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.
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On August 30, 1971, the Progressive Conservative Party led by 43-year old Calgary lawyer Peter Lougheed were rocketed into government when they unseated the 36-year old Social Credit government led by 57-year old Harry Strom.
It was a shift that, until recently, had happened only once every generation in Alberta: a change in government.
Lougheed’s election represented a generational shift, with the voting age dropping from 21 to 18 years old for the first time, and an urban shift, with a handful of new urban districts added to the electoral map dislodging the disproportionate rural majority that had dominated Alberta’s elections until that point.
As Ernest Manning’s successor, Strom inherited an aging dynasty that had governed Alberta since 1935. While he appeared open to new ideas, modernizing the long-in-the-tooth Socred government was a tall order.
In contrast, Lougheed embodied new ideas of a younger Alberta – or at least that’s what the mythology of that election tells us. His campaign was made for TV and the telegenic Lougheed could be frequently seen “main streeting” and running from door to door while canvassing for his party’s candidates.
Social Credit tried to revitalize their look, with go-go girls and live bands at their election rallies, but once voters decided that change was needed it was impossible for Strom to turn that around. And the iconic NOW! slogan of Lougheed’s campaign tapped into that feeling.
The Lougheed PCs were not alone. They had the financial backing of corporate Calgary, including generous support from the Mannix Corporation, which employed Lougheed before he was first elected to the Legislature in 1967.
The PCs won with 49 seats and 46.4 per cent of the popular vote, sweeping out Social Credit, which, with 25 seats and 41.1 per cent of the vote formed the Official Opposition for the first time. While the Social Credit Party would wither in the opposition benches and eventually shrink into a 4 MLA rump that would survive until the early 1980s, Lougheed’s first victory transformed Alberta politics for the next five decades.
The PCs would form commanding majorities until their defeat to Rachel Notley’s New Democratic Party in 2015.
Also elected in 1971 was NDP leader Grant Notley, who would represent the northern rural district of Spirit River-Fairview until 1984. The NDP narrowly missed out electing a few other MLAs in this election, and Notley would remain the party’s only MLA – and the only social democratic voice in the Legislature – until Ray Martin was elected in Edmonton-Norwood in 1982.
The Alberta Liberal Party, which had formed Official Opposition before Lougheed’s PCs earned the spot in 1967, were wiped off the political map and would remain in the political wilderness until 1986.
In politics timing is everything, and Lougheed lucked out. Massive windfalls in oil and gas revenues led to overflowing government coffers, allowing the PC government to make major investments in public infrastructure like hospitals, schools, universities and colleges. The Lougheed PCs founded the The Banff Centre, the Kananaskis Country recreation area, and even bought an airline – Pacific Western Airlines.
Lougheed’s government introduced a Bill of Rights, created the Legislature Hansard, and dissolved the notorious Alberta Eugenics Board.
The difference between Lougheed and some of his successors in Alberta’s Conservative dynasty was his belief that government had a positive role to play in society (a Reform Party Member of Parliament named Jason Kenney once criticized Lougheed’s legacy of “neo-Stalinist make-work projects.”)
Lougheed believed Alberta should behave like an owner of our oil and gas resources and that the government should collect its fair share of revenues. Royalty revenues were much higher than today, peaking at 40 per cent during his time as Premier. The oil companies complained but Lougheed was persistent.
“This is a sale of a depleting resource that’s owned by the people. Once a barrel of oil goes down the pipeline it’s gone forever. It’s like a farmer selling off his topsoil,” Lougheed once said.
Lougheed’s government also negotiated landmark financial investments from the federal government and the Ontario government in the oil sands that kickstarted development of the deposits when private investors would not take the risk. These government investments in Alberta’s oil industry likely helped save companies like Suncor when the international price of oil plummeted in the 1980s.
Relations between Lougheed’s government and Ottawa soured following the introduction of the National Energy Program, creating a political wedge that Conservative leaders have continued to crank ever since. But he always made sure he was seen as advocating for Alberta in a strong Canada and was a key player during the Constitution-making negotiations of the early 1980s.
