04/23/2015 06:34 EDT | Updated 07/19/2015 03:59 EDT

Paul Davis announces 'generations fund' at election-style kickoff

Newfoundland and Labrador Premier Paul Davis unofficially launched the PC Party's election campaign Wednesday night at a fundraiser in St. John's, and he used the event to lay out a key promise.

After touting the party's successes with building communities and infrastructure in the province, Davis announced the creation of a new legacy fund that will be used to collect offshore oil revenues to protect the provincial treasury in the decades to come. 

"We will present a plan that will rachet our deficit down, step by step, all the way to zero," Davis told the crowd.

"When we return to surplus, and we will return to surplus, then we are going to create something which I am calling a 'generations fund.'"

In this week's speech from the throne, the governing Tories said they intend to return to surplus budgets in 2020. 

While he didn't give many specifics or numbers, Davis said the fund will protect future generations from the volatility of oil prices.

"We will have the capacity to set up this fund, and we will do it within the next five years," said Davis, who told the crowd that the fundraising event marked the start of his campaign to win the next provincial election, which will likely happen in the late fall. 

"A fund which will be set aside for our children, and our children's children."

Fund dismissed by former premiers

Former PC premiers have previously spoken out against the idea of setting aside money in a savings fund, saying it doesn't make sense when the province still has a large debt to pay down.

The idea had been pitched by the provincial Liberals during the 2011 election, when they suggested $250 million a year should be put aside from oil revenues to assist future generations. Current Liberal Leader Dwight Ball has also said he would support a similar fund.

- Liberals pitch legacy account for oil money 

On Wednesday, Davis said his stance on the idea is different than his predecessors.

"I know that leaders that have gone before me have had different views on it," he said.

"It's something we need to do, we need to level out those highs and lows that we've experienced with oil, those highs and lows we're experiencing right now."

Davis says the province needs to uncouple its finances from the rollercoaster of oil prices. The government last year 

"It creates a challenge for the government to try and level off its books and commitments when you have those highs and lows," he said.

"A generation fund will help us get through that, that's my belief."

Comparisons with Norway

Alberta, Saskatchewan and Norway all have similar funds in place.

During his speech, Davis referenced the similarities between the Newfoundland and Labrador approach and that of Norway — which also greatly depends on the offshore oil industry for much of the government's revenue.

"One of the criticisms that we we hear is, 'why haven't we done it like Norway has done it?'" he said.

"Norway produced oil for 20 years before they generated their own fund."

"What we've done is the same thing that Norway did. In the first 20 years, what they did with their oil revenues is they built their infrastructure, they created better social programs, they build a better society and better communities."

When asked for specifics on the fund, such as how much would be put aside each year, Davis said he wasn't ready to get into those numbers at this point in time.

"That will depend on oil revenues that exist at the time," he said.

"Often governments are criticized for managing in four-year blocks. It's time to look beyond four years."

"We've got to provide a way for us to smooth out the road."