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Norway fund vs AHSTF

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  • #46
    And then there's the other oil states...

    Kazakhstan Looks to Private Equity for Help With Its $93 Billion Cash Pile

    Oil plunge means Alaskans may see first state income tax in years

    Originally published December 25, 2015 at 5:41 pm Updated December 28, 2015


    “We’ve had it awfully good for a long time, and if we want to protect that, we’re going to have to make some hard choices,” said Ronald Duncan, president and chief executive of GCI, a telecommunications company that is one of the state’s largest non-oil businesses.

    Duncan is organizing a group to push for hard choices with a statewide publicity campaign that will start next month. The campaign, aimed at residents and the Legislature, is being developed, Duncan said. But his enthusiasm for the governor’s message in recent weeks — that residents will have to be less reliant on oil companies and pick up more of the burden themselves, as they did in the past — was clear. Duncan said he thinks a broader recession is inevitable next year if Alaska’s budget is not stabilized.

    Last edited by KC; 28-12-2015, 10:37 AM.


    • #47
      And Alberta's fate is to deplete and vacate. Last one out turns off the lights.

      Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince - Bloomberg

      ...PIF will technically make investments the source of Saudi government revenue, not oil,” the prince said in an interview at the royal compound in Riyadh that ended at 4 a.m. on Thursday. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”


      • #48
        The best job security is: a big pile of diversified investments throwing off cash.

        Norway’s Oil Fund Hits $1 Trillion; Meanwhile, In Alberta..


        “ "Reaching one trillion dollars is a milestone, and the growth in the fund's market value has been stunning."

        That stands in stark contrast to Alberta's oil fund, which is valued at C$17.2 billion, according to a statement released last month.

        Norway's fund amounts to US$192,000 (C$235,000) for every person in the country. Alberta's fund works out to C$4,150 per person in the province.

        Though the two jurisdictions share similar-sized populations (5.2 million Norwegians to Alberta's 4.1 million) and similar-sized economies, they have taken radically different approaches to their oil industry. ...”

        Norway a shining example of how to manage resource revenues | CFJC Today

        “In Canada for example, Alberta’s Heritage Fund had an asset value of $19.1 billion as of December 31, 2016. The Heritage fund was established in 1976 with the stated objective, “to save for the future, to strengthen or diversify the economy, and to improve the quality of life of Albertans.” Yet by the 1990s, just as Norway was launching its resource-based fund, Alberta had decided to put a significant portion of their income into general revenues.

        Since 1976, the Heritage Fund has earned over $190 billion, but the savings account has been raided again and again by successive governments and the value in the fund by 2014 was only $17.3 billion.

        The Canadian correspondent for The Economist suggested, as did the IMF, that every Canadian province should, “establish a sovereign wealth fund and treat non-renewable resource revenue as capital to be saved and invested, rather than income to be spent.”

        Good advice, yet governments, including British Columbia ,have been unable to resist the temptation of the quick political fixes these large ‘savings’ funds offer.


        Bolding mine
        Last edited by KC; 09-12-2017, 09:59 PM.


        • #49
          As has been mentioned here many times, if we were a country we could also have a large savings account, however.....we are only a province and must share our wealth with the rest of the nation.
          Just enjoying another day in paradise.


          • #50
            Originally posted by Drumbones View Post
            As has been mentioned here many times, if we were a country we could also have a large savings account, however.....we are only a province and must share our wealth with the rest of the nation.
            Albertans have a right to self determination. My guess is those that any referendum for independence would fail.


            • #51
              Originally posted by Drumbones View Post
              As has been mentioned here many times, if we were a country we could also have a large savings account, however.....we are only a province and must share our wealth with the rest of the nation.
              Exactly. If all of Canada was debt free, sure, but for us to save while other provinces are struggling, is basically obscene - its just going to hurt the currency and make those other provinces even more worse off / unable to compete. That's why no Federal government will ever allow it, anytime the fund grows, the health transfers decline, the subsidies to Alberta decline, the Federal spending in Alberta declines - we basically just get less and less bang for the federal tax buck our economy pays. Norway by contrast has careful chosen policies to ensure they haven't had to share their wealth with their neighbors - the most obvious of which was not joining the EU.

