Alberta since 1971 has been a manifestation of continued western alienation within
the Canadian federal system. Like other remote resource-dependent regions,
Alberta was locked in a quasi-colonial status with respect to the industrialized
centres of Eastern Canada. Provincial strategy evidenced two factors that are
typically found in the decolonization process: devolution of political authority
from federal to provincial levels, and diversification of the economy. The second
factor is a counterpart of the first. And, as in other resource hinterlands, natural
resources are seen as the key to solving the problems of quasi-colonialism and
endogenous, sustainable development. Alberta responded to these problems in part
by establishing a natural resource trust fund (Smith, 1991). By doing so it provided
a foundation for the province-building strategy as well as providing a basis—which
would depend on the exact policies pursued—for achieving a sustainable flow of
revenue.
5.1 Peter Lougheed and the idea of a trust fund
The AHSTF owes its origins to ideas circulated among the Alberta cabinet in the
early 1970s. The provincial government was receiving revenues at a faster rate
than it could spend them, and this fact, coupled with the trust fund principles
discussed earlier, convinced Peter Lougheed, the Premier of Alberta, that a fund
in oil prices in 1973 (Collins, 1980, 159).11 The Alberta Cabinet proposed a natural
resource trust fund in late 1974 (Warrack, 1994, 4); in the Alberta Budget Speech
of February 1975 a fund was specifically mentioned; and later that month an
election was called. Part of the reason for calling an election was to assess the
public’s support for the trust fund concept. As Lougheed surely predicted, he and
the Progressive Conservative government won by an impressive landslide in that
election held later in 1975. Lougheed interpreted this success as a sign of public
support for the fund concept (Smith, 1987).12 In autumn 1975, Bill 74 was
introduced in the Alberta legislature calling for the creation of a fund, but this bill
was intentionally allowed to die (Smith, 1987). The bill had been introduced to
alert Albertans to the concept of a fund; by allowing the bill to die the government
hoped to stimulate public input regarding the fund. The bill, now renamed Bill 35,
was reintroduced into the legislature in April 1976, where it was approved and
became the Alberta Heritage Savings Trust Fund Act.
5.2 The trust fund and provincial resource policy
Natural resources were central to the Progressive Conservative Party’s vision for
Alberta. Noting that in the early 1970s the province was deficit-financing its
budgets, Allan Warrack (1994, 4) lists four aspects of the new resource policy:
11 Also interviews with The Hon. Peter Lougheed, QC, Former Premier of Alberta, Calgary, 1987
and 1988, and with The Hon. Dick Johnston, Treasurer of Alberta, Edmonton, 1988. Lougheed told me in these interviews that he viewed the province through the metaphor of a house, with the concomitant need to provide for its future economic security through savings. It is clear both from the series of interviews with Lougheed himself, and from other sources, that Lougheed was the originator of the trust fund idea.
12 Also interviews with Peter Lougheed, Calgary, 1987 and 1988; and with Dick Johnston,
1) To increase the share of public ownership of natural resources; 2) To increase prices of oil and gas to market levels;
3) To upgrade resources, which would increase employment; and
4) To gain greater investment opportunities as public resources are developed.
These policy dimensions reflect several factors. First, the province would rely on
the market economy, but it would attempt to increase provincial ownership of
resources. Second, increased resource prices and increased public resource
ownership would lead to an increase in provincial revenue. Other aspects of
Alberta policy suggest that this new flow of resource revenues could be used to
achieve the provincial goal of economic diversification. These policy objectives,
together with a dramatic increase in oil prices by the mid 1970s, did in fact provide
the province with substantial new revenues.
The fund was developed as a means to counteract the problems of a
resource hinterland and its peripheral economy. Specifically, developing a large
pool of endogenous capital would extend the benefits of resources over time (and
allow future generations to share in them); it would provide a source of capital in
addition to that provided by Eastern Canadian banks and by foreign financiers (and
would, ultimately, replace these sources); and it would provide a pool of capital
that could be used to achieve the Alberta government’s diversification objectives,
which were so central to the Progressive Conservative Party’s general program and
necessary to secure the support of the party’s urban constituents. Thus, while the
fund did have long-range objectives and was founded on a long-range resource
management philosophy, it nevertheless provided immediate economic support for
fund strengthened this latter tendency.
The Alberta Heritage Savings Trust Fund Act passed the provincial
legislature on 19 May 1976, and the AHSTF received its first allocation of $1.5
billion (from general revenues).13 The fund was given three objectives:
1) To save for the future;
2) To strengthen and [later ‘or’] diversify the economy of Alberta; and 3) To improve the quality of life for Albertans (Alberta Statutes, 1976).
These stated objectives indicate that the fund would be used to benefit Alberta
alone. Moreover, the fund could also be used to provide a source of capital for
Alberta government-sponsored projects. The stated objectives, especially the latter
two, provided the authority for the province to use the AHSTF as a developmental
instrument. In addition to specifying the objectives of the fund, the Alberta
Heritage Savings Trust Fund Act specified the fund’s organization, management,
and investment policies. The Act created the AHSTF through legislation, meaning
that such legislation could be amended by a motion of the provincial legislature.
The Act did not provide any constitutional protection for the fund.