Danielle Smith says she wants to skim off investment income from the province’s famously mismanaged Alberta Heritage Savings Trust Fund to prop up oilpatch investment ideas so bad they can’t get financial support from conventional lenders.
As Alberta’s premier put it in one of those stereotypical armchair talks to the Calgary Chamber of Commerce on Thursday, “if we took a different strategy with those Heritage Savings Trust Fund assets, more like a sovereign wealth fund, that might give us more opportunities to be able to assist in de-risking projects that we’re finding difficult to be able to get financing.”
De-risking projects finding it difficult to get financing? Whoa!
Wasn’t this the premier who on the eve of her government’s last Budget in February pledged to “invest in the Heritage Fund annually, strategically pay down maturing debt, and slowly but surely wean our province’s budget off the volatile roller coaster of resource revenues”?
Rhetorical question. Of course it was.
In her televised Feb. 21 pre-Budget pep talk to the people of Alberta, Ms. Smith went on to say that while she would be breaking her election promise to cut taxes for everyone, that was because the economic rollercoaster Alberta is perpetually stuck on was, you know, rollercoasting again.
“If we had just re-invested the income earned in our Heritage Fund from the Lougheed Government’s initial deposits of about $12 billion dollars in the late 70s and early 80s,” she lamented, “even without investing another extra dollar…our Heritage Fund would be worth over $250 billion dollars today, earning between $12 and $25 billion dollars per year in revenue.
“This means we would have been earning enough interest today to make us entirely un-reliant on resource revenues,” she continued.
“Now is not the time for us to bemoan what might have been,” Ms. Smith added, bemoaning what might have been. “In my view, the time has come to act decisively and end any further procrastination.”
“Last year, our government passed a law mandating that all income earned in the Alberta Heritage Fund must be reinvested in the fund rather than spent,” she said.
Her government would reintroduce austerity, she explained, to “limit government spending to below the legislated rate cap of inflation plus population growth” in bad years and good, and, instead, “invest in the Heritage Fund annually, strategically pay down maturing debt, and slowly but surely wean our province’s budget off the volatile roller coaster of resource revenues.”
“Prior to the end of this year,” she said back then, “our government will publicly release a long-term financial plan charting a path to a Heritage Fund of between $250 and $400 billion dollars by the year 2050.”
She described this return to austerity – thereby justifying claims we couldn’t afford decent public services or fair public sector salaries any more – as Alberta’s “one last shot at getting this right.”
“Once the royalties are gone, they’re gone, and we need something to replace them,” Finance Minister Nate Horner said a few days later. “What the Heritage Fund does is take some of our surplus revenue and create an interest stream that will last forever. And that’s the goal we’re trying to achieve.”
“We think it’s entirely possible to grow that fund to $250 billion to $400 billion over a couple of decades,” he told a credulous Calgary Herald reporter.
My sense at the time was that this pitch worked for a majority of Albertans.
Well, so much for that plan.
Mr. Horner will unroll the new de-risking strategy for the Heritage Fund “in a little bit more detail in the fall,” Ms. Smith promised the Chamber.
The reaction was predictable – and predictably correct:
“‘We’re going to invest in projects that are finding it difficult to get financing’ is the very definition of dumb money,” observed University of Alberta economist Andrew Leach on X. “It’s the intersection of big government and picking winners.”
“Find me someone who thinks ‘de-risking’ projects that the market rejects is ‘conservative’ and I’ll show you someone who stands to gain from those investments,” said University of Alberta political scientist Jared Wesley on the same social media platform.
As journalist Max Fawcett commented wonderingly, if the purpose of Heritage Fund is supposed to be to reduce Alberta’s reliance on the fossil fuel rollercoaster, using it as a pool of cash to invest in the same industry is a strange way to go about it.
Like many others, he connected the dots between Ms. Smith’s plans for the Heritage Fund and her desire to get her paws on the Canadian Pension Plan’s investment funds.
Now hold your horses, you may be thinking, that’s not what she said about an Alberta pension plan.