The Heritage Savings Trust Fund is one of Lougheed’s biggest legacies. Today the trust fund is seen as a visionary move to save money for future generations of Albertans, which it is in a way, but it was also a result of a government that at one point literally had more money that it knew what to do with.
Lougheed commanded the loyalty of his cabinet, caucus and party – which built a political dynasty that would span four decades but also gave him a bit of an autocratic reputation.
PC MLAs would be required to share frequent local membership and fundraising updates with the Premier’s Office and Lougheed was known to make monthly calls with local PC Party association presidents in order to create a system of accountability with his local leaders. And there have also been stories that Lougheed kept undated and signed letters of resignation from his cabinet ministers in order to avoid having to fire anyone who became a political liability.
There is a Camelot-like mythology to Lougheed’s time in office. He towers over Alberta politics in ways that more recently popular leaders like Ralph Klein do not. While Klein was a populist, Lougheed was a builder. The oil money sure helped, but so did having a vision for making this province a better place.
Day Light Saving Time Referendum
Nothing is new under the prairie sun. In 1971, Albertans voted to adopt Daylight Saving Time in a province-wide referendum after voting against DST in a 1967 referendum. This October 2021, Albertans will vote whether to abandon the time change and permanently adopt Daylight Saving Time.
Newspaper Election Ads from 1971
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You sent us your questions and we answered! In this edition of the annual Alberta politics Q&A episode, Daveberta Podcast host Dave Cournoyer and producer Adam Rozenhart dive into the mailbag to answer listener questions about provincial parks, the Heritage Savings Trust Fund, the reopening of schools in September, political party fundraising, how previous governments might have handled the COVID-19 pandemic differently, how the government could do a better job convincing more Albertans to wear face masks in public, and much more.
We also chat about your recommendations for the Alberta politics summer reading list, which will be published later this week.
The Daveberta Podcast is a member of the Alberta Podcast Network: Locally grown. Community supported. The Alberta Podcast Network includes dozens of great made-in-Alberta podcasts.
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If you were looking for evidence that Alberta Premier Rachel Notley is a pragmatist, we saw it yesterday. Backed by the members of the Royalty Review Panel, Energy Minister Marg McCuaig-Boyd and the 16 New Democratic Party MLAs from the Calgary region, Ms. Notley announced the Alberta government would not be increasing natural resource royalty rates.
The Royalty Review wraps up the second major review panel launched by the NDP after their win in the 2015 provincial election. The report from Alberta’s Climate Change panel represents a more meaningful shift by the government by phasing out dirty coal fired power plants and introducing a carbon tax. As the Climate Change report represents sweeping change, the royalty review panel embraces the status quo.
“It is not the time to reach out and make a big money grab. That just is not going to help Albertans over-all right now, and so I feel quite confident that this is the right direction to take,” Ms. Notley told the news conference in Calgary yesterday.
The decision to keep royalty rates the same is a 180 degree turn from the feisty NDP opposition we knew ten months ago, which claimed Albertans were not getting their fair share from royalties under the old Progressive Conservative regime.
It was also a sharp contrast from the words we heard from the chairman of the province’s previous royalty review. In 2007, Bill Hunter wrote that “Albertans do not receive their fair share from energy development. Albertans own the resource. The onus is on their government to re-balance the royalty and tax system so that a fair share is collected.”
If you were paying attention to the moderate language Ms. Notley and NDP cabinet ministers have used when discussing royalty rates since forming government and launching this review panel in mid-2015, you might be less surprised.
With the government’s messaging in mind, it is not shocking that the NDP did not choose to ignore the panels recommendations and impose sweeping changes that many Albertans, including myself, felt were needed. It is my belief that our resource royalties should have been raised to ensure that Albertans are actually getting their fair share when oil prices are high. This report does not do that.
While the decision to accept the status quo on royalty rates will certainly be a divisive issue within the NDP caucus and party, it demonstrates that Ms. Notley is not a partisan ideologue.
The NDP would have faced a severe political backlash from its right-wing opponents, the energy industry, and thousands of Albertans nervous about the state of the economy if they had jacked up royalty rates yesterday. In the short-term, with the current economic situation in mind, it is a smart political decision to keep royalty rates the same, but in the long-term it represents a missed opportunity for Albertans.
