CALGARY - A report from the Fraser Institute suggests Alberta is doing little to save for a rainy day through its Heritage Savings and Trust Fund.
The independent, fiscally conservative think-tank says Alberta governments have saved little of the province's resource revenue over the years leaving the heritage fund severely lacking when compared with similar funds in Alaska and Norway.
"We've seen this movie now at least twice where the province gets into financial trouble and the heritage fund suffers as a result," said Mark Milke, a senior fellow with the institute.
"Much of the money that has been earned in the heritage fund — the income — has been taken out over the decades, so we need not to make this mistake a third time."
The institute's report says as of Dec. 31, 2012, the heritage fund was valued at $16.4 billion — not much more than its $12.7-billion value in 1987 when the province stopped making deposits linked to resource revenue.
Former premier Peter Lougheed set up the trust fund as a "rainy day" nest egg in 1976 for future generations. He initially put in 30 per cent of Alberta's resource revenue and made a few other large deposits.
"We found ... if we had simply applied the Alaska rules since 1995 when the budget was balanced here in Alberta, today the Alberta heritage fund would stand at $32 billion and not the $16 billion that it's at today," Milke said.
Alaska held a referendum in 1976 and residents voted in favour of contributing 25 per cent of resource revenue into what the state calls its Permanent Fund. That level was upped to 50 per cent a few years ago.
Norway has been putting 100 per cent of its non-renewable resource revenue into a trust fund of its own.
The report notes that between 1977 and 2011, the heritage fund earned $31.3 billion on its assets, but the Alberta government withdrew $29.6 billion.
"That's the importance of bringing in rules. It prevents politicians from using the fund for day-to-day expenses," Milke said.
A referendum in Alberta, similar to the one in Alaska, might be a good idea, suggested Milke, who warned it is time for Premier Alison Redford to take action to guarantee a more fiscally successful future.
"The province has to watch its spending, then it has to get back to a balanced budget and then it can consider depositing money into the heritage fund."
Jason Clemens, Fraser Institute executive vice-president, echoed the need for the government to plan for the future.
"Although Alberta is currently running a deficit, it should think ahead about how best to manage the heritage fund and ensure it meets its original mission of providing the greatest financial return for current and future Albertans," he said.
Also on HuffPost