. Private investors stand ready to provide capital and expertise – similar to JFK’s New Terminal One – but they need viable entry points.
To unlock that potential, the government must reform the current ownership, governance, and regulatory frameworks that restrict private capital. Most major Canadian airports are operated by non-profit airport authorities under long-term federal leases, a model that limits flexibility and disincentivises investment.
Private investors – domestic and foreign – can add value well beyond terminal renovations. They can unlock surrounding land for logistics hubs, hotels, retail, and business parks, turning airports into economic engines and job creators. Their operational expertise often improves throughput, digitisation, and customer service, ushering in cutting-edge technologies like biometric screening and smart check-in.
Canadian pension funds already invest in airports across the globe and bring both the capital and operational experience to transform the sector. The previous government recognised this, laying the groundwork to allow pension investment into certain airports. With a new government in place, that vision must now be revisited, refined, and clearly communicated to reignite investor interest.
Lead the world in nuclear energy
The Bruce Nuclear Generation Station in Ontario is a shining example of how investors can help build out the country’s clean energy capacity. Bruce Power is a Canadian-owned partnership of TC Energy, OMERS, the Power Workers’ Union and The Society of United Professionals.
Bruce Power is a powerhouse in every sense. Apart from clean power, Bruce provides hundreds of good-paying jobs to the local community – unionised jobs, which include a 2.23% ownership of the plant by the Power Workers’ Union. As Canada considers expanding nuclear capacity, replicating the Bruce model could help meet ambitious climate targets and secure economic benefits for local communities. One critical move would be for the federal government to classify nuclear energy as ‘sustainable’ under Canada’s green taxonomy, as both the EU and UK have done.
Canada is also positioning itself as a global leader in small modular reactor (SMR) technology. The 2020 federal SMR Action Plan outlines a four-stream approach: grid-scale reactors, off-grid and remote applications, heavy industry, and international deployment. Four provinces – Ontario, New Brunswick, Saskatchewan, and Alberta – have signed a memorandum of understanding and produced a joint roadmap. Ontario Power Generation (OPG) is already advancing Canada’s first grid-scale SMR at Darlington, aiming to bring a BWRX-300 reactor online by 2028.
This leadership is commendable, but delivering on SMR ambitions will require deep collaboration with private investors. By tapping into their capital and expertise, Canada can manage costs, speed up deployment, and reinforce its global leadership in clean energy.
If Canada is serious about unlocking half a trillion dollars in private capital, the moment to act is now. Clear signals – like restoring inflation-protected instruments, reforming airport governance, and doubling down on nuclear innovation – can catalyse global interest. With a stable regulatory environment, world-class pension expertise, and urgent infrastructure needs, Canada is uniquely positioned to become the next frontier for infrastructure investors. The interest is there – what’s needed now is the invitation.
Pictured: Chief executive, Jon Phillips at House of Common in Canada