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Alberta

Alberta government should pay dividends to Albertans from Heritage Fund

Published

2 months ago

5 minute read

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:

Tegan Hill
Director, Alberta Policy, Fraser Institute
Joel Emes
Senior Economist, Fraser Institute
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After 15 years as a TV reporter with Global and CBC and as news director of RDTV in Red Deer, Duane set out on his own 2008 as a visual storyteller. During this period, he became fascinated with a burgeoning online world and how it could better serve local communities. This fascination led to Todayville, launched in 2016.

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Alberta

$8.6 billion committed: Province to fund up to 30 new schools and 8 modernizations in each of next 3 years

Published on September 18, 2024

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Alberta’s government is committing $8.6 billion to complete and open 200,000 new student spaces across the province in the next seven years.

Alberta’s population is growing exponentially as more people from across Canada and around the world choose to make the province their home. This rapid growth is causing strain on the Kindergarten to Grade 12 education system, with student enrolment increasing at historic rates.

To keep up with fast-rising student enrolment, Alberta’s government is committing $8.6 billion through the new School Construction Accelerator Program. This program will create more than 200,000 new and modernized spaces for students to learn, grow and reach their full potential. Starting in Budget 2025, Alberta’s government will kick-start up to 30 new schools and as many as eight modernizations and replacement schools every year for the next three years.

“Every student deserves a quality education in a school that can meet their learning needs and set them on a path to success in the future. As hundreds of thousands of people are choosing to make Alberta their home, we are responding by funding and building the schools our fast-growing communities need. As we build, we’re asking school boards and municipalities to work with us so we can get shovels in the ground as quickly as possible.”

Danielle Smith, Premier

The Calgary Metropolitan Area and Edmonton Metropolitan Region, along with other communities across the province, have been feeling the pressures of strong student growth and aging school infrastructure. The School Construction Accelerator Program will result in 50,000 new or modernized student spaces over the next three years – and more than 150,000 new and modernized spaces over the following four years. In total, the School Construction Accelerator Program will mean approval for up to 30 new school projects and as many as eight new modernization and replacement projects every year over the next three years. In addition to the school projects, 20,000 new student spaces will be delivered through modular classrooms over the next four years.

“We are investing in the future of our province. Through our commitment to kick-start 30 new schools each year over the next three years, we are delivering new student spaces across the province and in our fastest-growing communities for students to learn, grow and reach their full potential.”

Demetrios Nicolaides, Minister of Education

“I look forward to working with my ministry and industry partners to build the schools Albertans need and ensuring that each project is as unique as the students who use them. School builds, modernizations and renovations support tens of thousands of jobs across the province. As Alberta communities continue to grow, this announcement will allow us to meet demands for spaces faster and more efficiently, all while creating jobs and boosting our local and provincial economies.”

Pete Guthrie, Minister of Infrastructure

The School Construction Accelerator program also takes immediate action to speed up the construction of schools by enabling school projects to be approved in-year for their next stage in the construction process without having to wait for the next budget cycle. This means all previously approved school projects currently in the planning and design stages can move forward to the next stage as soon as they are ready to do so. Through this change, 10 previously announced priority school projects are now approved for the next stage of project delivery, including six moving to full construction.

“We appreciate the government’s recognition that there is an urgent need to provide additional learning spaces for CBE students. CBE families are looking forward to new schools in their growing communities and modernizations to address aging infrastructure. Thank you to the Premier and the Government of Alberta for this much-needed investment.”

Patricia Bolger, board chair, Calgary Board of Education

“Edmonton Public Schools is grateful for the province’s funding for school infrastructure. This crucial support will help us meet urgent needs and positively affect our students and families.”

Julie Kusiek, board chair, Edmonton Public Schools

The population growth has not only increased pressure in the public and separate school system but has increased demand for publicly funded charter programming and space needs. Public charter schools play an important role in Alberta’s education system by offering unique programming to students focused on a learning style, teaching style, approach or pedagogy not already being offered by school boards where the charter is located. As part of this accelerated program, Alberta’s government will add 12,500 new charter school student spaces over the next four years through a Charter School Accelerator pilot program.

“The Association of Alberta Public Charter Schools is elated by this historic capital announcement. It will help ensure that more families and students can access the excellent programming our public charter schools offer for generations to come.”

