Province vows to grow Heritage Trust Fund
By Lethbridge Herald on January 30, 2025.
The Heritage Trust fund will grow by at least a factor of ten within the next 25 years, according to an announcement by the Alberta government Wednesday.
“Our goal is to have at least $250 billion in the bank by 2050,” said Premier Danielle Smith in a news conference. “That’s the minimum required by the fund to be truly beneficial.”
To that end, the province has created the Heritage Fund Opportunities Corporation, a new Crown corporation to be chaired by Joe Lougheed, son of former Premier Peter Lougheed who created the fund in 1976. The initial purpose of the fund was to invest a portion of Alberta’s non-renewable resource royalties each year so the investment interest earned in the fund would reduce the province’s reliance on resource revenues.
“(Peter Lougheed) recognized that Alberta can’t rely forever on non-renewable resource revenues to fund programs and infrastructure,” said 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.”
For decades, contributions to the Heritage Fund were limited and investment earnings were spent instead of being reinvested. Going forward, the government will adopt a new plan to grow the Heritage Fund and achieve long-term growth and financial stability for the province. When the fund reaches its goal of $250 billion, the province can use a portion of the annual interest accrued to offset any decreases in resource royalties.
As of September 2024, the Heritage Fund is worth $24.3 billion. With a $2 billion commitment from Budget 2024, the fund is projected to increase to more than $26 billion by the end of the 2024-25 fiscal year.
Smith pointed out that, if all of the Heritage Fund’s investment income had been reinvested since inception instead of being transferred to the general revenue fund, the Heritage Fund would be upwards of $250 billion today, generating about $20 billion annually.
“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 Finance Minister Nate 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.”
That said, she added that Alberta’s oil industry is still robust.
“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.”
Joe Lougheed, who followed in his father’s footsteps and became a lawyer, will chair the board that governs the new corporation.
“The Heritage Fund assets belong to Albertans – and future Albertans,” Lougheed said in a release. “The HFOC will have a world-class, independent board of directors providing oversight and guidance in an accountable and transparent fashion. Working closely with the Alberta Investment Management Corporation, the objective will be to deliver long-term growth of the assets of the Heritage Fund for future generations. It is an honour to serve in this governance role.”
13-12
Recent conservative governments have not grown anything. The next conservative government will start spending the interest as general revenue.
What in the world is FEDup going to do, JOe Lougheed running a division.
It is true what the government has stated, for years this was used as a candy store. A change has been made, maybe fifty years too late, but to prepare somewhat for the future is never too late. We keep forgetting that those countries mired in poverty and despair basically want what we want. Prosperity and that is usually brought through easily accessed and cheap energy. Hopefully this will become an investment opportunity for the future.
No government could save enough to manage the impacts of climate change. Especially if you burn through as much coal, oil and gas as you can to do so. Pretty simple causality for non-politicians. Painting it with Lougheed-lipstick should be our first clue that this is purely theater of distraction.