Fraser Institute News Release: Dividends to Albertans key to success of the Heritage Fund over longer-term
July 25 2024 - 5:00AM
If the government of Alberta wants to build the Heritage Fund over
the longer term, it should start paying dividends to Albertans,
finds a new study published today by the Fraser Institute, an
independent non-partisan Canadian think-tank.
“The Alberta government has promised
to ‘re-build’ the Heritage Fund, but it will require a consistent
commitment over the long term,” said Tegan Hill, director of
Alberta Policy at the Fraser Institute and co-author
of An Alberta Dividend: The Key to Growing the
Heritage Fund.
In 1976, the province established the
Alberta’s Heritage Savings Trust Fund to save a share of the
province’s resource revenues to provide ongoing benefits to
Albertans. Since its creation, however, resource revenue
contributions have only been made in 11 of 48 years of the fund’s
existence and just 3.9 per cent of total resource revenue has been
deposited to the fund over its lifetime.
Learning from Alaska’s success with
its resource revenue savings fund—the Alaska Permanent Fund—the
study proposes that Alberta should introduce a dividend to
provincial residents to create public buy-in that generates
political pressure to adhere to fiscal rules around the Heritage
Fund’s operation—such as consistent resource revenue contributions
and inflation-proofing of the fund’s principal—to ensure its growth
over time.
For perspective, the Permanent Fund
was started the same year as Alberta’s Heritage Fund but has grown
to US$78.0 billion in 2022/23—or C$88.6 billion—compared to a
balance of just C$19.0 billion in Alberta’s Heritage Fund.
Using two alternatives based on
Alaska, which includes mandatory 25 per cent resource revenue
contributions and consistent inflation proofing of the fund’s
principal, the Heritage Fund has the potential to pay each Albertan
a total of $571 to $1,108 in dividends over the next three
years—equivalent to $2,284 to $4,430 per family of four.
Under these rules, the Heritage Fund
would be worth between $35.8 billion and $38.7 billion by 2026/27,
while paying out between $2.9 billion to $5.5 billion in dividends
to Albertans.
“As demonstrated in Alaska, by giving
citizens an ownership share in the state’s resource fund, they
demand that sound rules regarding the governance of the fund be
adhered to,” said Hill.
MEDIA CONTACT: Tegan Hill, Director of Alberta
PolicyFraser Institute
To arrange media interviews or for more information, please
contact:Drue MacPherson, 604-688-0221 ext. 721,
drue.macpherson@fraserinstitute.org
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The Fraser Institute is an independent Canadian public policy
research and educational organization with offices in Vancouver,
Calgary, Toronto, and Montreal and ties to a global network of
think-tanks in 87 countries. Its mission is to improve the quality
of life for Canadians, their families and future generations by
studying, measuring and broadly communicating the effects of
government policies, entrepreneurship and choice on their
well-being. To protect the Institute’s independence, it does not
accept grants from governments or contracts for research. Visit
www.fraserinstitute.org