Joanne Higgins, president, The Alberta Association of Public Charter Schools (TAAPCS)

Independent schools offer specialized learning supports as well as religious and cultural programming to support parental and educational choice. Alberta’s government will continue to explore opportunities for a school capital pilot program for non-profit independent schools to broaden learning options for Alberta families.

Quick facts

  • The School Construction Accelerator Program will deliver more than 200,000 new and modernized student spaces.
    • Previously approved school projects and modular classrooms will create about 50,000 new and modernized student spaces over the next three years.
    • The program will create about 150,000 additional new and modernized student spaces. This includes:
      • more than 100,000 new student spaces
      • more than 16,600 modernized student spaces
      • more than 20,000 student spaces in new or relocated modular classrooms
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Alberta

Premier Smith to Ottawa: Alberta can’t afford thousands of asylum seekers right now

Published on September 17, 2024

By

From Free Alberta Strategy

For decades, Canada’s immigration policies were uncontroversial – parties across the spectrum maintained generally sensible policies.

But the current government in Ottawa has ditched this consensus, and the public mood is turning fast.

A large influx of newcomers has put a significant strain on public services and the housing market across the country.

Alberta, in particular, is feeling the strain, as our province receives both a disproportionately large share of the immigrants arriving in Canada, as well as by far the largest number of people moving between provinces.

Earlier this year, the Alberta government reported that in the year from April 2023 to April 2024, Alberta’s population had grown a record 4.11%, representing 204,677 people.

This is by far the highest annual growth rate in the country, outpacing second-place Ontario by nearly a full percentage point.

Importantly, international migration is responsible for about 68% of the increase, interprovincial migration is responsible for about 25%, and just 8% is caused by natural increase.

Another area of immigration that has significantly increased in Alberta is asylum seekers, which have more than doubled from 5,076 per year to 11,292 per year.

Of course, this represents just a small portion of the overall immigration to Alberta, and Alberta actually accepts a much smaller share of asylum seekers (about 5% of the total) compared with our population (about 12% of Canada).

But, Ottawa is now pushing to change this – they want provinces like Alberta to accept more of their “fair share” of asylum seekers – despite the fact that Alberta already receives more than its “fair share” of other types of immigrants.

Federal Immigration Minister Marc Millers says the federal government anticipates full cooperation from all provinces and territories as it strives for a fair and sustainable approach to managing the influx.

He says the federal government has “levers that we need to push and pull” when it comes to enticing provinces to agree to their terms:

“The reality is that Quebec and Ontario are facing disproportionate pressures, compared to any other province in the country – as they have been welcoming the majority of asylum seekers,” says the Minister.

“We will have proper incentives for those willing to welcome asylum seekers, and will take a holistic view with regards to other immigration programs based on participation – as this is work we cannot do alone, nor unilaterally. All options remain on the table.”

In other words, the federal government is once again planning on spending more of our tax dollars to effectively bribe the provinces’ to go along with their policies.

This idea isn’t new – Quebec has already urged the Trudeau government to disperse asylum-seekers more evenly across the provinces.

Premier Smith, however, is saying no:

“Section 95 of the Constitution is clear – immigration is an area of shared authority between the federal government and the provinces.”

“We are informing the Government of Canada that until further notice, Alberta is not open to having these additional asylum seekers settled in our province,” she added.

“We simply cannot afford it.”

Maybe, when the full details of the federal government’s plan are made public, the numbers will stack up.

But, based on past precedent, it seems unlikely.

More likely, this is just another agreement with the federal government that Alberta can’t afford to make.

Time and time again, we’ve seen the federal government approach the provincial government with a deal that – in Ottawa’s view – is good for the province.

We know, as we’ve seen with the nationalized childcare fiasco, that these deals very rarely work out for Alberta.

The Free Alberta Strategy continues to be Alberta’s shield against federal overreach, ensuring that Albertans remain in control of our future.

This issue is just the latest battle in which our unwavering defence of our provinces’ best interests can make a real difference.

If you believe in defending Alberta from Ottawa, join us!

Your contribution will help ensure that the Free Alberta Strategy has the resources and voice it needs to push back. 

Donate today to stand up for Alberta’s sovereignty and sustainability!

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