              I think people have to be a little careful what they wish for as well. Its obviously better to have savings than be in debt, and its bad when the debt growth is out of control (like in Alberta today). But, there's a limit to how much having savings makes things perfect. I have met a few trust fund babies (not really circles I normally associate with, the Liberal elite), and they didn't seem to me to be very successful or happy people. Wealth basically can make you fat and lazy, its hard for families to hang onto it beyond a generation or too (the 1% when I die will be made up of mostly different families than the 1% when I was born, much of the super rich today is self made). Its the same with countries - if you have a massive state fund, you end up like the Middle East, a few spoiled citizens living cozy lives, while immigrants do all the work. You are living off the spoils of capital invested in other countries - while you may have built that capital, the earnings you generate from it are via ther peoples efforts. It doesn't last forever, sooner or later people more hungry than you will find success themselves, we all need to put some effort in, either that, or the roof caves in, once you have got too pampered, you are in for a heck of a shock.
              Last edited by moahunter; 10-12-2017, 11:11 AM.


              • #52
                Money makes people fat and lazy yet lower taxes on the rich somehow drive increased capital investment in the economy? I think we are so far from the too much wealth problem that it’s s none issue. Even in Norway you can see that people are just itching to dip further and further into the savings to bail out a bad debt position that they somehow rationalized as good not too long ago.

                So wealth may work against some people but not all. Poverty and debt though seem to work against all.
                Last edited by KC; 10-12-2017, 11:25 AM.


                • #53
                  “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”

                  US Senator Chuck Grassley, 12/04/17

                  Or food or clothing or shelter or heat.....


                  • #54
                    Adding this comment based on a discussion in another thread.

                    Anyway, the royalty money that DID NOT go into the Heritage fund (AHSTF) either went into General Revenues or was not collected at all due to lower than market royalty rates or other forms of tax holidays (opportunity cost).

                    The money that went into General Revenues went straight back out as government expenditures. Some would have directly left the province as interest payments on foreign held debt and some would have left the province in other less direct ways. (ie sustaining higher incomes and corporate profits and so in higher federal taxes that did not get returned due to equalization. Then in exports like dividends, transfer pmts, good and services imports, savings exports via things like vacations...)

                    Generally though, Albertans benefitted each and every year as the royalty money circulated in the economy.

                    Alberta: spending more than we really earn, since 1970 | The Narwhal

                    Last edited by KC; 24-10-2019, 06:12 PM.


                    • #55
                      Peter Lougheed’s wish (ten years ago)

                      Lougheed upset at stagnant Alberta Heritage Fund | CTV News

                      July 5, 2009

                      “ Former Tory premier Peter Lougheed, whose government created the fund in 1976, is sorely disappointed and has renewed his push to breathe new life into the fund.

                      Lougheed, who has a Harvard MBA, was shocked when he heard that the Heritage Fund had lost $3 billion in the markets, reducing its value to $14 billion.

                      "That number is distressing to me because when I left government in 1985 the fund was of a similar value," he told The Canadian Press in an interview.

                      Lougheed's government designed the Heritage Fund so that 20 per cent could be used for capital projects to help diversify the province's roller-coaster economy that still relies primarily on the energy sector.

                      In the early years, the fund was used to kick start the petrochemical industry and to create a medical research foundation.“


                      “ Lougheed, who will be 81 this month, concedes that the political bruising that Getty had taken over his government's investment choices likely left Klein's government leery of taking the same kind of risks.

                      But he bristled when reminded of Klein's often repeated slogan that his government was "no longer in the business of being in business." Lougheed suggests that was a mistake, given that the Heritage Fund had always been intended to have an element of risk capital.

                      "I think the province should have been building in a significant way more diversification into our economy in a multitude of ways."


                      “ "I'd like to see the fund rebuilt. I think the public of Alberta would support that," he says. "It will be difficult because they're going through such a turmoil right now in terms of the world business and financial environment."

                      Stelmach's government has put about $10 billion into the Sustainability Fund, a separate pool of money which is being used to top up the province's budget now that Alberta is sinking back into debt. New projections forecast a deficit in the $7 billion range for the current fiscal year.

                      "In terms of a cushion fund, we put together the Sustainability Fund because we know we have the most volatile revenue of any jurisdiction in North America and unfortunately, we have to draw on it," Stelmach says.

