Alberta
Alberta government should pay dividends to Albertans from Heritage Fund
From the Fraser Institute
By Tegan Hill and Joel Emes
Despite promising in February to rebuild the Heritage Fund to help eliminate Alberta’s reliance on resource revenue, last month Alberta Premier Danielle Smith said she plans to use income from the fund to “assist in de-risking projects” in the oil and gas sector (in other words, projects that can’t secure financing from private lenders). Clearly, if Alberta has any hope of building up the Heritage Fund, it needs robust fiscal rules to help ensure governments responsibly grow the fund—and don’t raid it for other purposes.
The Lougheed government created Alberta’s Heritage Fund in 1976 to save a share of the province’s resource revenue for the future. Since its creation, however, governments have only contributed resource revenue in 11 out of 48 years of the fund’s existence, and just 3.9 per cent of total resource revenue has been deposited in the fund over its lifetime. Instead, governments have largely spent away onetime resource revenues, contributing to Alberta’s boom-and-bust cycle, rather than saving a share of resource revenue to turn it into a financial asset that can generate steady income over time.
While Premier Smith says she wants to build up the fund so its investment income (i.e. earnings) can eventually replace resource revenue in the budget, the fund’s earnings in 2023/24 are a projected $2.1 billion compared to a projected $19.4 billion in resource revenue. Obviously, Alberta needs a new approach to grow the fund. On this front, it can look to Alaska’s experience with its Permanent Fund, which was also created in 1976 but has grown much larger over time.
Unlike Alberta’s Heritage Fund, Alaska’s fund operates under robust fiscal rules. First, according to Alaska’s constitution, the state government must deposit at least 25 per cent of all mineral revenues into the fund each year. Alberta could introduce a similar constitutional rule.
In addition, a share of the Alaska fund’s earnings are set aside each year to ensure that the principal of the fund is not eroded through inflation. Alaska also prohibits use of the principal without approval by a referendum; the government may only spend the earnings of the fund (minus what’s needed to inflation-proof the principal).
And crucially, there’s the dividends—a topic that would surely pique the interest of many Albertans. In Alaska, the government pays a share of the fund’s earnings to Alaskan citizens via a dividend, which has helped support growth in the fund over the long term. By giving citizens an ownership share in the state’s resource fund, Alaskans recognize their vested interest and demand that the state maximize returns. Put simply, due to the annual dividend, Alaskans want the government to maintain the Permanent Fund’s health. And any government that tried to use the fund for irresponsible purposes would face the ire of Alaskan voters.
Which brings us back to Alberta. If the Smith government began contributing 25 per cent of resource revenue to the Heritage Fund and inflation-proofing the principal this year, it could pay each Albertan a dividend worth between $148 to $297 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. And as the fund grows, so would the dividends.
The Smith government has promised to rebuild the Heritage Fund, yet at the same time wants to use the fund’s earnings to “assist in de-risking” energy projects in the province. Without a mechanism to ensure growth of the fund, it will remain vulnerable to the whims of governments. Alberta should learn from Alaska’s success and start paying annual dividends to Albertans.
Authors:
Show your Alberta side. Buy Local. |
When the going gets tough, Albertans stick together. That’s why Alberta’s government is launching a new campaign to benefit hard-working Albertans.
Global uncertainty is threatening the livelihoods of hard-working Alberta farmers, ranchers, processors and their families. The ‘Buy Local’ campaign, recently launched by Alberta’s government, encourages consumers to eat, drink and buy local to show our unified support for the province’s agriculture and food industry.
The government’s ‘Buy Local’ campaign encourages consumers to buy products from Alberta’s hard-working farmers, ranchers and food processors that produce safe, nutritious food for Albertans, Canadians and the world.
“It’s time to let these hard-working Albertans know we have their back. Now, more than ever, we need to shop local and buy made-in-Alberta products. The next time you are grocery shopping or go out for dinner or a drink with your friends or family, support local to demonstrate your Alberta pride. We are pleased tariffs don’t impact the ag industry right now and will keep advocating for our ag industry.”
Alberta’s government supports consumer choice. We are providing tools to help folks easily identify Alberta- and Canadian-made foods and products. Choosing local products keeps Albertans’ hard-earned dollars in our province. Whether it is farm-fresh vegetables, potatoes, honey, craft beer, frozen food or our world-renowned beef, Alberta has an abundance of fresh foods produced right on our doorstep.
Quick facts
- This summer, Albertans can support local at more than 150 farmers’ markets across the province and meet the folks who make, bake and grow our food.
- In March 2023, the Alberta government launched the ‘Made in Alberta’ voluntary food and beverage labelling program to support local agriculture and food sectors.
- Through direct connections with processors, the program has created the momentum to continue expanding consumer awareness about the ‘Made in Alberta’ label to help shoppers quickly identify foods and beverages produced in our province.
- Made in Alberta product catalogue website
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Alberta
Province to expand services provided by Alberta Sheriffs: New policing option for municipalities
Expanding municipal police service options |
Proposed amendments would help ensure Alberta’s evolving public safety needs are met while also giving municipalities more options for local policing.
As first announced with the introduction of the Public Safety Statutes Amendment Act, 2024, Alberta’s government is considering creating a new independent agency police service to assume the police-like duties currently performed by Alberta Sheriffs. If passed, Bill 49 would lay additional groundwork for the new police service.
Proposed amendments to the Police Act recognize the unique challenges faced by different communities and seek to empower local governments to adopt strategies that effectively respond to their specific safety concerns, enhancing overall public safety across the province.
If passed, Bill 49 would specify that the new agency would be a Crown corporation with an independent board of directors to oversee its day-to-day operations. The new agency would be operationally independent from the government, consistent with all police services in Alberta. Unlike the Alberta Sheriffs, officers in the new police service would be directly employed by the police service rather than by the government.
“With this bill, we are taking the necessary steps to address the unique public safety concerns in communities across Alberta. As we work towards creating an independent agency police service, we are providing an essential component of Alberta’s police framework for years to come. Our aim is for the new agency is to ensure that Albertans are safe in their communities and receive the best possible service when they need it most.”
Additional amendments would allow municipalities to select the new agency as their local police service once it becomes fully operational and the necessary standards, capacity and frameworks are in place. Alberta’s government is committed to ensuring the new agency works collaboratively with all police services to meet the province’s evolving public safety needs and improve law enforcement response times, particularly in rural communities. While the RCMP would remain the official provincial police service, municipalities would have a new option for their local policing needs.
Once established, the agency would strengthen Alberta’s existing policing model and complement the province’s current police services, which include the RCMP, Indigenous police services and municipal police. It would help fill gaps and ensure law enforcement resources are deployed efficiently across the province.
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