EXCLUSIVE HANNAFORD： Smith's save now, spend later plan gets a boost
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Summary
For decades, Premier Bill Smith has argued that Alberta should use its resource revenues to build up the Alberta Heritage Fund for the benefit of future generations. Today, with a $2.8 billion contribution from the government, the fund is now worth more than $30 billion.
Transcript
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Premier Smith, welcome to the Western Standard again in this special edition of Hannaford.
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It's Friday, July the 18th. For decades, you've been a Heritage Fund militant. You've argued that
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instead of spending all of its resource revenues as it comes in, Alberta should build up the
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Heritage Fund for the 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 records,
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that the first column I wrote on it was in 2001. Because I think at that point, we made substantial
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strides in getting our debt to zero, or at least putting money aside to pay it off. We were at a
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point where we were reducing taxes. And the only missing piece was building that fund up. If I
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remember what I wrote about at the time, it was that if we had saved the interest and the investment
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income in that fund, by 2001, it would have been worth already $150 billion. So I said, well,
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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 finally
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be able to implement the policy I've been thinking about for decades. So that was really good news
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this morning, when you and Minister Horner announced that with a $2.8 billion contribution
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today, the fund has, well, you tell us, how big is the fund now? So keep in mind, when we first came
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in as a government, in the 2019-2020 year, the fund was worth $16.3 billion. Can I give a history lesson?
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Peter Lougheed put $12 billion in the fund. And then they were inflation proofing it modestly for a
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period of time. So by the time we came in, it was only at $16.3 billion. And with this additional
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contribution, it's now at $30 billion, which just shows the strength of compound interest,
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shows the strength as well of having a little bit of discipline. And I think what we're hoping is
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people will see that if we stick with this policy, absolutely by 2050, we'll be able to be at a point
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where it's worth $250 billion or thereabouts, and able to generate enough income to help wean us off
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the royalty rollercoaster, which everybody has been so concerned about for so many years. So I'm
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really pleased that we're able to make such progress so quickly.
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Well, let's just talk about, I mean, there are some people who are going to say that according
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to the fiscal plan released with the budget, spending is up for the year to come. Revenues
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aren't particularly. Oil prices are not that strong. Gas prices are about where they've been
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for 15 years. 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
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use your RRSP to pay your grocery bills, you still have to pay your RRSP, you still have to pay down
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your mortgage, and you also have operational expenses. And that's how we're looking at it,
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that we can't be sacrificing our long term fiscal prosperity and the future of our kids and their
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ability to have a reasonable tax rate on the demands of today. Now, when it comes to today's
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spending, you have to remember, Alberta as a government is a service provider of some pretty
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important programs that people rely on. We provide health care, which is about a $29 billion budget,
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we provide K to 12 education, which is about a $10 billion budget, we provide university support,
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we also provide social services to our most vulnerable, we provide infrastructure services.
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And so yes, it makes sense as our province continues to grow, as more people come here,
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more people are going to demand those services. So the budget will go up. Our solution is to be
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looking for ways that we can reduce duplication, overlap, waste programs that aren't serving their
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purpose. We go through a process every year of analyzing that so that we can move money from
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low priority areas to high priority areas. And we'll keep on doing that. And at the same time,
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we also know, especially with the turmoil out there, the inflation crisis that we have,
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the tariff threat that people needed to break, they needed to have a few more dollars in order to be
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able to manage their household expenses. So with accelerating the income tax cut,
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that'll put $1,500 back into the pocket of a two-income family. And we think it comes at exactly
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Can't come too soon. Premier, you referred to the fact that you had been writing about this
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from your days on the editorial board at the Calgary Herald. And it seems to me that from those
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days, there are quite a number of things that you talked about then, which you're doing now,
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which is really rather a remarkable political story. But tell us about your passion that you
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once had for having the voucher system in the health system. Now, I know you've introduced
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activity-based funding. Does that mean that the person who wants medical treatment is going to
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have a little shit of paper and they can take their pick of whichever hospital they want to go to
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to get it done? Well, I don't know if we will go that far initially, but I can tell you what we
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are going to do with the hospitals. Right now, we do what's called a global budget, which means we
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give a lump sum of money and then the hospital is supposed to provide all the services, emergency
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and surgeries and all of the support for patients who need to be inpatients. But the problem that we
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observed is that we were giving more and more money to Alberta Health Services, three and a half
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billion dollars more, quite frankly, since we became government. And they were doing fewer surgeries
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this year than they had done back in 2019. Meanwhile, we fund charter surgical centers on an
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activity basis. They got to do the work in order to get the money. And as a result, we've seen that
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charter surgical services have increased their number of surgeries from 40,000 to about 65,000 over
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that same period of time. So that just got us thinking, well, if it's working over in this area of
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surgical provision, let's do it for everything. And we've already done our first step doing an
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analysis of how much it costs to deliver basic surgeries for joints at different hospitals.
