The Government of Alberta has introduced a new corporation to manage its rainy-day fund.
On Jan. 29, Premier Danielle Smith and Finance Minister Nate Horner announced the creation of the Heritage Fund Opportunities Corporation under the guidance of Joe Loughheed, the son of the Heritage Fund's founder, former premier Peter Loughheed.
"He recognized that Alberta can't rely forever on non-renewable resource revenues to fund programs and infrastructure," said Premier Smith. "And so almost 50 years ago, his response was to create the Alberta Heritage Savings Trust Fund to save and invest some of those revenues."
However, over the years, successive governments withdrew earnings from the fund not allowing it to grow.
According to Minister Horner, had the fund remained untouched since its inception, it would have had over $250 billion in it right now.
Over the last five years, the United Conservative Party has increased the Heritage Trust Fund to around $25 billion and enacted legislation which sees the government automatically depositing a portion of surpluses into and preventing the government from withdrawing funds without oversight from treasury.
The goal of the new corporation, which will work with AimCo., will be to, along with government deposits, grow the fund to $250 billion by 2050.
Smith noted that the fund was created to remove the province from its dependence on energy resources, given their volatility.
"Wells are nowhere near drying and demand for oil and gas will continue to grow for the decades to come," said Smith.
"Alberta is one of the world's cleanest, safest, and most reliable energy suppliers, so we'll continue to produce those resources responsibly in line with ever higher standards and lower issues. But no matter how far into the future, there will come a time that we will not, but that we may be unable to rely on those revenues."
We are not using the heritage fund to supplement the budget. We are genuinely saving for a day that won't arrive for decades, but which we know surely will come."
In the planning of the new corporation, Minister Horner noted he travelled to Singapore and other municipalities around the world to ascertain best practices where jurisdictions have these types of funds.
The Heritage Trust Fund Opportunites Corporation will operate under the guidelines of "planning, prudence and discipline," says Smith.
"It is our commitment to ensuring Alberta remains the best place to call home long into the future with our plan to grow the Alberta Heritage Savings Trust Fund to at least $250 billion by 2050," said Minister Horner. "Many of us know the importance of planning ahead. We all know the value of having a savings account, whether we are actually able to set money aside for it or not."
The new corporation will be guided by three principles: independence, professionalism, and transparency.
Additionally, a board will oversee the new corporation.
To reach the "ambitious" goal of $250 billion by 2050, the corporation will use strategic investments, create global partnerships and use strong governance according to a Government of Alberta media release.
“Albertans deserve a Heritage Fund they can rely on – one that is focused on creating long-term growth and financial stability. We owe it to future generations of Albertans," said Premier Smith. "The new Heritage Fund will lessen our dependence on natural resource revenues, diversify our economy, and create both wealth and prosperity for generations to come."
The new corporation will see a $2 billion commitment from Budget 2024 and the Heritage Trust Fund is expected to reach $26 billion by the end of the 2024-25 budget year.
