Alberta’s struggling nest egg, which has been neglected and drawn from under successive Tory governments, will get fresh support from Premier Alison Redford, according to the province’s new finance minister.
The Alberta Heritage Savings Trust Fund was created in 1976 by then-premier Peter Lougheed during the honeymoon phase of Progressive Conservative Party rule. But today, the rainy-day fund is worth just $15.2-billion and is poised to drop further due to roller-coaster markets, halted cash injections, as well as spending of earnings, leaving critics calling for new investments into the piggy bank.
Finance Minister Ron Liepert said he expects to receive marching orders soon that will refocus how the province’s resource revenue will be socked away.
“There’s no question the fund and the purpose of the fund are going to receive some renewed attention,” he said in an interview.
“The Heritage Fund is going to be looked at as to how it can better serve Albertans, [more]than simply an investment that sort of goes up and down with the market,” he said.
This week, the public is invited to the fund’s annual standing committee meeting to find out how the money pot is doing and share advice. Prominent members of the public continue to preach reinvestment as they have to previous premiers and finance ministers.
Mr. Lougheed said that, while the creation of the fund was one of his proudest initiatives, it is also his greatest regret under 40 years of Tory government, particularly as Ralph Klein introduced his own Sustainability Fund during his tenure as premier.
“I’m disappointed,” Mr. Lougheed said, “… If they had continued putting in 30 per cent of resource revenues, it would have now been up to almost $100-billion.”
Frank Atkins, an economist at the University of Calgary, has publicly and privately pleaded with the government to rein in spending and reinvest in the Heritage Fund. Instead, spending ramped up and up and up as oil revenues were high, and money funnelled into the Sustainability Fund, which was later raided when times got tough.
“The provincial government’s finances are a mess,” Prof. Atkins said.
Ideally, 50 per cent of resource revenue should be directed to the Heritage Fund he says now.
“I would love to say there’s a long-term vision to build up the Heritage Fund, live off the interest and reduce taxes,” he said, “ But I’m not optimistic.”
A few days before Ms. Redford was selected party leader, and successor to premier Ed Stelmach, then-finance minister Lloyd Snelgrove announced that the Heritage Fund would show losses or a writedown during the next fiscal update. He blamed turbulent world markets. Meanwhile, the head of the Crown corporation that manages the fund told local news media that the fund has pulled out about $20-million in investments to some companies that Norway’s government has deemed unethical. (Norway has a similar piggy bank.)
During her leadership bid, Ms. Redford said she would kick in as much as $4-billion a year to rebuild Alberta’s Heritage Fund.
MLA Doug Elniski, who is deputy chairman of the Heritage Fund committee, said everyone would like to see higher returns, but the markets are challenging. He also doesn’t want to engage in armchair quarterbacking.
“I think we’ll wait for the Premier to have her words as to what we’re doing as we move forward with it. I’m not going to apologize, or frankly comment on what’s gone on with the fund before. If every jurisdiction in the country had one, we’d have some benchmarks,” Mr. Elniski said.
With reports from Josh Wingrove in Edmonton