How the Heritage Fund was launched
It was 1975 and Lougheed's PCs were swimming in oil money like Scrooge McDuck
The Heritage Savings Trust Fund was front and centre in Premier Danielle Smith's pre-budget televised speech last week, so there’s a good chance Albertans are going to hear a lot about it when Finance Minister Nate Horner rises in the Legislative Assembly this afternoon to table the provincial government's annual budget.
In her 8-minute address to Albertans, Smith said she wants to funnel oil and gas royalty revenues into the Heritage Savings Trust Fund to increase it to between $250 and $400 billion by 2050. A report to the Standing Committee on the Alberta Heritage Savings Trust Fund reported the fund had a market value of $21.6 billion in 2023.
Many Albertans know the patriotic version of the Heritage Savings Trust Fund story - a visionary rainy day bank account created in the 1970s by former premier Peter Lougheed meant to preserve Alberta's oil wealth for future generations. But like many political stories that reach legendary status it is missing a lot of relevant historical context.
Lougheed having a vision for the future is certainly part of the story, but the oil revenue bonanza the government was wading through 49 years ago is another important part.
When the idea of the fund was announced in 1975, the Alberta government was swimming in oil royalties like Scrooge McDuck swam in gold coins.
From 1971, when Lougheed’s Progressive Conservatives won their first election by defeating Harry Strom's long-in-the-tooth Social Credit Party, to the eve of their first re-election bid in 1975, the Alberta government's annual oil and gas royalty revenues had skyrocketed from $270 million to a whopping $1.5 billion.
The big oil boom allowed the Alberta government to build schools, colleges, universities, hospitals, highways, and even buy an airline. But even after all that there was still a huge pile of cash left over.
The Alberta government literally had more money than it knew what to do with and there was worry that all the excess oil revenue might start to look awfully appealing to other provinces and the federal government, so Lougheed needed to do something with it.
The pre-election promise
On the eve of an election call in February 1975, Finance Minister Gordon Miniely announced a big tax cut and the creation of a trust fund as a place the government could shovel a substantial portion of its oil revenue.
“According to our government's policy that a substantial part of the incremental crude oil royalties must be invested in such a way as to promote diversification of our economic base, an Alberta heritage trust fund will be established to ensure the prosperity of future generations of Albertans,” Miniely said in his February 7, 1975 pre-election budget speech.
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