Oil pumpjacks operating in a farmer’s field near Calgary in November, 2025.Todd Korol/Reuters
Albertans are prickly, with that prickliness grounded in history, about Ottawa making moves to siphon off the province’s resource revenue.
Despite episodes of upset, there’s been no serious move by the federal government on that front since the Mulroney government ended the National Energy Program in 1985. But during those years, there has been someone siphoning off Alberta’s oil wealth: Albertans themselves. For decades, the provincial government has used resource revenues to pay for current consumption, rather than converting petrodollars into financial wealth, for future generations.
The Heritage Fund, established in 1976, was supposed to do just that. But the opposite has happened in its 50 years of existence. There were not net savings. Indeed, withdrawals from the fund have not only outstripped deposits, successive governments have gone further and drawn down on the fund’s investment income. Since 1976, $18.7-billion has been deposited in the Heritage Fund – but more than double that amount, $45.8-billion, has been withdrawn.
In other words, Albertans have been picking the pockets of their children and grandchildren. That trend was underscored on Thursday, when Alberta Finance Minister Nate Horner boasted in his budget speech that the United Conservative Party government would be able to hit its 2050 target for increasing the Heritage Fund to $250-billion “without requiring additional deposits.”
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It’s telling that Mr. Horner thinks it’s brag-worthy to plan on consuming rather than saving the next 24 years of oil wealth. (Sadly, that would still outdo much of the past 40 years, in which the Heritage Fund was continually raided.)
Mr. Horner’s framing is easy enough to understand: The UCP government is already projecting sizable deficits over the next three years, in part because lowered estimates for oil and gas prices have deflated its natural resources revenues somewhat. He talked about “protecting the Heritage Fund so our kids and grandkids inherit security, not the unpredictability of Alberta’s boom-and-bust cycles.”
Those are hollow words. Even if this government, and those for the next quarter century, stuck to the plan for the Heritage Fund, it would provide only a fraction of the income of today’s oil and gas revenues.
By contrast, Norway has shown what a disciplined approach can do. Starting in 1996, the country funnelled its petroleum revenues into a sovereign fund, with sharply defined limits on how much can be spent each year. The result has been the creation of a massive financial asset, nearly $2.9-trillion in 2025, or about $510,000 for each Norwegian.
By contrast, Albertans’ per capita savings, through the Heritage Fund, are a relative pittance – and lower than they were four decades ago. In 1983, the Heritage Fund held the equivalent of $12,000 for each Albertan. By 2020, that had fallen to $4,425 (helped along by population growth). By March 31, 2025, that per capita amount had rebounded a bit, rising to $5,500. But that is barely more than 1 per cent of Norway’s equivalent figure.
Of course, the Alberta government has every legal right to pursue this irresponsible fiscal course, just as a parent would have the right to spend every cent of their inheritance and pass on nothing to their own children. It’s just not particularly admirable, or wise.
What might Alberta do to reverse course, and start saving its annual resource revenues? It could restrain spending, although austerity alone is unlikely to be enough. Health spending would need to fall by half, for instance, to accomplish that goal. But expenditure restraint needs to be part of the effort. The province is projecting a small decline in real per capita spending over the rest of the decade; that would merely avoid digging a deeper hole.
Taxes would need to rise, absent a major austerity program. Increasing personal or corporate income taxes by the amount needed would be a heavy blow to the provincial economy. A provincial sales tax is the most obvious, and least damaging, option. Last week, Mr. Horner said a PST could generate $6-billion in annual revenue, while adding that there are no plans for a referendum question on such a tax hike.
Albertans loathe the notion of a provincial sales tax almost as much as meddling from Ottawa. Perhaps there is a made-in-Alberta solution that can avoid a PST. If so, the provincial government should lay out that plan: future Albertans are owed that, and much more.