Alberta
Fraser Institute says Albertans should get annual dividend to promote Heritage Fund
From the Fraser Institute
By Tegan Hill and Joel Emes
An Alberta Dividend: The Key to Growing the Heritage Fund
If the government of Alberta wants to build the Heritage Fund over the longer term, it should start paying dividends to Albertans, finds a new study published today by the Fraser Institute, an independent non-partisan Canadian think-tank.
“The Alberta government has promised to ‘re-build’ the Heritage Fund, but it will require a consistent commitment over the long term,” said Tegan Hill, director of Alberta Policy at the Fraser Institute and co-author of An Alberta Dividend: The Key to Growing the Heritage Fund.
In 1976, the province established the Alberta’s Heritage Savings Trust Fund to save a share of the province’s resource revenues to provide ongoing benefits to Albertans. Since its creation, however, resource revenue contributions have only been made in 11 of 48 years of the fund’s existence and just 3.9 per cent of total resource revenue has been deposited to the fund over its lifetime.
Learning from Alaska’s success with its resource revenue savings fund—the Alaska Permanent Fund—the study proposes that Alberta should introduce a dividend to provincial residents to create public buy-in that generates political pressure to adhere to fiscal rules around the Heritage Fund’s operation—such as consistent resource
revenue contributions and inflation-proofing of the fund’s principal—to ensure its growth over time.
For perspective, the Permanent Fund was started the same year as Alberta’s Heritage Fund but has grown to US$78.0 billion in 2022/23—or C$88.6 billion—compared to a balance of just C$19.0 billion in Alberta’s Heritage Fund.
Using two alternatives based on Alaska, which includes mandatory 25 per cent resource revenue contributions and consistent inflation proofing of the fund’s principal, the Heritage Fund has the potential to pay each Albertan a total of $571 to $1,108 in dividends over the next three years—equivalent to $2,284 to $4,430 per family of four.
Under these rules, the Heritage Fund would be worth between $35.8 billion and $38.7 billion by 2026/27, while paying out between $2.9 billion to $5.5 billion in dividends to Albertans.
“As demonstrated in Alaska, by giving citizens an ownership share in the state’s resource fund, they demand that sound rules regarding the governance of the fund be adhered to.” said Hill.
- The Smith government has promised to “re-build” the Heritage Fund so that eventually its earnings are significant enough to replace volatile resource revenue in the budget. While this is a worthy goal, it will require a long-term commitment.
- Building on work from Hill, Emes, and Clemens (2021), this bulletin uses Alaska’s success with its resource revenue savings fund—the Alaska Permanent Fund—to demonstrate how the Smith government can introduce new fiscal rules to ensure growth in the Heritage Fund with a focus on the annual dividend.
- As demonstrated in Alaska, by giving citizens ownership shares in the state resources, they recognize their vested interest and demand that the state maximizes returns from such resources. Put simply, by creating public buy-in, the dividend generates political pressure to enforce robust fiscal rules around the fund’s operation to ensure its growth.
- Using two illustrative models based on the Alaska Permanent Fund, which includes mandatory 25 percent resource revenue contributions and consistent inflation proofing of the fund’s principal, each Albertan could be paid an estimated $148 to $297 in dividends in 2024/25, equivalent to $594 to $1,187 per family of four. From 2024/25 to 2026/27, each Albertan could receive a total of $571 to $1,108 in dividends, equivalent to $2,284 to $4,430 per family of four.
- Under these rules, the Heritage Fund would be worth between $35.8 billion and $38.7 billion by 2026/27, while paying out between $2.9 billion to $5.5 billion in dividends to Albertans.
Authors:
Alberta
Premier Smith says Auto Insurance reforms mean lower premiums and better services for Alberta drivers
Premier Smith says Auto Insurance reforms may still result in a publicly owned system
Better, faster, more affordable auto insurance
Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.
After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.
Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.
“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”
“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”
Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.
Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.
Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.
In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.
Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.
By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.
“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”
Quick facts
- Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
- A 2023 report by MNP shows
Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.
Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.
The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.
Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.
“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”
Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:
- $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
- $125 million to address enrollment growth pressures in Alberta schools.
- $847 million for disaster and emergency assistance, including:
- $647 million to fight the Jasper wildfires
- $163 million for the Wildfire Disaster Recovery Program
- $5 million to support the municipality of Jasper (half to help with tourism recovery)
- $12 million to match donations to the Canadian Red Cross
- $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
- $240 million more for Seniors, Community and Social Services to support social support programs.
Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.
After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.
Revenue
Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
- $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
- $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.
Surplus cash
After calculations and adjustments, $2.9 billion in surplus cash is forecast.
- $1.4 billion or half will pay debt coming due.
- The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.
Contingency
Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
- The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.
Debt
Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
- Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.
Related information
COP 29 leaders demand over a $1 trillion a year in climate reparations from ‘wealthy’ nations. They don’t deserve a nickel.
What Will Be the Future of the Keystone XL Pipeline Under President Trump?
Health Care Update: Province will deliver health services regionally in seven “health corridors”
Trump Energy Policies will be executed by New York Rep. Lee Zeldin and North Dakota Gov. Doug Burgum
-
Brownstone Institute2 days agoThe Most Devastating Report So Far
-
Business2 days agoCarbon tax bureaucracy costs taxpayers $800 million
-
ESG1 day agoCan’t afford Rent? Groceries for your kids? Trudeau says suck it up and pay the tax!
-
Daily Caller1 day agoLos Angeles Passes ‘Sanctuary City’ Ordinance In Wake Of Trump’s Deportation Plan
-
John Stossel1 day agoGreen Energy Needs Minerals, Yet America Blocks New Mines
-
Alberta1 day agoProvince considering new Red Deer River reservoir east of Red Deer
-
MAiD2 days agoOver 40% of people euthanized in Ontario lived in poorest parts of the province: government data
-
Addictions1 day agoBC Addictions Expert Questions Ties Between Safer Supply Advocates and For-Profit Companies