Abstract
Alberta has an abundance of natural resource wealth. In recent decades the oil and
gas component of the resource sector has accounted for a large proportion of the
provincial government’s total revenue and, directly and indirectly, accounted for
approximately half of total economic activity within the province. It has also made
significant contributions to the economic growth in Alberta, allowing the province to
have a high level of public services and a competitive tax regime that has further
contributed to economic growth.
The substantial non-renewable resource revenues (NRRRs) generated by the oil
and gas sector are volatile and subject to decline over the long term. Along with resource
depletion there are many risks to the sustainability of NRRRs arising from shifting
energy markets, prices and costs, constraints in access to new markets and numerous
environmental challenges. Given this, Alberta will need to save a higher proportion of its
NRRRs in order to sustain prosperity and meet intergenerational equity objectives. Alberta’s current NRRR savings plan, the Alberta Heritage Savings Trust Fund
(AHSTF) has not been as successful as originally envisioned. With only sporadic
contributions from resource revenues, a lack of inflation proofing and frequent
withdrawals of fund earnings to support government budget shortfalls, the real (or
inflation adjusted) value of the fund per-person has fallen sharply since the early 1980s.
In comparison there are other similar funds that have performed much better. Two, which
provide an interesting contrast, are Norway’s Government Pension Fund—Global, and
Alaska’s Permanent Fund. A comparative analysis of the their approaches applied to an
Alberta context can provide useful policy direction in changing the AHSTF to better
serve the objectives of sustainable prosperity and intergenerational equity for Alberta.
Refereed
Yes