True enough. “Now, you can’t do that with pension funds,” she reassuringly told the Calgary Chamber Thursday. “That would be irresponsible, because you have to invest pension funds to the benefit of the pensioners, and it’s a little bit more of a conservative investment strategy.”
Of course, as we’ve just illustrated, what Ms. Smith tells voters one day often has very little to do what she says the next time you see her.
If you want to know what she’s really thinking, a better strategy is to look back when she was a right-wing radio talk show host or an increasingly loony far-right blogger, when she tended to blurt out exactly what she had (and still has) in mind.
If you doubt me, I give you Alberta Hospital Services, Recovery Alberta, and the rest of the gong show that is tearing our health care system to bits before our eyes.
Here she is in May 2022, preaching to the converted, her paid podcast subscribers on Locals.com, about the advantages of an Alberta pension plan:
“The bigger issue with the CPP is the Investment Board’s ‘woke agenda’ where they’re starting to divest itself (sic) of oil and gas investments, which withdraws funds from those companies into doing more development,” she said forcefully. “An APP would fix this by insuring an investment into or own industry. One hundred per cent!”
“If the rest of the country, especially the big banks, the big pension funds, are gonna be punishing our industries,” she went on, “one of the ways we push back is making sure that we repatriate our own investment dollars so that we can, if we need to, make sure that we can counteract some of that hostility.”
So don’t imagine for a moment. Dear Readers, that Ms. Smith not thinking the same thoughts about your retirement funds as she has now admitted to about the Heritage Fund – as a bailout slush fund for a declining industry with which Alberta governments traditionally have had a cozy relationship.
I suppose saying derisking sounds better than saying raiding the Heritage Trust Fund to make bad investments that may be politically appealing. It is shorter, snappier and so in keeping with Smith’s glib communication style often targeted at the gullible who do not think too much about what she says, but just focus on how she confidently says it.
If you do think about it for more than a moment, derisking essentially means the government taking on someone else’s risk, in this case likely for quite profitable private energy companies.
Of course this raid the Heritage Trust Fund idea contradicts what Smith not so long ago said about building the fund up. But listening to Smith over time is an exercise in sorting through bewildering inconsistency. So obviously consistency is not her strength. This week it is raid the trust fund, perhaps because she is starting to realize the difficulty of getting her hands on more of Albertans pensions. Who knows what she will say next week, but it probably will not be good.
Dave–“who knows what she will say next week? “…
We don’t have to wait that long:
— WStandard (JBradley) .. speaking to Ryan Jesperson ” Smith said Redford given government posting because she can’t find work in Alberta”
….of all the cockamamie…
sigh..never mind.
—Then there’s the question of
” regulators in the O&G ,most notably in Guyana….”
Wait, what ??
— meeting with the ambassador of Kazakhstan…”expanding our opportunities …..including aircraft procurement and agriculture “…….???
And about that new arena, that tax payers would only have to pay for the infrastructure, but hotel developers will need help, so tax incentives are on the table.
I would think that she had better start thinking about how much all that double/triple overtime for the waterline pipe repairs is going to cost, if they want all 5 ( so far) done in time for Stampede, or Calgary is going to be drier than the beer strike days of the 80’s .That’s if the car washers, ‘water deniers’ – it’s not real, I’m not listening to someone wearing a rainbow braid…gang don’t cause more problems sooner.
So just another week in the UCP saga.
And just for Ronmac , we had Mother Nature turn on the big snow machine on the Coqihalla and the Mt passes, so hope it makes it to your side so you can have some “proof ” climate change/ global warming isn’t real.
( We’ll just ignore the unseasonal HEAT DOME in the US, cause it’s way over there, and our border will stop it affecting us, right))?)
Daniel Smith is probably jealous that the Canada Pension Plan Investment Board, headquartered on one Queen Street East in downtown Toronto, is getting all the oil and gas action in Alberta with $6 billion in investments and counting. For all this talk about climate change and co2 it’s strange to see the CPP boasting about increasing its’s investment in oil and gas. Seems they made the announcement in a LinkedIn post on day one of COP28 in Duba.
https://www.shiftaction.ca/news/2023/12/7/cppib-opens-cop28-by-celebrating-oil-and-gas-investments
Absolutely no surprise. She was a paid lobbiest for O&G before returning to politics and she continues in that role as premier. The question is, when will Albertsons clue in to the fact that they are being ripped off by the very industry they’ve been told, all their lives, to support without question.
