This article originally appeared in The Hub.
By Heather Exner-Pirot, May 5, 2026
How do nations generate wealth? That was the question Adam Smith sought to answer in his seminal 1776 work, The Wealth of Nations, which laid the intellectual foundation for modern capitalism and economic policy.
The key, argued Smith, was in free markets and coordination through prices, rather than state intervention, using the “invisible hand” to match supply with demand. We now have 250 years of data to support Smith’s thesis. Free markets are not perfect, but they outperform state interventionism in the long term and provide greater prosperity and human development than any other system.
This is newly relevant as Canada considers how it might generate wealth once again, following a decade that saw, according to a recent RBC report, $1 trillion of net investment flee the country’s business-unfriendly environment. Prime Minister Mark Carney introduced the idea of a Sovereign Wealth Fund with April’s spring economic update. The country’s commentariat was quick to point out that it would have to be capitalized by debt rather than wealth, since the government has none. But it’s notable that we are finally talking about generating wealth in Canada.
That’s because the progressive Left in Canada, our governing elite for 11 years, have displayed not just a lack of understanding, but of curiosity about how wealth is generated by nations. Their only concern has been on redistributing it, it being the imagined endless and excess profits of billionaires and fat cat CEOs they think can be allocated to cheaper groceries and subsidized prescriptions drugs and day care and renewable energy and unionized government jobs forever. Wealth is assumed by the Left to exist, and they restrict their thinking to ways to appropriate it from others, rather than generate it themselves.
Carney and Finance Minister François-Philippe Champagne are a step up from that socialist nightmare for sure. But their idea of generating wealth still seems far from Smith’s. The Liberals see our AAA credit rating—the ability of Canada to borrow at a more competitive rate than the broader market—as our driver of wealth, our ace in the hole. Rather than make ourselves more attractive for private investment through regulatory reforms and tax competitiveness, they seek to replace the need for private investment with Canada’s borrowing power.
This all seems perplexing from a prairie perspective, where the question of what creates wealth for the state has an obvious answer: oil, alongside natural gas, minerals, lumber, grains, and oilseeds. The Sovereign Wealth Fund that Canada aims to emulate in name, if not in concept—Norway’s $2 trillion USD fund—was derived, of course, from surplus oil revenues.
It seemed suspicious to me that Canada was announcing the creation of its own sovereign wealth fund in the middle of the worst energy crisis the world has ever faced, with oil prices skyrocketing. I will confess to being a bit relieved that it’s apparently being capitalized from debt and airport privatization rather than windfall taxes, which Alberta could not accept.
But since we are here, in the middle of an energy crisis and at the beginning of a structural bull market for commodities, and Canada has a real opportunity to actually create wealth which could subsequently be used for the purposes of improving the well-being and security of its citizens, it is worth asking how Alberta and Saskatchewan came to be in the non-embarrassing half of the per capita GDP chart showing most Canadian provinces hovering around Alabama and Mississippi levels of wealth.
The short answer, of course, is oil, and I expect some people will note that fact derisively: “easy for you to be rich”; though, with a different set of energy policies, the whole country could have been richer.
The long answer is that Alberta and Saskatchewan embraced resource development, developed policies that encouraged it, charged comparatively low taxes, and obeyed the principles of free markets, a strategy Smith would have recognized and endorsed.
Alberta’s oil success has been Canada’s success. Between 2007 and 2024, Albertans contributed $285.1 billion more to the federal government (in taxes and other payments) than Ottawa spent or transferred to Alberta, four times as much as British Columbians or Ontarians. (As an aside, if you’re wondering why Alberta doesn’t have a bigger sovereign wealth fund of its own…well, there’s a reason Norway never joined the European Union).
If Alberta’s oil wealth doesn’t seem replicable for other provinces, then perhaps the example of Saskatchewan—the only Canadian province to have broken out from “have not” to “have” status—can be instructive.
In the 1990s and early 2000s, tens of thousands of people like me left Saskatchewan and went to Alberta to start careers and families. It was depressing to watch your friends and family leave home to find greener pastures; I’m guessing there are a lot of people in Canada today who know that feeling.
But then came the upswing of the commodities cycle, and Saskatchewan’s “food, fuel, and fertilizer” economy boomed. The free market-leaning Saskatchewan Party usurped the NDP and moved the province from a state-led, cautious development philosophy to a market-oriented, resource-driven growth strategy.
The result? Saskatchewan became a permanent “have” province and has not been on the receiving end of equalization transfers since 2007-08. The resource roller coaster has its ups and downs to be sure, but when your valleys are better than other provinces’ peaks, why would you get off it?
A new commodities boom is upon us, and I want for all of Canada what Saskatchewan was able to achieve in the last one: opportunity, confidence, ambition, and wealth. Saskatchewan’s path did not go through Ottawa, it did not arise from industrial strategy, and it was not distorted by dirigisme from its political elites. It saw the public sector set good rules and then left the private sector to play the game, with an aggressive trade and export strategy sprucing up the playing field.
The last commodity boom saw hundreds of billions of foreign investment pour into Canadian energy and mining projects. To attract that kind of wealth again, we know the recipe that works: it begins with accelerated depreciation, whereby companies can fully deduct the cost of investments immediately instead of spreading it over decades. Investment tax credits, flow-through shares, royalty relief/sliding scales, Indigenous loan guarantees, and faster, predictable permitting are other strategies that have worked and that the private sector is asking for to incent new projects and expansions.
These are not unreasonable demands; they are tried and true strategies, and in many cases, they were invented or perfected in Canada.
If we get this right, the pot at the end of the rainbow is not just a return to the economic charts Canada used to enjoy before 2015. The prize is national wealth, and that wealth means good jobs, affordable homes, modern infrastructure, well-funded health care and education, environmental protection, and a capable military.
Not every country gets a second chance at that kind of prosperity, and I’m not sure Canada deserves it. But it’s passing by us, and we had better grab on to it with two hands.
Heather Exner-Pirot is the director of energy, natural resources and environment at the Macdonald-Laurier Institute.
