Pipelines and Oil Companies

[makar]

As much as we love cc his post above makes sense.

[chuckChuck]

Norway has one of the highest standards of living in the world. It is a great place to live by most measures.

Alaska has $66 Billion in their permanent fund. They pay annual dividends to every Alaskan.

Norwegian officials visited Alberta to examine the Alberta Heritage Fund that Peter Lougheed set up in 1976.

https://en.wikipedia.org/wiki/Alberta_Heritage_Savings_Trust_Fund https://en.wikipedia.org/wiki/Alberta_Heritage_Savings_Trust_Fund

"The Alberta Heritage Savings Trust Fund (HSTF)[1][2] is a sovereign wealth fund established in 1976[3]:10[4] by the Government of Alberta under then-Premier Peter Lougheed.[3]:10[4][5] The HSTF had three objectives: "to save for the future, to strengthen or diversify the economy, and to improve the quality of life of Albertans"

This is radical? Not really. Peter Lougheed was just being a good manager.

Criticisms

In their August 2015 contrast for The Globe and Mail between the AHSTF and the Norwegian Government Pension Fund Global, Brian Milner and Jeff Lewis wrote that Norway parks 100 per cent of its non-renewable resource (NRR) revenue from royalties and dividends in a fund that is barred from investing a krone in the domestic economy.[10]

Reports by the Canadian Centre for Policy Alternatives and the Fraser Institute[15]:9 concluded that Alberta should be saving more of its non-renewable resource revenues. Since 1980, the NRR in Alberta has generated almost $190 billion, but the value of the Heritage Fund was only $17.3 billion in 2014. After 1987, NRR was no longer added to the Heritage Fund.[4] The Fraser Institute report compared the Alberta Heritage Fund to Norway and Alaska's NRR funds and argued that Alberta's was significantly "smaller than others because of its relative under-funding and chronic withdrawals of most income from the fund."[15]:9 Alaska for example continued to deposit 25 percent of its NRR from 1982- 2011 and Norway contributed 100 percent. If Alberta had followed the Alaskan formula, by 2011 the Heritage Fund would have had $42.4 billion instead of $9.1 billion. By the Norway rules, Alberta would have had $121.9 billion by 2011.[3][15]:9

In 2013 Madelaine Drohan, author of the Canadian International Council report entitled The 9 Habits of Highly Effective Resource Economies: Lessons for Canada,[16]:94and a Canadian correspondent for The Economist, echoed the IMF call for "stabilization funds" arguing that every province in Canada should consider establishing a sovereign wealth fund, as global peers have done, and treat non-renewable resource revenue (NRR) as "capital to be saved and invested, rather than income to be spent."[17] She added that in provinces like Alberta where the Fund already exists, it "should be implemented with a great deal more rigour."[17] Drohan warned in 2013 against the "political temptation" to "raid" the Fund and offered the Canadian Pension Plan Investment Board (CPPIB), a Crown corporation, the largest pension fund in Canada, as a model.[17] By March 2015 the CPPIB fund had grown to $219-billion and made a 16.5-per-cent rate-of-return in 2013.[18]

In its annual report on the Canadian economy in February 2013, the Washington-based International Monetary Fund (IMF) urged Canada, and resource-rich provinces like Alberta and Quebec to "better manage boom-and-bust commodities cycles by stashing away more tax revenue in good times".[19] IMF mission chief for Canada, Roberto Cardarelli, suggested that Norway, with the largest sovereign wealth fund, is an example Canada should follow. However, unlike Norway, resource royalties are collected at the provincial, not the federal level in Canada.

Max Fawcett, the editor of Alberta Oil magazine, warned that the "new" Alberta Future Fund, "which would receive $200 million a year" that would "support big-picture projects" and the two "new innovation endowments" announced by Finance Minister Doug Horner in the 2014 budget, would be funded by raiding the Alberta Heritage Savings Trust Fund. There were no new savings.[7]

According to Fumbling the Alberta Advantage, a Fraser Institute report written in 2015, "Between 2005/06 and 2013/14, and adjusted for inflation, the province of Alberta garnered $101.3 billion in resource revenues."[20]:2

Given what is now known about the spending patterns of the last decade—that Alberta spent an extra $49.2 billion on programs above inflation and population growth—a deposit of 25% of resource revenues, or $25.3 billion, into the Heritage Fund would not have been unreasonable had program spending been more carefully controlled. Instead, the province deposited just $4.5 billion, or 4.5% of all resource revenues between 2005/06 and 2013/14.
— Fumbling the Alberta Advantage

[farming101]

While I highly doubt The Fund could ever be wiped out it will be interesting to see the next report.

[shtferbrains]

"According to Fumbling the Alberta Advantage, a Fraser Institute report written in 2015, "Between 2005/06 and 2013/14, and adjusted for inflation, the province of Alberta garnered $101.3 billion in resource revenues."[20]:2

Given what is now known about the spending patterns of the last decade—that Alberta spent an extra $49.2 billion on programs above inflation and population growth—a deposit of 25% of resource revenues, or $25.3 billion, into the Heritage Fund would not have been unreasonable had program spending been more carefully controlled. Instead, the province deposited just $4.5 billion, or 4.5% of all resource revenues between 2005/06 and 2013/14."

Interesting numbers Chuck.

Thanks for posting that.

Did Mr. Trudeau's relief packages last week not put his budget into 101 billion dollar deficit for this year?

I might be wrong, but that number in the top paragraph rang a bell.

Good thing the budget will balance itself because the shit hasn't hit the fan yet IMHO.

We're so screwed.