*Albertans
“if”,”might”,”de-risk??????”, “difficult”
I see…
“cozy” is the wrong word. Alberta is the epitome of a captured petro-state
Same old
Thanks ,political love to you and your brilliant articles
There’s almost nothing Marlaina loves better than giving taxpayer money to billionaires. The hundreds of millions gifted to Murray Edwards for his Calgary Flames new rink, the RStar scam, the carbon capture scam, the list goes on and on. And yet there’s no money for education, health care or basic infrastructure. Give to the rich and take from the poor is her top priority.
Marlaina grew up poor. Ayn Rand’s family were gassed in WW2. What do these two have in common?
Internalized oppression caused by so much self hate and guilt due to circumstances. They ultimately identify with the oppressors.
In Marlaina’s case, she blames the poor for being poor and need to be endlessly punished. Rand, her hero, identifies with the extremists who murdered her family. And then builds a philosophy around it.
So ya, Smith loots our fund, our services, she is driven to wipe us out. She is, as was Rand, a sociopath. Someone driven by hate with no filters. Chronic lying. The woman is truly mad. Her ragey twitchy expressions tell it all. Put her on mute and just watch her. Mad. But driven by this craven desire to identify with the wealthy, to please them, her keepers. All others be damned.
Dooh Nibor? (Robin Hood spelled backwards).
From cppinvestments.com: May 22, 2024. Canada Pension Plan Investment Board ended the fiscal year on March 31, 2024 with net assets of $623.3 billion compared with $570.0 billion at the end of fiscal 2023. Net annual return of 8.0%. Ten year return of 9.2%.
I believe Albertans are savvy enough not to fall for a radio talk show host’s blathering about the benefits of an Alberta pension plan divorced from the highly successful CPP. Its results speak for themselves.
“Now hold your horses, you may be thinking, that’s not what she said about an Alberta pension plan.”
As Premier, Danielle Smith has gone back and forth several times on the idea of raiding the Alberta Pension piggy bank for her O&G overlords.
The name of the game is to transfer as much public wealth as possible to private hands. Government of the corporations, by the corporations, for the corporations.
“Alberta Premier Danielle Smith, like her predecessor, Jason Kenney, whose government started the ball rolling on the Lifeworks report, has portrayed pulling out of CPP as a way for Alberta to take control of how the money is invested, with an eye to bolstering the province’s oil and gas sector.”
“‘Impossible’ for Alberta to exit with half of CPP assets, pension fund official says” (Financial Post, Sep 21, 2023)
https://financialpost.com/fp-finance/alberta-cpp-exit-report-does-not-add-up-says-official
“Alberta rules out copying Quebec pension model despite promise to consult public first” (CP, Oct 12, 2023)
“Three weeks ago Premier Danielle Smith said her government wants to hear from Albertans before they make decisions such as whether to follow the Quebec model.
“Finance Minister Nate Horner says if Alberta abandons the Canada Pension Plan to run its own stand-alone fund, it will not adopt Quebec’s model, which mandates optimizing returns while also investing in the province.
https://calgaryherald.com/news/canada/alberta-rules-out-copying-quebec-pension-model-despite-promise-to-consult-public-first/wcm/96c0d210-6964-4f43-a9af-474e4d89681a
The UCP changed its mind less than a week later:
“Alberta says Quebec pension model back on table in Canada Pension Plan exit debate” (CP, Oct 17, 2023)
“The Alberta government is again considering using the Quebec investment model for a possible provincial pension plan, less than a week after Finance Minister Nate Horner announced the Quebec option had been scrapped.”
https://www.cbc.ca/news/canada/calgary/alberta-pension-plan-ucp-ndp-abpoli-1.6999344
The O&G lobbyist now occupying the Premier’s Office changes her mind more often than she changes her socks.
