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New Federal Green Funds – The Right Approach or a Waste of Money?

November 9, 2015

There’s a great deal of enthusiasm for new and expanded green government funds (see Clean Energy Canada and Campbell Clark in the Globe and Mail). However, some of the justifications are suspect. Just how is a green infrastructure fund supposed to support “inter-provincial collaboration”? And excitement around “pockets of money to aid a deal [on climate change in Canada” doesn’t provide much confidence that the money will create rather than destroy value.

As Josh Lerner points out in Boulevard of Broken Dreams, governments often love to create funds to dole out money for innovation and entrepreneurs without doing the hard work of creating the right environment for innovation to thrive. Quite simply, “capital is only one of the many requirements for innovation”, it just happens to be the one that everyone loves. There’s a risk that we take that route again in Canada: “Consider the experience of the Canadian labor fund program. Not only did it end up backing mostly incompetent groups that did little to spur entrepreneurship, but it had the effect of “crowding out” some of the most knowledgeable local investors.” Now’s the time to think and act thoughtfully on the best measures to address our critical climate change, infrastructure and yes, investment needs, but not spread the dollars around the country in the hope of having a positive impact.

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