Closing the door to royalty increases will also not help solve the revenue shortfall caused by the drop in the international price of oil. After enjoying decades of high oil and natural gas prices, the old conservative government became over dependent on resource royalties to fund the province’s operations budget. With international oil price dropping, the new government now faces a significant shortfall in revenue.
By accepting current royalty rates, the government has also rebuked months of hyper-partisan rhetoric and nasty attacks from Wildrose leader Brian Jean, who claimed the review was risky, ideological and would “not be independent or fair.” It is troubling that Mr. Jean and his party are opposed to even the concept of reviewing Alberta’s resource royalty rates, something that should be done by the Alberta government on a regular basis to assess whether our rates are competitive.
Creating mechanisms for increased transparency around royalties is one positive outcome of this review. The report recommends the annual publication of a capital cost index for oil and gas wells and the costs and royalties paid for each oil sands project. The Auditor General has reported numerous times that the old Conservative government was not properly tracking whether Albertans were receiving the royalty rates they were owed.
Significant new investment in the Heritage Fund when oil prices do rise again will pay off for Albertans in the long-term. In their 2015 election platform, the NDP campaigned on the promise that “100% of incremental royalty revenue, above the sums earned by Alberta under the current regime, will be invested into Alberta’s Heritage Fund.”
Many Albertans will disagree with the report’s claim that Albertans are currently receiving our fair share from resource royalties. Others will claim it will limit the government’s options for dealing with the revenue shortfall. But, for better or worse, it does show the evolution of Ms. Notley and her party from leftish opposition into a moderate government. For better or worse, yesterday we saw Rachel Notley boost her credentials as a pragmatic Premier of Alberta.
After forty-four years of Progressive Conservative government in Alberta, it still feels surreal to believe that another party has been elected into government. Two and a half months after the NDP victory, Premier Rachel Notley is putting her stamp on Alberta politics. But Alberta’s new government is left to deal with some of the more unhelpful legacies created by the previous government. Here is a look at a few of the Progressive Conservative scandals that continue to haunt Alberta politics.
Funeral Homes
CBC reports that it has obtained documents showing how the Alberta Funeral Service Association pressured former minister Jonathan Denis and the Department of Justice to reopen a contract and abandon earlier efforts to control spending. CBC reports the contract was reopened and revised against the advice of a government lawyer and chief medical examiner Dr. Anny Sauvageau.
Kananaskis Golf Course
Alberta’s auditor general is reviewing a controversial contract between the government and a private company operating a publicly-owned Kananaskis golf course. During this year’s election, NDP MLA Brian Mason asked the auditor general to investigate why the government paid $9.3 million to the company, which is known to have connections to the PC Party. The golf course has been closed since the 2013 floods in southern Alberta.
Wildrose MLA Derek Fildebrandt, who chairs the Standing Committee on Public Accounts, has said he hopes to compel former PC cabinet ministers, including Diana McQueen, to appear at a committee meeting. Critics have criticized the 1983 contract as a “sweetheart deal.”
Airplane sale
The rushed sale of the government’s fleet of airplanes led to a $5 million loss for Albertans. This contradicts claims by former PC premier Jim Prentice that the sale of the planes netted $6.1 million for the government. The planes were sold after Ms. Redford and PC MLAs faced harsh criticism for alleged misuse of the government air fleet for personal and partisan activities.
Public Sector Pensions
Alberta public sector pension liabilities dropped by more than $400 million last year, suggesting evidence that changes planned to the funds by former premier Alison Redford and finance minister Doug Horner were not necessary. The attacks on public sector pensions alienated thousands of public sector workers in Alberta, many who voted for Ms. Redford’s PC Party in the 2012 election. The PC government’s planned changes to the pension plan were scrapped after Ms. Redford resigned as premier in early 2014.
Cowboy welfare
The auditor general reported that the government has been forgoing an estimated $25 million in annual revenue by not limiting surface rights compensation paid by the energy companies to holders of provincial grazing leases. The report states the province does not track which leases have oil and gas activity on them or how much was paid to the leaseholders for access to the natural resources.
“Current legislation allows an unquantified amount of personal financial benefit to some leaseholders over and above the benefits of grazing livestock on public land,” the report says.