P.S. AIMCo and the Heritage Trust Fund have sunk over one billion pension dollars into failing O&G companies:
“Alberta public pension manager loses big in oilpatch investments: analysis” (CP, April 22, 2020)
“Alberta’s public pension manager has lost millions after investing in smaller energy companies at a time when the entire sector is in decline.
“AIMCo has invested $1.1 billion from public service pensions in junior and intermediate oil & gas firms since 2016.
“Most of those companies lost value well before the COVID-19 crisis and oil supply war… At least one company has gone bankrupt despite the injection of tens of millions of pension dollars.
“‘The vast majority of them were in really rough shape before the crisis.'”
https://globalnews.ca/news/6853877/alberta-aimco-pension-manager-oilpatch-investment-losses/
On second thought, it is not accurate to say that Premier Smith has changed her mind about funnelling public funds to the O&G industry. In face of public protest, she may walk back her policies, but her intentions remain unchanged.
Smith has floated several schemes to accomplish her nefarious goal, including:
-RStar (up to $20 B in royalty credits);
-raiding the Heritage Fund;
-using AIMCO and Alberta Pension Plan funds to invest in struggling companies;
-billions of dollars for carbon capture and storage (CCS) and eventually SMRs in the oilsands;
-creating a crown corporation to build gas-fired power plants.
-indirectly, by throttling the renewables industry
That’s on top of paying for industry advertising and the standard gamut of assorted subsidies, visible and invisible.
So, no, Smith’s ambitions remain unchanged. As she knows, blatant corporate welfare is largely unpopular among Albertans outside the O&G sector. Smith will have to choose her opportunities carefully, but she will get the job done. Her own job depends upon it.
“Alberta is entrepreneurial in the truest sense, as by Austrian economist Joseph Schumpeter who coined the term creative destruction. We do not spend a lot of time thinking about how government should intervene to protect legacy industries.”
It is unsurprising that the dominant myths that surround capitalist economics [neo-liberal free market ideology in the service of the corporate state] and market ‘efficiencies’ along with their primitive illusions, delusions, and falsehoods are still parroted in clumsy ways by the dull minded true believers in the Academy and their political charlatans, that is, by all those individual pimps and deceivers ‘committed to the cause’ of the current economic ‘religion’ who continue to be rewarded [by feedback loops via pecuniary reinforcement] for their misplaced beliefs and self interest that is ultimately dedicated to the interests of the economically wealthy and powerful.
The cognitive dissonance and psychological violence that accompany and support the intellectual fraud is corrosive collectively and individually; where, the greater the myth generated failures the greater the tendency to double down and become even more tenacious and dedicated to a long term losing position.
Everything she says is a future lie. Can we have a new edition of the Panama Papers, please? Where does all the money go?
Kiss the Canada Pension Plan goodbye, paupers. Dani will dispose of it within a month if she gets her politically-interferin’, money-grubbin’ hands on it.
Now if she interferes in Calgary’s water crisis, as she can with her brand new Bill 18, watch out. I would advise the federal government to buy pipes directly for Calgary if they want to help. Any money channelled through Bill 18 to the provincial government is likely to be skimmed, if not entirely made to vanish, like magic. Don’t give her one single copper.
Dani has no clue how angry people in Calgary are right now, so she’d be well advised to butt out and let her overreaching bills go dormant. We all know how much she loves O&G, though, and Stampede is nothing but the O&G show. Emergency powers default to the province now. Bring in the cows, horses and tourists! Let the people of the city drink pancakes! La Jefa in Tropico!
Has any callous kleptocrat ever been prudent or honest, even once?
Every time I see that “$250 billion” figure for the potential upside of the Heritage Fund dollars, I think of the $260 billion oil and gas reclamation liabilities estimated by the Alberta Energy Regulator in 2018 (later dismissed as a “worst case” projection). Since then, industry has kept on drilling and digging, while inflation added to costs.
Last year, total reclamation spending in Alberta was about $1.2 billion.
Hey Alberta! If that little water leak had happened in Ontario, it would be fixed in less than a week. Probably would have been caught in time actually.