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And it's pretty dramatic. We see that there's an average of 8,800 at some of our regional facilities
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like Medicine Hat and Lethbridge. And then it goes as high as $26,000 per surgery at places like U of
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A Hospital. So that is really illuminating. What you want to do is you want to find out what the best
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practices are. And then you want to share those best practices. And you want to get everybody
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trying to operate within a band for normal types of procedures. There's always going to be the ones
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that are complicated. You want to reduce complications. And then we want to be able to do
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more surgeries with the same amount of money. And I think activity-based funding for joints will be the
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first step. But that's how we want to ultimately fund all of our elective surgeries that are being done
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in hospitals. Will that open up the way to more surgeries being contracted out to non-AHS facilities?
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I suspect it might. I mean, this is an opportunity for AHS to really show us what they're made of. We
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have taken away from AHS all of the things that wasn't their core business. They were managing
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international medical students. They were saying yes and no over certain primary care functions. They
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were doing public health. They had Indigenous care as one of their areas. They were doing mental
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health, addiction, long-term care. It was all jumbled into all of our facilities. And so as a result,
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they weren't specializing at any of them. So now they are focused on hospital and acute services.
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They have an advantage in that they do the vast majority of our services right now. We've invested
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in surgical suites for expansion. They manage most of our hospital facilities. It's up to them.
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If they want to excel at what their core business is, they will get more surgeries and more dollars.
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If they don't excel, then it will be other surgical facilities that we're going to use to bridge the
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gap. So I would say that this is very much on the shoulders of Alberta Health Services to perform,
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and we're expecting them to. So what they're saying in the food fair where old men in bullcats
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gathered to talk about the politics of the day is, fine, are the wait times coming down?
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Are the wait times coming down? We're seeing that, yes. I don't have the stats right in front of me,
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but we were looking at what were the average wait times for knees and hips in particular
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from one year to the next. And this was, I think we've got a Canadian Institute of Health Information
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Statistics that look at 2023. And why that's important is that they compare with other jurisdictions.
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And in those areas in particular, in joints, we are seeing that we're doing better on average than
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most of the other jurisdictions. Still not good enough. What we are aspiring to is that every
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single person who needs a surgery gets it within a medically recommended period of time. That
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doesn't necessarily mean tomorrow. It might not even mean a week from now, but most surgical procedures
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should be done within a few months. And that's where we'd be looking at it. We don't want anybody
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waiting longer than medically necessary, finding that their condition's getting worse, having to
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live in pain, suffering with a lower quality of life. That is where we're aspiring to get to.
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And activity-based funding, along with multiple service providers, are going to allow us to get
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there. The main thing that we know is nobody really cares where they get their surgery done. They just
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don't want to have to pay out of pocket and they just want it done. And that's what we're aspiring to.
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Let's talk a little bit about Ottawa. Premier, before the last election, nearly three months ago,
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you laid out what has come to be known as your initial nine demands. Then you said you would
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suspend judgment on whoever was elected for six months to see how they dealt with it. Now we're
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talking about things like the repeal of the West Coast tanker ban and the No New Pipelines Act. Well,
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here we are. We're almost three months along from the election. And it turned out to be Mr. Carney.
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Carney, do you think Mr. Carney is paying attention on what happens on day one of month seven?
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Well, the clock is ticking. Remember, they are returning to the legislature and scheduled for
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September 15th. So we literally are three months away from seeing whether they've taken us seriously
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and are going to either substantially revise or repeal these nine terrible laws. And it's necessary. I
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mean, we want to get a bitumen pipeline to the Northwest BC coast on the national projects list,
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because we think that a million barrel a day bitumen pipeline is going to be what we need to
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get our economy going, not only in Alberta, but also nationally. It bridges a missed opportunity that
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we had when the Northern Gateway pipeline got cancelled. But in order to have a shiny new
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pipeline, you need to have producers willing to do the production to put product into it. And unless we
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get rid of an emissions cap, which is really a production cap, unless we get rid of all the policies
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that have led to a negative investment climate, we're going to end up failing at the exercise. So
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that's what we're putting to them, to the prime minister, if we truly want to be an energy superpower,
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let's send the right signals to the investment community. Let's repeal the terrible laws that have
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impacted the investment and chased it away. And then we can really start talking about what that
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collaboration looks like. So three more months, we're going to work with the federal government, but we want to
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Well, Mr. Carney would probably say, well, look at the action I've already taken. We forced through
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Bill C-5, which is how Canada is going to become an energy superpower and rebuild the country, which
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is a wonderful sentiment. But there were a couple of very clear letouts over indigenous rights and
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agreement of the provinces, brackets Quebec. So how much confidence or how much encouragement do you take
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from the passage of that legislation? Do you think Mr. Carney actually has something there
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Well, I was pleased to see, I mean, it's not usual to see the official opposition stand with the
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government on policy. And the fact that the conservatives did, I think that that says that
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we all have some hope that they're going to be heading in the right direction. I think what the
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projects list does is they need to do something dramatic to tell the investment community,
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we are here and we want your money back. We want you to take another look at Canada. That's what I
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think the national projects list is. It's a message to the investment community that the approach is
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changing in Ottawa. That being said, it is a necessary condition, but it's not sufficient. We need to have
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all of those other bad policies repealed or, again, substantially revised if those dollars are going
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to flow back here. I mean, I'm not the only one saying it. If you look at the letter that the 38 CEOs
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wrote, they're also reiterating the same issues that we are putting on the table. So I think that
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the Prime Minister, he has done some action, but not enough. And so now we've got three more months
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to see if he's going to move on some of those other important issues.
