Over the past decade, the province of Alberta treated boom-time resource revenues like a permanent state of affairs. That set the province up for fiscal failure, for multiple lost opportunities.
One high-profile example is the Alberta Heritage Savings Trust Fund. The fund was enacted via legislation from the Alberta government in 1976. It was created, in part, to save for the future by diverting a portion of resource revenues every year that otherwise would end up in the government's general revenue fund.
In theory, the fund would provide options for future Alberta governments--everything from disbursing cheques to citizens (as occurs in Alaska with the Alaska Permanent Fund) or replacing resource revenue streams when they slow to a trickle.
When then-premier Peter Lougheed created the fund, it was immediately given two deposits--a one-time payment to "kick start" the fund, and a portion of the current year's resource revenues (30 per cent). That latter practice continued up to and including 1987, though in ever-smaller proportions.
After 1987, no deposits were made until nearly two decades later, when deposits were resumed briefly between 2006 and 2008, only to cease once again.
By the end of 2014, the fund's market value was $18.4 billion.
Now consider a comparison: the Alaska Permanent Fund, created the same year as Alberta's fund but which accepted its first deposit in 1978.
So what's Alaska's secret? In 1976, the Alaska legislature crafted a constitutional amendment that let voters approve or deny diverting 25 per cent of oil revenues to the proposed fund. Also useful, the Alaska government was prevented from touching the fund principal. Voters approved that amendment in November 1976, by a two-to-one margin.
Also, in addition to the constitutionally mandated 25 per cent rule, later Alaska law, the 1980 Permanent Fund Act, required that 50 per cent of all newer mineral lease rentals, royalties, royalty sale proceeds, net profit shares (and other related revenues from the same) be deposited into Alaska's fund.
As a result, Alaska has a very different institutional control and safeguard on its fund compared with Alberta, where no such voter or constitutional protections exist.
Speaking of Alberta, back to the most recent missed opportunity here, one caused in part by soaring government program spending.
In Alberta, by 2004/05, per person program spending stood at $8,965. That jumped to $10,967 per person by 2013/14--a $2,002 increase (and to be clear, that's after accounting for inflation).
Over that period then, the province spent $49.2 billion more on programs than inflation and population growth would warrant.
Now here's another number to ponder.
During that same 10-year period, the province garnered $101.3 billion in resource revenues (adjusted for inflation). Let's suppose the province had desired--just for one decade--to imitate Alaska and divert 25 per cent of resource revenues into the Alberta Heritage Savings Trust Fund. Alberta could have deposited an extra $25.2 billion into the fund (assuming budget surpluses and deficits remained the same).
Instead, the Alberta government let program spending soar far beyond inflation and population. Two words come to mind. Lost opportunity.