This is the second of a two-part column that started on March 21.
A Parkland Institute study shows that Alberta’s share of the total market value of combined oil, gas, and tar sands development was about 40 per cent under the watch of Peter Lougheed’s governments, which raised royalties and vigorously pursed their collection.
Under the regime of Ralph, the share of the public in its own resource was halved to around 20 per cent and, under Stelmach, it dropped to 10 per cent, the lowest level in our history.
Lougheed realized that royalty money is not income in a strict accounting sense, but really the one-time sale price of a depleting asset which the present generation consumes at the expense of future generations.
Thus, in 1976, Lougheed, created the Alberta Heritage Savings Trust Fund (AHSTF), primarily to save for the future, but also to strengthen and diversify the economy, and to improve the quality of life of Albertans.
But, according to the Fraser Institute, the AHSTF has been a disappointment, because deposits have not been nearly as regularly made as withdrawals by a government struggling to meet current expenditures mainly caused by its own negligent failure to charge proper resource royalties … and collect them. Just how badly we have done, and a blueprint for fixing it is found in the March, 2013 Fraser Institute report, “Reforming Alberta’s Heritage Fund: Lessons from Alaska and Norway.”
Every thinking Albertan owes it to his own heritage and progeny to study this report, either by obtaining a hard copy, or reading it on-line at www.fraserinstitute.org.
Alaska’s fund was also started in 1976, by a constitutional amendment requiring at least 25% of oil, gas, etc., be deposited into the Permanent Fund, and that spending be restricted to the earnings, not the principal of the fund.
In 2011, the total value of Alaska’s fund was $40.1 billion, despite dividend payments of $19.2 billion to state residents (a shrewd way to protect the fund against government raids).
Norway is even more frugal, careful and shrewd. In 1996 it started paying all its net proceeds from oil, gas, etc. activities, into Norway’s Government Pension Fund Global.
Only the earnings of the fund, not the principal, may be spent by government, and only on a parliamentary resolution.
Norway has spent a mere 4.3 % of the fund’s market value, which stood at $575 billion in Canadian dollars as at Nov., 1912.
By stark and startling contrast, Alberta has deposited only 5.4% of resource revenues into its AHSTF during the fund’s history and the fund’s principal has not been wisely invested to maximize the fund’s growth, all resulting in the fund’s value, as of 2011, being a puny, paltry $14.2 billion.
The AHSTF is a discretionary slush fund, with no checks and balances to help achieve Peter Lougheed’s goals: no requirement for minimum mandatory annual deposits, no limiting withdrawals to the principal’s earnings.
Ironically, the fund soon became known as the “Rainy Day Fund,” but, under our incompetent conservative governments, it deluged so constantly that stuffed government sinuses regarded it as a “Raidy Day Fudd.”
Seldom making contributions to it, constantly raiding it to pay the high price of its careless, negligent resource management, our governments have plundered our progeny, robbing them of a resource heritage and inheritance that should rightly be theirs.
If you aren’t crying yet for yourself, Alberta, do you feel tears welling for your personal heritage, your kids, grand, and great grand kids?
Future Albertans will also suffer in the area of renewable natural resources because of the destruction of our forests, grasslands, watersheds, water, fish and wildlife and public land wreaked by careless big oil, gas and forestry and stupidly permitted and enabled by lazy, negligent Conservative governments.
If any broker, banker, manager, etc., misused, wasted, and gave away the personal assets and savings of any Albertan as seriously as successive bad governments have done with Alberta’s natural resources, summary firings, maybe even executions would take place.
Why, collectively, do we continue to elect the same bad governments that make the same stupid mistakes, over and over, continuing to put the future of Alberta and future Albertans in dire straits?
Part of my answer has to be that Albertans are perhaps the most politically naïve citizens of any modern democracy, afraid of rocking a sinking boat even if it might turn it upright.
A majority also clings to a curious freeloader mentality: low taxes and no sales tax, and we’re OK; but we’re really all KO’d, if that’s all the governments we elect can do, and can’t even properly manage our natural resources.
A pungent possible answer is to put an even more cynical twist on George Bernard Shaw’s robbing Peter to pay Paul proverb: A government which robs the progeny to pay the parents, can always depend on the support of the parents.
As so often in writings on environmental and resource … even political … matters, Pogo the possum gets to utter his famous last words from deep in his swamp: “We have met the enemy and he is us…”
Bob Scammell is an award-winning columnist who lives in Red Deer. He can be reached at email@example.com.