Alberta Premier Danielle Smith's plan to grow the Heritage Fund to $250 billion by 2050 raises concerns about the lack of robust safeguards. The text argues that constitutional rules, rather than statutory ones, are necessary to ensure the fund's long-term growth and protect it from political manipulation.
Alberta Premier Danielle Smith recently stated that increasing the Heritage Fund would 'take political will over a long period of time.' Her comments came during a press conference in Halifax on July 15, 2024, preceding a meeting. The Alberta government unveiled its ambitious plan to bolster the Heritage Fund to $250-billion by 2050, aiming to wean Alberta off the volatile rollercoaster of resource revenue .
While bolstering the province's 'rainy day fund' is crucial, the plan lacks robust rules to safeguard it and guarantee its long-term growth.The Heritage Fund, established in 1976 by the Alberta government, was designed to preserve a portion of the province's resource revenue, including oil and gas, for future generations. Unfortunately, throughout its history, successive Alberta governments have frequently withdrawn income from the fund to supplement their budget, even during challenging times like oil price crashes. Despite accumulating resource wealth over decades, the fund's growth has been inconsistent.The Smith government's plan, revealed last Wednesday, proposes reinvesting all investment returns generated by the Heritage Fund back into the fund and allocating a portion of any budget surpluses towards its growth. However, these rules are based on 'statutory' law, which the government can amend unilaterally at any time. For the fund to reliably grow, its rules need to be 'constitutional,' making them more difficult to deviate from or eliminate. Consider that when the Alberta government initially created the Heritage Fund, it mandated a statutory rule requiring the government to deposit 30 percent of resource revenue annually. This rule quickly dwindled to 15 percent by 1982-83 and was entirely abolished by 1986-87. Statutory rules can be easily altered or disregarded when they no longer serve the government's immediate needs. Ms. Smith acknowledges this risk, citing Alaska's constitution, which compels the state government to deposit at least 25 percent of all mineral revenues into their equivalent fund each year. Following Alaska's example, Alberta could implement constitutional rules for the Heritage Fund, requiring a referendum to present the rules to Albertans. If approved, the government would then enact legislation recognizing these rules and submit them to the federal House of Commons and Senate for national constitutional recognition. Reversing these rules or ignoring their requirements would necessitate a complete reversal of this multi-step process, starting with a new referendum. Constitutional rules would undoubtedly provide far greater protection for the Heritage Fund compared to statutory rules. The Smith government's desire to grow the Heritage Fund is commendable. However, statutory rules have proven ineffective in achieving this goal in the past, and there's no reason to anticipate a different outcome this time. Albertans require constitutional rules to ensure the sustainable growth and preservation of the Heritage Fund for future generations
ALBERTA HERITAGE FUND CONSTITUTIONAL RULES POLITICAL WILL RESOURCE REVENUE ECONOMIC GROWTH
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