Smith announces new Crown corporation to oversee Alberta's reserve fund.
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The provincial government has a new plan to significantly increase the Alberta Heritage Fund, increasing it by 10 times its current size. Alberta Premier Danielle Smith announced Wednesday the creation of a new Crown corporation to oversee the province's reserve fund.
The Heritage Fund Opportunities Corp. is to direct policy for the Heritage Fund, which will be managed primarily by Alberta Investment Management Corp., or AIMCo.
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The new state-owned corporation is also responsible for independently managing investments in new deposits.
Smith said he aims to increase the fund to at least $250 billion by 2050 to lift the province off the resource revenue roller coaster. "No matter how much time we have left, there will come a time when we can no longer count on that income, and we can't escape that reality now," the premier said in Calgary.
The fund's assets were valued at $23.4 billion in September and the government has pledged an additional $2 billion that is now earmarked for investment by the new company.
Finance Minister Nate Horner said his board could invest the seed funds differently from AIMCo, the province's public pension fund manager.
"This is beyond the mandate of AIMCo, more in the vein of a sovereign wealth fund," Horner said.
The new state-owned company will operate independently and publish its results, Smith said. Horner told The Canadian Press in a previous interview that the goal is not to "disappear" animal projects that have difficulty securing funding, as Smith has previously suggested.
"It will be performance-driven," he said.
The finance minister said the new company would create global investment opportunities that would not be available to a manager like AIMCo.
Asked Wednesday if the new company's goal of supporting "areas that matter to Albertans" would mean investing in more Alberta-based assets, Horner said "not necessarily."
"It's about taking advantage of opportunities where those partnerships can provide great opportunities for the province in the future, but that's not necessarily the goal," he said, noting the province's assets, such as its knowledge base in artificial intelligence and water infrastructure. .
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He said the plan represents a return to the original vision of the legacy fund.
It was created in 1976 by former Prime Minister Peter Lougheed to set aside a portion of resource revenues, but successive governments have dipped into the fund as necessary, particularly when the price of oil has fallen. The Heritage Fund Opportunities Corp. will be chaired by Lougheed's son, Joe, chairman of the board of directors of Calgary Economic Development and a partner at Calgary law firm Dentons.
Smith's United Conservative government has pledged not to divert interest income from the fund to support the province's general revenue.
He estimates that if all of the Heritage Fund's income had been reinvested from the beginning, it would be worth more than $250 million today, generating more than $20 billion annually.
Opposition finance critic Court Ellingson told reporters in Calgary that he supports the government's efforts to boost the long-neglected savings fund, but the province already has an organization to do the job. "We don't need a new company," he said.
Wednesday's announcement comes after Horner fired the chief executive and entire board of AIMCo in November.
Less than two weeks later, the province hired former Prime Minister Stephen Harper as AIMCo's new president.
In addition to the Heritage Fund, AIMCo also manages about $118 billion in investments for public sector pension plans representing thousands of Albertans, including teachers, police officers and municipal employees.
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