                      The current premier says he's also reluctant to invest Heritage Fund money in the way that Lougheed suggests.

                      "I'm not looking to invest in any particular business using Alberta Heritage Savings Trust Fund money," Stelmach says. "That's for future generations."

                      "I'm looking at how the private sector can invest in Alberta to diversify our economy," he says. "I have tremendous faith in the private sector to do that."


                      Roger S. Smith: Dipping into Heritage Fund has cost Alberta financial security – Edmonton Journal

                      BY ROGER S. SMITH. MAY 14, 2016

                      Official government accounting for 1982 through 2015 shows Alberta with a deficit in 15 years and a surplus in the other 19 years. Overall the reported net surplus for these years is $29 billion. Non-renewable resource revenues were $205 billion for the same period.

                      If we recognize the $205 billion as spending down of wealth from 1982 to 2015, Alberta’s real deficit over this period was around $176 billion, $45 billion of it during Premier Ralph Klein’s so-called surplus years.

                      What might have been? Norwegian government policy has been to save its oil and gas revenues. With a population of five million people, the Norwegian fund has US$165,000 per capita. Norway’s four per cent benchmark return, when met, yields US$6,600 per Norwegian to be used in a variety of ways. The Alaska fund paid out US$1,884 to 631,306 individuals in 2014.


                      “ With 30 per cent saved, as intended from 1977 onward, annual returns of four per cent or six per cent would have resulted in a current Heritage Fund of $125 billion or $190 billion. Such pools equal $30,000 to $47,000 per Albertan. A spending rule of four per cent from such a pool would yield $5 billion to $7.6 billion per year, or $1,200 to $1,900 per Albertan. Such government revenues could be spent, used to lower taxes or distributed to Albertans.

                      How does $5 billion-$7.6 billion compare with existing revenue sources? Alberta’s 2016-17 personal income tax revenue is estimated to be $11.4 billion, corporate income tax $4.3 billion, and non-renewable resource revenue of $2.8 billion. The government deficit estimate — before the Fort McMurray wildfire — was $10.4 billion.

                      An Alberta sales tax similar to that in Ontario (eight per cent) would yield around $8 billion. Without such a tax, it is perhaps inevitable that Alberta will continue to consume its resource wealth...”


                      Bolding mine
                      Last edited by KC; 25-11-2019, 07:25 PM.


                      • #56
                        "I'm looking at how the private sector can invest in Alberta to diversify our economy," he says. "I have tremendous faith in the private sector to do that."

                        Yeah, how'd that work out for ya, Ed?

                        To today's UCP/Wild Rose/Reform brand of "conservatives", Lougheed was a pinko, Liberal, Commie.


                        • #57
                          At least the lower taxes in Alberta have allowed Albertans to save more money and become financially secure.

                          Of course, lower taxes mean the private sector will diversify and individuals and families will save for a rainy day.

                          Per capita value of Alberta's Heritage Trust fund lower than in 1976

                          DARCY HENTON, POSTMEDIA NEWS 06.24.2011

                          “ But Cochrane pointed out Albertans are benefiting from the fund.

                          "The money is still going to fund key priority programs with an effort to keep taxes low," she said. "It's intended to benefit not only future generations of Albertans, but also current Albertans."

                          Economist David Emerson warned Albertans last month that spending non-renewable resource money on programs and services is like selling off pieces of a farm to pay for groceries and daily living expenses.

                          The blue-ribbon panel he chaired has urged Alberta to wean itself off non-renewable resource revenues over the next five to 10 years, but it noted that means reducing services or finding other revenues.”

                          Albertans most concerned about debt, personal finances
                          Share this story:
                          CTV Edmonton, April 22, 2019

                          “The quarterly survey found that nearly six in 10 Albertans are worried about rising interest rates and their ability to repay their current debts. “Albertans are maxed out right now and what makes the situation more alarming is that there is no real plan for paying back what they have borrowed,” Licensed Insolvency Trustee Donna Carson said in a written release. “If the economy deteriorates further or interest rates rise, there’s going to be a significant number who will be forced into bankruptcy or insolvency.”

                          Last edited by KC; 25-11-2019, 07:59 PM.