Previous attempts to change the law governing the leases met fierce opposition from rural leaseholders, including a posse of sixty cowboys on horseback who tried to block premier Ralph Klein from visiting the Royal Tyrrell Museum in 1999.
Carbon Capture and Storage
The government’s large investments in carbon capture and storage development has not paid off, according to a July 2014 report from the auditor general. Marketed as a key piece of the PC government’s climate change plan, the auditor general reported that “with only two carbon capture and storage projects planned, the total emissions reductions are expected to be less than 10% of what was originally anticipated.”
The NDP pledged to end the carbon capture contracts and instead reinvest hundreds of millions of dollars into public transit programs, but high cost of cancelling binding contracts with private sector corporations developing the projects could solidify this PC legacy.
Heritage Fund
When premier Peter Lougheed created the Heritage Savings Trust Fund in 1976, the government dedicated 30% of annual revenues into the rainy day fund “to save for the future, to strengthen or diversify the economy, and to improve the quality of life of Albertans.” The PC government halted non-renewable resource transfers to the fund in 1987, when it was worth $12.7 billion. Investments into the fund were only started again in 2004.
Despite Alberta’s immense natural wealth, the fund is now only worth an estimated $17.4 billion.
Recent polls show a three-way split in support between the Progressive Conservatives, New Democratic and Wildrose Parties have generated some interest in Alberta’s provincial election campaign but with 24 days left until voting day we can expect a lot to change. Here is a quick review of what the politicians were saying and political parties were spinning in the first week of this election campaign.
Progressive Conservatives
Campaigning on issues related to the March 2015 provincial budget, Progressive Conservative leader Jim Prentice spent most of his week travelling around rural Alberta in his party’s campaign bus.
Mr. Prentice targeted his opponents as extremists while moderating his own tone around Alberta’s economy. Before the election was called, Mr. Prentice’s repeated doom-and-gloom messages led opposition critics to name him “Grim Jim.” The PCs are attempting to present Mr. Prentice as the balanced (a.k.a. safe) candidate, as opposed to the extremist (a.k.a. dangerous) leaders of the opposition.
The PCs promised to double the $17.4 billion Heritage Fund as part of a ‘ten year plan’ and Mr. Prentice repeated his pre-election statement that he would remove the provincial government’s dependence on natural resources revenues.
The recent provincial budget included almost sixty tax and fee increases, including increases to personal taxes but no increases to corporate taxes, which appears to have been a political miscalculation on the part of the PCs. The government’s own budget survey results showed 69% of Albertans support a corporate tax increase, a point the NDP has stressed.
PC MLAs and candidates took to social media to post different variations of a message that 8,900 jobs would be lost if corporate taxes were increased by 1%. It is unclear what study the 8,900 jobs number originates from.
Creating more confusion around corporate tax increases, a PC press release from April 9 stated ‘Prentice pointed out that more than 95% in Alberta are small businesses, employing fewer than 50 people, and questioned those who would put those jobs at risk with a corporate tax increase.” This is a good talking point, if not for the issue that small businesses do not pay corporate tax rates.
According to the Department of Finance website, small businesses earning $500,000 of less profit each year pay a separate 3% small business tax, not the 10% corporate tax applied to companies earning more than $500,000 in profit annually. The PCs dropped the corporate tax rate in Alberta from 15% in 2001 to the current 10% in 2006.
Edmonton Police are investigating bribery allegations made during the Edmonton-Ellerslie PC nomination contest and disqualified Edmonton-Decore PC nomination candidate Don Martin is suing the PC Party for $124,000 over bribery allegations. Dismissed nomination candidate Jamie Lall declared that he is running as an Independent candidate against PC MLA Bruce McAllister in Chestermere-Rockyview.
