Alberta
Alberta government should rely on dividends—not ‘political will’—to grow Heritage Fund
From the Fraser Institute
By Tegan Hill
The Smith government on Wednesday released its plan to grow Alberta’s Heritage Fund to at least $250 billion over the next 25 years, mainly by reinvesting all investment returns back into the fund. But even Smith recognizes her plan will “take political will over a long period of time.” Of course, political will is subjective and can change from government to government. If Smith wants to establish a sustainable plan to grow the Heritage Fund, it should pay dividends to Albertans.
First, some quick history. When the Alberta government created the Heritage Fund in 1976, it established a rule that the government must deposit 30 per cent of resource revenue (including oil and gas royalties) into the fund annually. That quickly fell to 15 per cent by 1982/83, and after an oil price collapse the government eliminated the requirement in 1986/87. Since then, governments have routinely failed to make deposits into the fund, the fund’s value (after accounting for inflation) has eroded over time, and governments have spent nearly all of the fund’s earnings. Consequently, this fiscal year the fund will be worth less than $26 billion.
In other words, political will hasn’t been a successful strategy in growing the Heritage Fund.
Which brings us back to dividends. Here’s where Alberta can learn from Alaska. Alaska’s resource revenue savings fund (the Permanent Fund) was also created in 1976, but is now worth about US$80 billion (roughly CA$115 billion). What does the Alaska government do differently?
While various rules contribute to the fund’s success, the dividend rule is arguably the most critical. The Alaskan government pays a share of the fund’s earnings to Alaskan citizens via a dividend each year. Crucially, this gives citizens an ownership share in the fund. And therein lies the political will for governments to responsibly grow and maintain the fund. Any government that tried to use the fund for irresponsible purposes (e.g. raid the fund to spend money elsewhere) would likely face the wrath of Alaskan voters, given their understandable attachment to the dividend cheques.
Indeed, while the Alaskan government can reduce or eliminate the annual dividend, it has consistently allocated funds to the dividend for more than 40 years, even though this reduces the amount of money available for government spending. Overall, the fund has paid out more than US$30 billion to Alaskan citizens via dividends. Last year, each Alaskan received US$1,702.
According to its plan released on Wednesday, the Smith government will rely on “political will” to grow the Heritage Fund. But that’s not a recipe for success. Instead, the Smith government should learn from Alaska’s success and start paying dividends to Albertans who will provide the political pressure necessary to grow the fund over the long term.
Alberta
Former Chief Judge of Manitoba Proincial Court will lead AHS third-party investigation into AHS procurement process
Deputy Minister of Jobs, Economy and Trade Christopher McPherson has issued the following statement on an independent third-party investigation into procurement and contracting processes used by the Government of Alberta and Alberta Health Services (AHS):
Deputy Minister of Jobs, Economy and Trade Christopher McPherson has issued the following statement on an independent third-party investigation into procurement and contracting processes used by the Government of Alberta and Alberta Health Services (AHS):
“While serving as Acting Deputy Minister of Executive Council, Premier Danielle Smith asked me to establish a credible, independent, third-party investigation into the procurement processes used by the Government of Alberta and AHS and their outcomes.
“I have informed Premier Smith that the Honourable Raymond E. Wyant, former Chief Judge of the Provincial Court of Manitoba, will lead this investigation. I asked Premier Smith to issue a ministerial order to facilitate his work and she has done so. Judge Wyant’s work on this matter begins immediately.
“Judge Wyant was appointed to the Manitoba bench in 1998 before becoming Chief Judge in 2002. Prior to his service on the bench, Judge Wyant worked as a criminal defence lawyer and Crown attorney and was acting deputy director of Manitoba prosecutions at the time of his appointment to the Bench. He has also taught law for many years at Robson Hall at the University of Manitoba.
“Judge Wyant will review the relevant legislation, regulations and policies related to procurement typically used by Government of Alberta departments and agencies, specifically AHS, and their application to the procurement of pharmaceuticals and to services offered by chartered surgical facilities. Questions that Judge Wyant will consider are outlined in the attached terms of reference, and include whether or not any elected official, Government of Alberta or AHS employee, or other individuals, acted improperly during the procurement processes. Judge Wyant will make recommendations to the government for improvement or further action as appropriate.
“Appointed under the Government Organization Act, Judge Wyant will operate independently of government. The Government of Alberta will provide Judge Wyant with access to all relevant documents held by its departments and AHS, as well as facilitate interviews with relevant individuals.
“Judge Wyant has been given a budget of $500,000 to undertake this important work, including to retain legal and audit assistance at his discretion. He is being paid $31,900 per month, which is the same remuneration rate as the Chief Justice of the Alberta Court of Justice.
“To ensure additional independence, Service Alberta and Red Tape Reduction will hold the budget for this third-party investigation.
“Judge Wyant will deliver an interim written report by May 30, 2025. A final written report and recommendations will be delivered by June 30, 2025, and it will be posted on alberta.ca.”
Related information
By Kris Sims
The Canadian Taxpayers Federation is applauding the Alberta government for giving Albertans a huge income tax cut in Budget 2025, but is strongly warning against its dive into debt by running a deficit.
“Premier Danielle Smith keeping her promise to cut Alberta’s income tax is great news, because it means huge savings for most working families,” said Kris Sims, CTF Alberta Director. “Families are fighting to afford basics right now, and if they can save more than $1,500 per year thanks to this big tax cut, that would cover a month’s rent or more than a month’s worth of groceries.”
Finance Minister Nate Horner announced, effective this fiscal year, Alberta will drop its lowest income tax rate to eight per cent, down from 10 per cent, for the first $60,000 of earnings.
The government estimates this income tax cut will save the average Alberta worker about $750 per year, or more than $1,500 per year for a two-person working family.
Albertans earning less than $60,000 a year will see a 20 per cent reduction to their annual provincial income tax bill.
The budget also contained some bad news.
The province is running a $5.2 billion deficit in 2025-26 and the government is planning to keep running deficits for two more years.
Total spending has gone up from $73.1 billion from last budget to $79.3 billion this year, an increase of 8.4 per cent.
“If the government had frozen spending at last year’s budget level, the province could have a $1 billion surplus and still cut the income tax,” said Sims. “The debt is going up over the next few years, but we caught a lucky break with interest rates dropping this past year, so we aren’t paying as much in interest payments on the debt.”
The province’s debt is now estimated to be $82.8 billion for 2025-26.
Interest payments on the provincial debt are costing taxpayers about $2.9 billion, about a 12 per cent decrease from last year.
Trudeau billed taxpayers $81,000 for groceries in one year
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