Jack Mintz: Alberta renews its quest for a holy grail — a healthy Heritage Fund

financialpost.com:

Alberta’s budget had lots of good news — unless you own an electric car, which will now be taxed at $200 a year. The provincial surplus is expected to be $5.6 billion this fiscal year, followed by a wafer-thin $0.4 billion next. Even though resource revenues are down, program spending isn’t being cut. It rises 3.7 per cent in fiscal year 2024-25.

By next year, Alberta’s gross debt ticks up to $94 billion, far better than its $111-billion pandemic peak. The Smith government will be criticized for postponing a promised personal tax cut, but any canny politician is going to wait until closer to the next election to implement the expected two-point reduction in tax rates on incomes less than $60,000.

On balance, the budget is pretty ho-hum and won’t upset the political apple cart. But it contains one nugget that has been a holy grail for Alberta’s politicians for a half-century. The Smith government intends to build up the provincial Heritage Fund to $250-$400 billion by 2050 in order to reduce the government’s dependency on oil and gas revenue. The fund currently stands at $26 billion, so there’s work to be done!

The plan is to freeze real per capita spending for the next 27 years, which is not an easy thing to do. And it will only generate the required surpluses if GDP grows faster than population and prices.

This dream of a large fund has never been fulfilled. Premier Peter Lougheed began the Alberta Heritage Savings Fund in 1976 with the intention of diverting 30 per cent of oil and gas revenues into it. That was easy as OPEC pushed oil prices to historic highs in 1974 and 1979. It was much harder when prices plummeted after 1980.

Lougheed was right, though. Without fiscal discipline, volatility in the resource prices