Now the UCP wants to raid the Heritage Fund
Meanwhile wasting our money on more of its political boondoggles.
Published Jun 20, 2024 in The Sherwood Park News • 2 minute read
One year after Danielle Smith told Alberta voters her goal was to save for the future, the Premier wants to use our savings account to finance private projects that can’t find their own funding.
Most Albertans are familiar with the Alberta Heritage Savings Trust Fund (Heritage Fund). It was established in 1976 by the provincial government to collect a portion of Alberta’s non-renewable resource revenue (royalty revenue) for future generations. Initially, 30 per cent of Alberta’s royalty revenue was transferred to the Heritage Fund. Then, in 1982, the government reduced this transfer to 15 per cent, and subsequently, in 1987, eliminated any mandate for the provincial government to make transfers to the Heritage Fund.
Transfers are now only made at the discretion of the government. Since it was created 48 years ago, provincial governments have deposited money into the Heritage Fund only 15 times and only when annual revenue from oil and gas royalties has been greater than $10 billion.
Last year, Alberta’s royalty revenue exceeded $25 billion. We deposited only $750 million into the Heritage Fund. This year, the UCP actually plans to borrow money in order to make a deposit into the fund because it has allocated all oil and gas royalty revenue to government spending.
Saving a portion of our oil and gas revenue has been a great idea from the start but our Heritage Fund is now somewhat infamous for how small and ineffective it is. Norway has a similar fund and puts all of their oil and gas royalty revenue into it. That fund is now worth $1.8 trillion dollars. Income from the investments made with the Norway fund provides their government with 20 per cent of its annual revenue.
Alaska created its Permanent Fund the same year as Alberta created the Heritage Fund. The Alaska government is mandated to contribute 25 per cent of their state royalty revenue to their Permanent Fund which is now worth $80 billion and pays an average annual dividend directly to Alaska residents of $2,000.
Norway and Alaska have saved and invested their oil and gas revenue better than Alberta has. Norway now funds government services with revenue generated by its fund. Alaska pays its residents a dividend with the revenue generated from its fund.
In Alberta however, the UCP is proposing that it raid the Heritage Fund to invest in private projects that are finding it difficult to get financing. Two weeks ago, Danielle Smith floated this idea to the Calgary Chamber of Commerce.
The Alberta NDP has offered concrete recommendations to help the Government of Alberta design a thoughtful fiscal strategy for oil and gas royalty revenue. The government should consult with Albertans and consciously determine a goal and purpose for the Heritage Fund. You can review our proposal at meetkyle.ca
In the absence of a mature conversation with Albertans about government revenue from oil and gas royalties and savings in the Heritage Fund, we are at risk of the UCP raiding the Heritage Fund and wasting our money on more of its political boondoggles.
Please reach out to me if you have any thoughts on this or other issues that are top of mind for you.
Kyle Kasawski is the MLA for Sherwood Park. If you have questions about this column or any provincial issues, he would like to hear from you. Find his contact information at meetkyle.ca