Sorry to say you give the ruling burghers of most Ontario cities too much credit.
So, the AHTF is about to turn into the MoneyTree of last resort, less the usurious interest rate usually charged for questionable investments. What is this lady’s home cell number so I can convince her to invest in my totally foolproof cubit zirconia mine mixed with a deposit of fools gold in Tomahawk, Alberta. Note well you cannot de-risk anything. Oh did I mention the initial core samples?
It’s not “de-risking”
It’s completely ignoring the risk against prudent financial advice. The industry knows the sun is setting on how they operate, but the UCP will gamble our tax dollars and investments for corporate handouts. There is something worse than Communism, & it’s UCP ignorance & lack of accountability.
#FireTheUCP
Danielle Smith and the UCP are a big joke. It’s comical to believe that she can increase the Heritage Savings Trust Fund to a value of $250 billion to $400 billion. There are reasons why this cannot be achieved. First of all, Peter Lougheed’s oil royalty rates were reduced to such a pittance by the Alberta PCs, and Ralph Klein played a major role in this. An astronomical $575 billion was lost in the process. Second, due to Ralph Klein not ensuring that oil companies in Alberta act responsibly and cleanup after themselves, like Peter Lougheed had been doing, Albertans have to come up with the grand sum of $260 billion (it’s likely $300 billion with inflation factored in) to fix this orphan well mess. Money couldn’t be saved because these pseudo Conservatives and Reformers in Alberta did one very pricey boondoogle after another for all these years, gobbling up any savings Peter Lougheed intended for Alberta. The UCP are no different. Because the price of oil can go down, more often than not, this also makes creating a bigger Heritage Savings Trust Fund impossible. Ralph Klein’s destruction of Peter Lougheed’s oil royalty rate system is impossible to even undo. Danielle Smith is full of it.
Danielle Smith is Ralph Klein 2.0. Ralph Klein changed what the Heritage Savings Trust was to be used for, which was contrary to the will and intentions of Peter Lougheed, and he made it so the the money from that fund could be raided, and used for his pet projects, that were not economically viable. Danielle Smith is doing the same. The Heritage Savings Trust Fund won’t exist anymore, if the UCP keep this up. However, with all the very pricey shenanigans that happened in Alberta over such a long period of time, from these fake Conservatives and Reformers, the opposite results happened, which were contrary to what Peter Lougheed did, and Alberta having the chance to save any money for the future is gone.
David has done an excellent job of showing how, once again, our premier seems to flit like a sparrow from one (bad) idea to another.
In his editorial in the current issue of Alberta Views, Evan Osenton makes the argument that Alberta demographics are changing, and Albertans are no longer singularly conservative. Mr. Osenton supports his case with last year’s election results, in which the UCP only got 53% of the popular vote. He then goes on to suggest that Alberta’s evolving demographics are pushing Danielle Smith to govern more and more like an authoritarian, which explains the UCP’s efforts to control the municipalities. I think the provincial government’s efforts to control which university research projects get federal funding also fits in this narrative.
Given our premier’s situation, it isn’t hard to see why Danielle Smith is feeling insecure. Her biggest supporter, David Parker, routinely suggests that if Ms. Smith doesn’t govern the way he wants, he will pull the plug on her leadership. Knowing that it has been twenty years since a conservative premier completed a full term, she must know that her situation is hardly tenable. After embarrassing herself once with her floor-crossing debacle, it also must cross her mind occasionally that history could record her as the last Alberta conservative premier in a generation.
I wonder, then, if Ms. Smith’s comments to the Calgary Chamber of Commerce are another sign of her insecurity – she tells any group she speaks to whatever they want to hear, regardless of whether it contradicts things she has said in the past.
de-risking. Is that even a real word? What does it actually mean? Where did the Alberta premier go to school? Doesn’t seem like she has a degree in economics or business or accounting.