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Has he given you any informal cues as to how he's thinking?
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Well, I would say we're meeting as we've got government officials on our side and they've
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got some government officials on their side. Remember, he's just got a new chief of staff.
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He's got a new clerk. So there's been some staffing issues that he's had in place. And so
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we're going to work the process. We're going to be patient. But we know that we've been able to put
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forward new policy and write legislation in a limited window. It is possible. So that's what
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I'm saying. I'll be able to maybe tell you in three months' time whether or not our efforts have
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come to fruition in a satisfactory way. We're still working on it.
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So last night, the night before, and the night before that, you were chairing two of Alberta Next
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panels, one in Red Deer, one in Edmonton. Looked like a lot of people went. Looked like there was a lot
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of enthusiasm. What do you make of what came out of those sessions?
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Well, I was really pleased to see that there wasn't a lot of overlap in people in Red Deer versus
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the one that was just outside Sherwood Park. Sometimes that happens that people get so
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enthusiastic that they just go around from one to the next to the next. And we really do want to get
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an understanding of how different people living in different communities feel about these same issues.
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So there's obviously very passionate people who got up to the mic and made their points. And we're
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grateful even to the ones who don't agree with us that they're willing to have that confidence to tell
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us what they really think. We've had over 30,000 people who participated in our survey, including over
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12,000 that have written in. So those are going to be analyzed to see if there's some good ideas that are
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coming out of them. But we do know that the six issues that we identified that we wanted to get
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feedback on, we've been hearing about those for years, if not decades. And we want to know if now's
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the time for us to move forward on some of them. So I'll be able to tell you a little bit more when
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we get to the end of the process about how the Albertans that we spoke with felt about it. But some
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of these items are very likely going to have to go to a province-wide referendum because there are going
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to be some substantial changes. And we want to make sure that every Albertan has an opportunity to weigh
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Well, talking of substantial changes, you were asked, I think it was in Red Deer, about whether it was time
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for Alberta to pull out of supply management for dairy products. And you said it was an idea worth
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considering. Could you enlarge on that a little?
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I've been annoyed for a long time that Alberta producers do not have their share of quota. It's exactly how
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this country always works, that they kind of locked in Quebec as the largest producer, and then they
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also have an increase in the amount of quota that they get as our population increases. I think I read
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recently that Quebec has 32% of the quota. Albert only has about 7%, even though we're about 12% of the
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population. So if the idea behind supply management was that the producers in a jurisdiction are
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supposed to be able to be matched with the consumers, it's just simply not fair. And our producers, if
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they do want to be able to increase their operation, have to pay a much, much higher price
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for quota. So yeah, I'm annoyed by that. That's just one more example of the way in which a lot
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of decisions are stacked against Western Canada and Alberta in particular. So the person mentioned if
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we could opt out of the national system. And I think the implication was, could we create our own
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provincial system? And, you know, I want to talk with the producers and see what they think about
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that. There's also those who think that we should move to a market-based system altogether. So let's
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have the conversation. Remember, these are the reasons why we're having these panel discussions is
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that if there are issues that Albertans want to put on the table, and that was an item that came from
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the audience, then we have to give fair consideration to it.
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Sure. Last question, Madam Premier. Are there any more ideas from 25 years ago on the editorial board
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that are going to be pulled forward, just as with the Heritage Fund and with the voucher? Well,
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it's not the voucher system, but activity-based funding. Anything else coming forward?
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I mean, you know me quite well, because we used to edit each other's work. But yes,
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the Heritage Fund was an important one to me. Also, transforming healthcare to make it more
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with local control, local decision-making, funding-following patients, responsive,
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competitive. There's a whole series of health reforms that we're making in that regard.
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Also, property rights. As you saw, we did some major changes to our Bill of Rights. I've been wanting to
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have a clause in there that guarantees just compensation if government takes your stuff
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for public use. That is one of the big missing pieces that we had in our Bill of Rights, as well
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as protection for firearms owners. So we put those in there as well. Those are things that I advocated on,
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going all the way back to my property rights advocacy. And I started as well as a landowner
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advocate, as you may know. And so cleaning up this inactive and suspended well problem that we have.
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We've got over 200,000 wells that have been drilled, and not enough of them have been cleaned up and had
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the land returned back to its natural condition. So that's going to be another major effort that we
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have to try to get serious about getting that cleaned up so that we can restore the relationship between
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our oil and gas industry, landowners, municipal governments, and make sure that we're prepared
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for what might be another boom. I want to see oil and gas production double in this province, because I
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think the world needs more Canada and the world needs more Alberta in particular. And so we do
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that when we all have a consensus about how we're going to move forward together and balancing the
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issues around environment and access. And so there's a few more bits of unfinished business that we're
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going to continue working on. Wonderful. Madam Premier, thank you for being with us today. All the best.