It’s time to stop fooling ourselves about the Heritage Fund

Future rainy- day piggy bank a 40- year experiment that has gone nowhere

For a fund supposed to cushion Albertans in a future where the river of black gold is dry, we’ve done one heck of a job in helping ourselves to its riches.

Yes, with energy prices once again in the toilet phase of their cyclical existence, and an election campaign underway, discussion inevitably resumes about the Heritage Fund. When times are good and money flows into the treasury like goals into an Oilers’ net, we don’t think about the fund — we simply keep milking it so we can pile spending upon spending. Forget the future, let’s party like it’s 1987.

That’s the year the provincial government stopped putting any fresh resource revenue into our future rainy- day piggy bank. Not only did we stop putting money in, we started taking investment returns out by the bucket full. The upshot is that three decades ago, after taking into account inflation and population growth, the Heritage Fund was worth almost $ 11,000 per Albertan. Now it’s a tad more than $ 4,000.

It’s easy to blame the government, but even the accumulated follies of ill- conceived magnesium plants, carbon capture boondoggles and Tory private airplane fleets can’t do full justice to the huge amount of money that either never went in or the investment returns taken out since Peter Lougheed launched it in 1976.

No, to quote our current premier, let’s take a look in the mirror. Because we’ve feasted on the $ 36.5 billion transferred from that fund into the government’s general revenue coffers over those years, money that’s kept taxes down and public servants’ wages up.

Compare that to what Norway’s accumulated with its oil fund — now closing in on a trillion dollars, yet launched after Alberta’s. That’s about $ 200,000 for every man, woman and child.

We could have gone that route. Instead, we voted time and again for lower taxes. It’s hard to blame the government when, for example, the mere hint of imposing a provincial sales tax causes a backlash that threatens the demolition of a political career quicker than you can say Danielle Smith. No, we wanted our cake and we ate it.

So let’s not be fooled by this resurgence of feel- good rhetoric about saving for the future that Premier Jim Prentice is spouting.

His plan is two- fold — doubling the fund in 10 years and using it to diversify the economy.

Prentice once held down an executive job at CIBC, so he’s heard of compound interest. A seven per cent return, averaged for a decade, would double the fund without a single penny of new money going in, as long as itchy fingers stop dipping into the darn thing. The arm’s- length outfit investing the money these days does a good job — averaging seven per cent is a stretch, but not an unreasonable one.

It’s the plan’s second part that should send shivers through us. Anyone around in the Don Getty days will recall the economic horror show when the government tried to pick business winners and diversify away from oil and gas.

The same will happen today if ministers get to play monopoly by backing some latest business fad using the remnants of Lougheed’s legacy as seed money.

“Letting politicians play with Heritage Fund money is like handing a pyromaniac a box of matches,” is how Scott Hennig of the Canadian Taxpayers Federation rightly described it.

A few weeks ago, we piled on another $ 5 billion of debt, yet we’re still duped into thinking we’re ready to save for our grandchildren’s future. We haven’t and we won’t.

Liquidate it, pay off all we owe, use the rest for a cushion for a few years while we hope natural gas and oil rebound. It’s a 40- year experiment that’s gone nowhere, yet is still raised up the flagpole as some noble cause.

Accept the truth: those Norwegians might have reached Newfoundland a thousand years ago, but they never reached Alberta.