New Democratic Party
NDP leader Rachel Notley launched her party’s election campaign in Edmonton and travelled to Calgary and Lethbridge to campaign with candidates in those cities. It is notable that the NDP are focusing resources on candidates outside of Edmonton, where the party has traditionally been weak. Calgary-Fort candidate Joe Ceci, Calgary-Varsity candidate Stephanie McLean and Lethbridge-West candidate Shannon Phillips were prominently placed at Ms. Notley’s side during photo-ops at these stops
NDP messaging in the first week of the campaign focused on the economy. Ms. Notley announced the creation of a Job Creation Tax Credit for businesses as the first NDP election promise, providing balance from their calls for corporate tax increases. The credit sounds reasonable, but much like the PC Party’s 8,900 job loss argument, I am skeptical about this credit creating 27,000 new jobs. The NDP also announced that in-province refining and upgrading is also a top priority. Before the election was called, Ms. Notley’s unveiled her party’s plans to create a Resource Owners’ Rights Commission.
The NDP responded to Mr. Prentice’s “extremist” claims with an “extremist of the week” press release quoting former Premier Peter Lougheed’s support of increased corporate taxes and former Deputy Premier (and current PC candidate) Thomas Lukaszuk support for in-province refining and upgrading.
Ms. Notley was also a guest on this week’s #abvote Google Hangout.
Wildrose Party
Focusing on rural Alberta, Wildrose leader Brian Jean campaigned in southern Alberta and his Fort McMurray constituency this week. While the campaign trail in Strathmore-Brooks, Mr. Jean and candidate Derek Fildebrandt cleverly walked around town with a giant arrow in hand pointing out services and commodities, like alcohol and gas, which became more expensive due to tax increases in the recent provincial budget.
Mr. Jean released his party’s “Five Priorities” that include positions on taxes, health care, education, democracy and rural Alberta. Part of the Wildrose plan to balance the budget by 2017 without raising taxes includes cutting 3,200 management jobs, including 1,600 in Alberta Health Services and 1,600 in the Government public service.
The Wildrose announced they would sell the Kananaskis Golf Course, a publicly owned and privately-operated golf course that the provincial government had paid millions of dollars to repair after it was damaged by floods in 2013.
Mr. Jean backtracked on comments made about Mr. Prentice undermining Prime Minister Stephen Harper.
The Wildrose Party also nominated new candidates this week including City Councillor Buck Buchanan in Red Deer-North, past mayoral candidate Shelley Biermanski in St. Albert, Don Koziak in Edmonton-Glenora and Ian Crawford in Edmonton-Riverview.
Liberals
The Liberal Party announced they would introduce pay equity legislation, increase funding to Family and Community Support Services and reinstate the Charitable Donation Tax Credit, which was decreased in the recent budget. Interim leader David Swann , who is running for re-election in Calgary-Mountain View, received an endorsement from Senator and retired Lieuteant General Romeo Dallaire. Receiving the 2015 Calgary Peace Prize this week, Mr. Dallaire called Mr. Swann a “true humanitarian.”
Edmonton Journal columnist Graham Thomson wrote that the Liberal Party might need “a ballot box miracle” in order to save themselves from political oblivion.
Alberta Party
Alberta Party Leader Greg Clark released his party’s policy platform and Economic Recovery Plan. Most of the party’s focus is on electing Mr. Clark in Calgary-Elbow, where he placed a strong second to PC MLA Gordon Dirks in a 2014 by-election. Mr. Clark’s campaign is using DirksRecord.ca to target Mr. Dirks’ record.
The party also grabbed media attention for scooping up the domain names choosealbertasfuture.ca and .com after the PC campaign slogan was unveiled earlier this week.
Green Party
The Green Party published a media release criticizing the PC Government’s record on environmental regulation, describing it as a “fake, not authentic, regulation and thus an insult to the intelligence, dignity and trusting nature of Albertans.” The release takes issue with the South Saskatchewan Regional Plan and calls on the government to create a regulator that understands the impact of proposed activity and puts rules in place to prevent any unacceptable impacts.
Other Groups
The Council of Alberta University Students (CAUS) launched a campaign to increase voter turnout among university students in this election. “We are going to sign up thousands of students and make sure they turn out on Election Day,” CAUS chairperson Navneet Khinda said in a press release.
The Parkland Institute released a new report looking at political values of Albertans. Public Interest Alberta released its “Priorities for Change” report as a resource for political candidates in this election And Change Alberta has returned to rank the progressive candidates most likely to win in constituencies across Alberta.