The Alberta government has announced a long-term plan and a new Crown corporation to grow the province’s Heritage Fund to $250 billion over the next 25 years in a bid to protect its economy from the “volatility” of the energy sector.
The fund’s growth stalled in recent decades due to limited contributions and the government’s spending rather than reinvesting earnings, Finance Minister Nate Horner said at a Jan. 29 press conference. The new plan prioritizes reinvesting annual profits, ensuring that both capital and returns remain in the fund until 2050.
The province expects the fund to then have reached $250 billion, when the government can start using some of the accrued interest to fund public services and infrastructure. The fund stood at $24.3 billion as of last September.
A new Crown corporation, the Heritage Fund Opportunities Corp., will oversee the fund, make investment decisions, and partner with other global wealth funds to deliver high returns, the province said.
Alberta’s revenue from oil and gas is “increasingly volatile,” said Horner, noting that oil prices have fluctuated since last fall, with every dollar decrease in the price of oil reducing provincial revenue by roughly $630 million.
“As we put together Budget 2025, the price of oil is something we have to factor into every decision, and unfortunately, our oil revenues do not grow with our population,” said Horner. “That is why it is so important to plan ahead now. We are committed to grow the Heritage Fund so that it provides long-term economic security for future generations.”
Related Stories
The fund would be worth more than $250 billion today and generate $20 billion annually if its income had been reinvested since it was created in 1976, the province said.
Premier Danielle Smith said the fund will provide financial stability for Alberta in the future, especially when the province’s fossil fuels run out.
“Our intent is clear. We are not using the Heritage Fund to supplement the budget. We are genuinely saving for a day that won’t arrive for decades, but which we know surely will come,” she said. “Alberta needs to prepare for an era when oil and gas revenues aren’t a mainstay of provincial spending.”
The province said the fund will focus on “strategic investments” in areas that matter to Albertans and maximize growth, such as technology, energy, and infrastructure. The plan will work with “like-minded” organizations and investors around the world “to access premier opportunities and bring new ideas and expertise back to the province.”
The plan will emphasize strong governance through the newly established Heritage Fund Opportunities Corp., which will work as an “asset owner,” according to the province. The corporation was created as an independent agency to ensure it is “free to make the right decisions for long-term growth without interference from government,” Smith said.
The corporation will be chaired by Joe Lougheed, son of former Alberta Premier Peter Lougheed, who created the Heritage Fund in 1976.
The province has earmarked $2 billion from Budget 2024 to the new corporation’s investments and expects the fund to increase to more than $26 billion by the end of the 2024-25 fiscal year.
