I have had a few people ask the question of what is the difference between the Heritage Savings Trust Fund and the Alberta Sustainability Fund. The easiest answer is the Tories these days don't contribute to the Heritage Fund because it is harder to access it.
The act for the sustainability fund is pasted below this blog. If you want to see the act for the Heritage Fund you can find it here. The problem I have as I delve into these two funds is the accountability gap between them.
The Heritage Savings Trust Fund was set up in 1976 by former Tory premier Peter Lougheed. The fund grew rapidly in the 70's boom, and the province was putting 30% of the Oil and Gas revenues into the pot. This carried on until the next Tory administration, led by Don Getty, started draining the revenues which were generated by billions of dollars in investments. This also carried on into the Klein era forcing the fund to remain stagnant. Lougheed recently announced his disappointment, and is pushing to breathe new life into the fund. I for one would have to agree with him, if my investment portfolio could not even keep up with inflation I would probably look for a new banker, or in this case a new government. Aimco took a beating with the fund and still doled out huge bonuses to their management, who will take accountability for it?
When Klein became premier in 1992 the Tory government chose not to build the fund in any significant way. Boom times returned to Alberta, and still no money was put aside in the Heritage Fund. Klein set up the Alberta Sustainability Fund which is simply a sub-account in the General Revenue Fund. Where this fund fails us is it may be drawn on by simply overestimating the resource revenue in a fiscal budget. This, as we have seen with the current budget, is very easily done. The part I have to disagree with is that they have already committed to using it for the following years as well instead of writing a realistic budget. The other issue I have is it states that if the fund is above $2.5 billion the excess may be transferred to the treasury board, with $14.5 billion dollars available and no accountable government there is no doubt in my mind this will be emptied in the next fiscal year. The way the GOA has patted themselves on the back for thinking they prepared for this moment is disgusting, they have done nothing outside of set up a fund to scratch their itch, not needing to be fully accountable for it. It has grown to a greater value than the Heritage Fund, which according to a March issue in Report on Business, could be worth $165 Billion dollars if they maintained Lougheeds policies.
After 15 years of mind boggling surpluses, we have $14.3 Billion in the Heritage Fund and $17 Billion less the $7 Billion deficit in the Sustainability Fund. This is of course if you believe the deficit will not be higher. Today's Aeco price for Alberta natural gas is $2.01/GJ, can you recall the price required from the fiscal update the other day?
Alberta Sustainability Fund
2.1(1) The Alberta Sustainability Fund is established as an account within the General Revenue Fund.
(2) Within the General Revenue Fund amounts may be allocated to and from the Alberta Sustainability Fund as follows:
(a) if for a fiscal year actual non-renewable resource revenue exceeds non‑renewable resource revenue for fiscal policy purposes, the difference must be allocated to the Alberta Sustainability Fund;
(b) amounts determined by the Treasury Board may be allocated to the Alberta Sustainability Fund;
(c) subject to subsection (3), if for a fiscal year actual non-renewable resource revenue is less than non-renewable resource revenue for fiscal policy purposes, the difference may be allocated from the Alberta Sustainability Fund;
(d) subject to subsection (3), if for a fiscal year
(i) actual non‑renewable resource revenue exceeds non‑renewable resource revenue for fiscal policy purposes, and
(ii) actual revenue excluding actual non-renewable resource revenue and any increase in revenue that funds an expense referred to in section 4(2)(b) is less than revenue for fiscal policy purposes excluding non-renewable resource revenue for fiscal policy purposes,
the difference referred to in subclause (ii), not exceeding the difference referred to in subclause (i), may be allocated from the Alberta Sustainability Fund;
(e) subject to subsection (3), amounts paid or payable for the cost of a public emergency or disaster declared by the Lieutenant Governor in Council may be allocated from the Alberta Sustainability Fund;
(f) subject to subsection (3), amounts paid or payable under the Natural Gas Price Protection Act may be allocated from the Alberta Sustainability Fund;
(g) subject to subsection (3), amounts paid or payable for the cost of a settlement with a First Nation may, with approval of the Lieutenant Governor in Council, be allocated from the Alberta Sustainability Fund.
(h) repealed 2008 c5 s4.
(2.1) Allocations under subsection (2)(a) and (b) may be adjusted due to the timing of when cash is received, changes in the net financial assets of Provincial agencies and regulated funds, capital cash requirements and other cash requirements as identified by the Treasury Board.
(3) The net assets of the Alberta Sustainability Fund may not be reduced to an amount less than zero.
(4) Subject to section 2, if the net assets of the Alberta Sustainability Fund exceed $2 500 000 000, the excess or any portion of it may be allocated by the Treasury Board from the Alberta Sustainability Fund.
A Most Righteous Rant
9 minutes ago
