Alberta’s Heritage Fund Hits $30B with $2.8B Boost — Smith Eyes $250B by 2050
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Summary
In this episode, we talk with Alberta s Finance Minister, Shep Chansal, about the need for a dedicated oil and gas fund for the benefit of future generations. He talks about the importance of the fund, why it should be built up, and how Alberta can achieve its goal of $250B by 2050.
Transcript
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For decades, you've been a heritage fund militant. You've argued that instead of spending all of its
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resource revenues as it comes in, Alberta should build up the heritage fund for the
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benefit of future generations, and I think in theory most people agree with you.
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How long have you been saying that? Well, I seem to recall, I'd have to go back and check the
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records, that the first column I wrote on it was in 2001, because I think at that point we made
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substantial strides in getting our debt to zero, or at least putting money aside to pay it off.
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We were at a point where we were reducing taxes, and the only missing piece was building that fund up.
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If I remember what I wrote about at the time, it was that if we had saved the interest and the
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investment income in that fund, by 2001 it would have been worth already $150 billion. So I said,
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well, best time to have started would have been before, next best time is now, and here we are,
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I guess almost 25 years later, and we are finally starting to do it. So I'm very pleased to
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to finally be able to implement the policy I've been thinking about for decades.
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So that was really good news this morning when you and Minister Horner announced that
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with a $2.8 billion contribution today, the fund has, well, you tell us, how big is the fund now?
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So keep in mind, when we first came in as a government in the 2019-2020 year,
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the fund was worth $16.3 billion. Can I give a history lesson? Peter Lougheed put $12 billion in
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the fund, and then they were inflation-proofing it modestly for a period of time. So by the time we
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came in, it was only at $16.3 billion. And with this additional contribution, it's now at $30 billion,
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which just shows the strength of compound interest, shows the strength as well of having a little bit
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of discipline. And I think what we're hoping is people will see that if we stick with this policy,
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absolutely by 2050, we'll be able to be at a point where it's worth $250 billion or thereabouts,
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and able to generate enough income to help wean us off the royalty rollercoaster, which everybody has
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been so concerned about for so many years. So I'm really pleased that we're able to make such progress
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Well, let's just talk about, I mean, there are some people who are going to say that according to the
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fiscal plan released with the budget, spending is up for the year to come, revenues aren't
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particularly, oil prices are not that strong, gas prices are about where they've been for 15 years.
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So do we have the room to do this? How does this work?
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Well, I would tell you, I mean, I think my finance minister has a pretty good line that you don't use
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your RRSP to pay your grocery bills. You still have to pay your RRSP, you still have to pay down your
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mortgage, and you also have operational expenses. And that's how we're looking at it, that we can't be
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sacrificing our long-term fiscal prosperity and the future of our kids and their ability to have a
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reasonable tax rate on the demands of today. Now, when it comes to today's spending, you have to
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remember Alberta as a government is a service provider of some pretty important programs that
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people rely on. We provide healthcare, which is about a $29 billion budget. We provide K-12 education,
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which is about a $10 billion budget. We provide university support. We also provide social services
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to our most vulnerable. We provide infrastructure services. And so, yes, it makes sense. As our
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province continues to grow, as more people come here, more people are going to demand those services.
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So the budget will go up. Our solution is to be looking for ways that we can reduce duplication,
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overlap, waste programs that aren't serving their purpose. We go through a process every year
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of analyzing that so that we can move money from low priority areas to high priority areas,
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and we'll keep on doing that. And at the same time, we also know, especially with the turmoil out
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there, the inflation crisis that we have, the tariff threat that people needed to break. They needed
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to have a few more dollars in order to be able to manage their household expenses. So with the
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accelerating the income tax cut, that'll put $1,500 back into the pocket of a two-income family,