What price prosperity? That is the question Albertans should be asking themselves in the face of a C$7.4 billion provincial surplus. Unfortunately, it won't be the citizens of Alberta who will decide what to do with the excess. It will be the provincial government and its soon-to-retire premier, Ralph Klein.
What the people need and what the premier may want are two different questions. We need the "little" things that won't earn pride of place in history. We need funds invested in our cities, particularly Calgary and Edmonton, which are desperately trying--and failing--to keep abreast with newcomers demanding housing, public services and new schools. We need infrastructure money to fix crumbling roads and improve access to downtown; we need money to repair and upgrade schools already neglected and to pay for more hospital beds and doctors. And Alberta needs to invest in postsecondary students: our future scientists, teachers, researchers and thinkers.
Money diverted into such institutions doesn't carry a "legacy" label. Nobody would ever look at Alberta's universities and credit Klein for their success. The question is whether Klein will do the right thing.
Glenbow Museum president
If I were the Grand Duke of Alberta, I would direct all surplus hydrocarbon royalties to a perpetual trust fund. The oil and gas that underlie Alberta do not belong just to this generation of Albertans; they are a gift to posterity. And they are rapidly being depleted. We need to turn these finite resources into infinite ones--in time to capture enough royalty revenues to do real good. At present, about 38% of Alberta government programs are funded by hydrocarbon-royalty revenues. If we could sequester just C$5 billion in royalties a year for 38 years, we could create a Heritage Fund of more than C$200 billion--a feat, in world terms, almost equal to Norway's Petroleum Fund. Assuming a sustainable endowment draw of 5%, a C$200 billion Heritage Fund would throw off C$10 billion a year, approximately the value of royalties the Alberta economy now takes.
Once established at that level of capital, the fund could sustain a variety of essential provincial programs and even enable creative risk taking for Canada and the rest of the world. We could recommit to the Canada Division of the Heritage Fund to provide loans at favorable rates for all territories and provinces. In that way, Alberta could help kick-start needed interprovincial energy and information-technology infrastructure. Another possibility is the creation of a small endowment (say, C$2 billion at 5%, or C$100 million a year) for loans to Canadian cities at favorable rates. Think of all the environmental and creative urban infrastructure that could be built. We could also catalyze an international program of Heritage Fund Centers of Innovation.
Albertans have a lot of generosity of spirit and no shortage of ideas. And we know intuitively that to whom much is given, much is expected.