Taking money out for the oil and gas industry does not make sense. Investing in things which banks and such won’t should be the first clue Smith is out to lunch. As some one mentioned earlier, there is a need for improved health care and education. Doesn’t make sense to not put money into things which keep people healthy and educated, but hey if they’re educated they might figure out Smith is running a scam on them. If seniors die due to a lack of health care, that works for her. They won’t need as many extended care beds and if its kids who die, they’ll need fewer schools.
This looks more like the last hurrah for the oil and gas industry’s gravy train complements of Smith and co. The oil and gas industry should not be given a dime of government money until they clean up those abandoned wells.
Yes, it does seem Smith is more interested in giving money to o&g companies than ensuring water pipes are in good condition and replacing those that aren’t. Wait until the sewer pipes burst.
When I lived in Vancouver, summers were when you had to deal with slow, slow, slow traffic. The works dept. was replacing water and sewer pipes every summer for several years in a row. A couple of years ago the gas company was replacing the pipes on a major artery. The pipes were originally installed in the 1950s and 60s. A gas line exploding is so uncool and just is bad for the tourist trade. In Nanaimo, the city is replacing water mains. It a big project but as the mayor and council decided its better to do it now than later. Fortunately there is land to do the work so the highway isn’t impacted.
What happens if Smith gets her hands on the CPP money and blows it all and the Heritage funds also. I know some people will have increased their personal wealth, but what about the other people in the province.
With the current water shortage it might be a better idea to cancel the rodeo. Better to cancel it than not be able to flush the toilets in all the hotels.
All I can think about is this sick money connection with the oil sindustry that makes everything else non important including our pension money.
What any other word can be used for this kind of distorted relationship other than addicted. These people are in serious need of some help.
Norway created a sovereign wealth fund of their own about forty years ago. Their fund was modelled after Alberta’s own Heritage Fund, and its current value is assessed at over $1 T. Of course, Norway has rules governing their fund: it cannot be invested in industries tied to fossil fuels, apart from those that have a proven potential to reduced carbon-emissions.
Queen Danielle, however, has taken what is left of Alberta’s Heritage Fund and has opted to pillage it by handing it over to the O&G industry, for who knows what purposes. I soon as she says “derisk” she means massive subsidies to every single thing her favourite industrial sector wants.
It’s not like the Fund hasn’t been pillaged before. Peter Lougheed used it for a weird mortgage subsidy program in the 1980s; Getty used it to rescue many, many failed Alberta corporations; and ole Ralph Klein turned what could have been a massive transfer to the Fund into his insane ‘Ralph Bucks’. In the end, the Fund has failed to grow beyond the mere $15 B value it had since the 1980s. Nothing to see here … move along.
While praising Ralph Klein and ignoring the fact that he financially destroyed this province Smith ,in a state of panic ,has finally realized what helping the rich steal the people’s oil and corporate tax wealth has done to this province but isn’t willing to admit that Klein created it , and hasn’t a clue as to how to fix it. Notley’s plan to increase royalties and corporate taxes back up to the Lougheed levels is out of the question let’s make our children and grandchildren suffer more instead and destroy Lougheed’s Heritage Trust Fund in the process. You can bet their ignorant supporters will think it’s a wonderful idea. They don’t care about our children’s future either, do they?
So Danielle Smith the market fundamentalist now wants to use public money to support businesses that cannot make it in the market !! Amazing.
There’s a reason Norway has a 1.5 Trillion dollar wealth fund and another multi billion dollar pension fund for their citizens, numbering somewhere close to the total souls our grand government cares for here in Alberta. Do you get it yet? Say what you want! We’ve been had!
Isn’t she still “an increasingly loony far-right blogger”?
And radio commenter and, oh yeah, a far right crazy premier too.
Imagine if it were now the fall of 1908, instead of the spring of 2024. Daniellezebub would be proposing to use taxpayer dollars to prop up manufacturers of horse-drawn carriages and buggy whips, just as the first Ford Model Ts were rolling off the assembly line. She’s like King Canute, commanding the tide not to come in*.
(*Yes, yes, I know, Canute was using this as allegory to illustrate the limits of even a king’s powers, but I’m using this as a rhetorical device).
Dinner out or a home cooked meal, I hope your daughter treated you to a well deserved day off….Cheers !!