Sunday, March 23, 2014
Alberta Heritage and Trust as good as gone! Thank you Redford!
This is a truly great and exciting piece of quality journalism by Milke!
BY MARK MILKE, CALGARY HERALD
MARCH 21, 2014
Alberta’s provincial government has provided plenty of political theatre as of late, with, as I write, three resignations from the government, including that of Alison Redford as premier.
However, the Redford resignation may not be the end of her influence on Alberta’s future, and in particular, upon the Alberta Heritage Savings and Trust Fund.
A clue here came from an earlier resignation, when Donna Kennedy-Glans, the now-former associate minister for electricity and renewable energy, jumped out of the Progressive Conservative caucus. As she herself resigned, Kennedy-Glans made a curious and consequential critique, noting that Bill 1, recent legislation sponsored by Redford, contained a “$200-million slush fund.”
The reference was to a new Alberta Future Fund, a sub-fund in the Alberta Heritage Savings and Trust Fund. Kennedy-Glans was on to something big. And few have noticed.
But first some explanations: Redford’s legislation, Bill 1, the Savings Management Act, creates several new funds. They include the Social Innovation Endowment Account, which diverts $1 billion from the main Heritage Fund over two years; the Agriculture Food and Innovation Endowment Account, with $200 million from the Heritage Fund; and the Alberta Future Fund, referenced by Kennedy-Glans, which will receive $200 million every year, and reach $2 billion by 2024, according to the provincial budget.
Bill 1 has no description of the Alberta Future Fund, or how the money can be used. Post-budget media reports note how Finance Minister Doug Horner said the fund was not dedicated to specific projects, but “future strategic opportunities.” Moreover, Budget 2014 describes the potential for this new fund thus: “Opportunities offering long-term strategic potential may arise and warrant the use of Alberta’s savings. These opportunities may arise unexpectedly, and may require large one-time investments.”
Because the other new funds will be used for social purposes, and the province already has plans for infrastructure spending, the vague description of this $2-billion fund’s intention (“future strategic opportunities”) should ring a few alarm bells. This looks to be a slush fund for more corporate welfare, beyond existing and ill-advised “investments” in the energy sector.
Some history: in the past, the Alberta government lost billions of tax dollars trying to spot strategic “opportunities.”
Back in the 1980s, the Alberta government placed big taxpayer-financed bets on startup companies and others that politicians and bureaucrats thought could help diversify the Alberta economy. Loans and loan guarantees were given to a variety of firms in multiple sectors: a pulp and paper mill, waste treatment plant, meat-packing plant, high-tech firms, and even a provincial oil upgrader.
The experiment was a disastrous failure. When, by the late 1980s and early 1990s, the provincially backed companies failed, and dozens did, the taxpayer (through provincial entities holding the loan guarantees) ended up paying the bills.
By 1994, these and multiple other corporate welfare failures cost Alberta’s taxpayers at least $2.2 billion. Back then, the Alberta experiment in loans and loan guarantees to business became so publicly toxic, that by 1996, the province even passed legislation greatly restricting the practice. Then-Premier Ralph Klein regularly said the province was “out of the business of being in business.” It was a promise mostly kept for the rest of that decade, with rare exception.
Even the province’s Heritage Fund, which had its own 1980s-era division (The Alberta Investment Division) dedicated to “strengthen or diversify the Alberta economy,” was restructured to eliminate rubbery and politicized goals. As the Heritage Fund itself notes, in 1997, the province reorganized the Heritage Fund to eliminate “economic development” and “social investment” as possible uses for the fund.
Back to the present: Memories of past provincial government intervention and the subsequent failures have obviously faded in the provincial legislature. The plan to use the Heritage Fund for social and “strategic” purposes is evidence of such forgetfulness. The recent provincial budget and Bill 1 have gutted the responsible 1990s-era reforms made to safeguard the Alberta Heritage Savings and Trust Fund — and to keep Alberta’s provincial government out of the business of being in business.
No wonder Kennedy-Glans labelled the new Alberta Future Fund a “slush fund.”
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