HALL: Finally, Alberta gets serious about the Heritage Trust Fund

So, they're really doing it... building up the Heritage Fund. Thank heavens! At last! When Finance Minister Nate Horner delivered the 2024/25 Alberta budget Thursday, he promised the government would invest $2 billion dollars into the Heritage Savings Trust Fund. It was a highlight. So too was Horner's projection that the fund should grow from $25 billion to between $250 billion and $400 billion by 2050 — as Premier Smith had promised a few weeks ago.The fund, established in 1976, is supposed to be a long-term source of revenue to take the province off the roller-coaster of oil and gas prices. The initial investment of $2 billion in 1976 dollars (almost $10.5 billion dollars in today's inflated currency) was supposed set the precedent of fiscal responsibility for decades to come. Peter Lougheed had a vision that was built on a commitment to invest 30% of non-renewable resource revenues into the fund every year. Sadly, in the nearly 50 years since it was created, this has never happened.Successive governments since Lougheed have used the resource revenues and the money generated from the fund to overspend and remove restraint from the public sector. Had previous premiers simply reinvested the income earned from the fund, it would be worth more than $250 billion today. Instead they continued to double down on the boom cycles without preparing for the inevitable bust that always follows.Things could be better. Consider Norway, with a similar population and industry to Alberta. Norway established their oil fund in 1990 and first deposited oil revenues in 1996. The value today? A cool $1.4 trillion (with a t) dollars. Rules are also in place that allow a maximum of 3% of the value of the fund to be used every year in the government budget. That translates to the Norwegian government receiving $42 billion dollars in revenues from their resource fund.Or see Alaska. The Alaska Permanent Fund was started at the same time as Alberta and mandates by law that at least a quarter of all non-renewable resource revenues be invested into the fund. In addition to a valuation of more than $77 billion dollars, that fund delivers dividends every year to each resident. Over 600,000 people who have lived in the state for at least a year will each receive a payment of $1,312 in 2024.Unfortunately, Alberta has lacked the long term vision seen in other jurisdictions. The province has lived beyond what it can afford for decades, and continuously spent more than it should. This latest investment into the Heritage Fund signals a recognition that we need to start saving. Done correctly, there is a future where the income generated from the fund completely replaces our need for oil and gas revenue.Echoing the words of Premier Smith, Horner stated in his address: “I have said before that you can’t run around with champagne tastes on a beer budget forever.” It appears the Government of Alberta is finally taking a hard look in the mirror. Oil and gas money will not last indefinitely. Other resource based economies have proven that it is possible to turn the riches of today into sustainable funding that will last for generations. Alberta needs to get serious and align spending with what we can afford. Not just for today, but for after the day the final barrel of oil is pumped out of the ground. Continuing the hard work of returning to the original vision of the Heritage Fund will be challenging. It will, however, provide a future Alberta the prosperity it deserves.

HALL: Finally, Alberta gets serious about the Heritage Trust Fund

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