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Alberta government should rely on dividends—not ‘political will’—to grow Heritage Fund

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From the Fraser Institute

By Tegan Hill

The Smith government on Wednesday released its plan to grow Alberta’s Heritage Fund to at least $250 billion over the next 25 years, mainly by reinvesting all investment returns back into the fund. But even Smith recognizes her plan will “take political will over a long period of time.” Of course, political will is subjective and can change from government to government. If Smith wants to establish a sustainable plan to grow the Heritage Fund, it should pay dividends to Albertans.

First, some quick history. When the Alberta government created the Heritage Fund in 1976, it established a rule that the government must deposit 30 per cent of resource revenue (including oil and gas royalties) into the fund annually. That quickly fell to 15 per cent by 1982/83, and after an oil price collapse the government eliminated the requirement in 1986/87. Since then, governments have routinely failed to make deposits into the fund, the fund’s value (after accounting for inflation) has eroded over time, and governments have spent nearly all of the fund’s earnings. Consequently, this fiscal year the fund will be worth less than $26 billion.

In other words, political will hasn’t been a successful strategy in growing the Heritage Fund.

Which brings us back to dividends. Here’s where Alberta can learn from Alaska. Alaska’s resource revenue savings fund (the Permanent Fund) was also created in 1976, but is now worth about US$80 billion (roughly CA$115 billion). What does the Alaska government do differently?

While various rules contribute to the fund’s success, the dividend rule is arguably the most critical. The Alaskan government pays a share of the fund’s earnings to Alaskan citizens via a dividend each year. Crucially, this gives citizens an ownership share in the fund. And therein lies the political will for governments to responsibly grow and maintain the fund. Any government that tried to use the fund for irresponsible purposes (e.g. raid the fund to spend money elsewhere) would likely face the wrath of Alaskan voters, given their understandable attachment to the dividend cheques.

Indeed, while the Alaskan government can reduce or eliminate the annual dividend, it has consistently allocated funds to the dividend for more than 40 years, even though this reduces the amount of money available for government spending. Overall, the fund has paid out more than US$30 billion to Alaskan citizens via dividends. Last year, each Alaskan received US$1,702.

According to its plan released on Wednesday, the Smith government will rely on “political will” to grow the Heritage Fund. But that’s not a recipe for success. Instead, the Smith government should learn from Alaska’s success and start paying dividends to Albertans who will provide the political pressure necessary to grow the fund over the long term.

Tegan Hill

Director, Alberta Policy, Fraser Institute

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Alberta

ChatGPT may explain why gap between report card grades and standardized test scores is getting bigger

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From the Fraser Institute

By Paige MacPherson and Max Shang

In Alberta, the gap between report card grades and test/exam scores increased sharply in 2022—the same year ChatGPT came out.

Report card grades and standardized test scores should rise and fall together, since they measure the same group of students on the same subjects. But in Alberta high schools, report card grades are rising while scores on Provincial Achievement Tests (PAT) and diploma exams are not.

Which raises the obvious question—why?

Report card grades partly reflect student performance in take-home assignments. Standardized tests and diploma exams, however, quiz students on their knowledge and skills in a supervised environment. In Alberta, the gap between report card grades and test/exam scores increased sharply in 2022—the same year ChatGPT came out. And polling shows Canadian students now rely heavily on ChatGPT (and other AI platforms).

Here’s what the data show.

In Alberta, between 2016 and 2019 (the latest year of available comparable data), the average standardized test score covering math, science, social study, biology, chemistry, physics, English and French language arts was just 64, while the report card grade 73.3—or 14.5 per cent higher. Data for 2020 and 2021 are unavailable due to COVID-19 school closures, but between 2022 and 2024, the gap widened to 20 per cent. This trend holds regardless of school type, course or whether the student was male or female. Across the board, since 2022, students in Alberta high schools are performing significantly better in report card grades than on standardized tests.

Which takes us back to AI. According to a recent KPMG poll, 73 per cent of students in Canada (high school, vocational school, college and university) said they use generative AI in their schoolwork, an increase from the previous year. And 71 per cent say their grades improved after using generative AI.

If AI is simply used to aid student research, that’s one thing. But more than two-thirds (66 per cent) of those using generative AI said that although their grades increased, they don’t think they’re learning or retaining as much knowledge. Another 48 per cent say their “critical thinking” skills have deteriorated since they started using AI.

Acquiring knowledge is the foundation of higher-order thinking and critical analysis. We’re doing students a deep disservice if we don’t ensure they expand their knowledge while in school. And if teachers award grades, which are essentially inflated by AI usage at home, they set students up for failure. It’s the academic equivalent of a ski coach looking at a beginner and saying, “You’re ready for the black diamond run.” That coach would be fired. Awarding AI-inflated grades is not fair to students who will later struggle in college, the workplace or life beyond school.

Finally, the increasing popularity of AI underscores the importance of standardized testing and diploma exams. And parents knew this even before the AI wave. A 2022 Leger poll found 95 per cent of Canadian parents with kids in K-12 schools believe it’s important to know their child’s academic performance in the core subjects by a fair and objective measure. Further, 84 per cent of parents support standardized testing, specifically, to understand how their children are doing in reading, writing and mathematics. Alberta is one of the only provinces to administer standardized testing and diploma exams every year.

Clearly, parents should oppose any attempt to reduce accountability and objective testing in Alberta schools.

Paige MacPherson

Associate Director, Education Policy, Fraser Institute

Max Shang

Economist, Fraser Institute
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Alberta

How economic corridors could shape a stronger Canadian future

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Ship containers are stacked at the Panama Canal Balboa port in Panama City, Saturday, Sept. 20, 2025. The Panama Canals is one of the most significant trade infrastructure projects ever built. CP Images photo

From the Canadian Energy Centre

Q&A with Gary Mar, CEO of the Canada West Foundation

Building a stronger Canadian economy depends as much on how we move goods as on what we produce.

Gary Mar, CEO of the Canada West Foundation, says economic corridors — the networks that connect producers, ports and markets — are central to the nation-building projects Canada hopes to realize.

He spoke with CEC about how these corridors work and what needs to change to make more of them a reality.

Gary Mar, CEO of the Canada West Foundation. Photo for the Canadian Energy Centre

CEC: What is an economic corridor, and how does it function?

Gary Mar: An economic corridor is a major artery connecting economic actors within a larger system.

Consider the road, rail and pipeline infrastructure connecting B.C. to the rest of Western Canada. This infrastructure is an important economic corridor facilitating the movement of goods, services and people within the country, but it’s also part of the economic corridor connecting western producers and Asian markets.

Economic corridors primarily consist of physical infrastructure and often combine different modes of transportation and facilities to assist the movement of many kinds of goods.

They also include social infrastructure such as policies that facilitate the easy movement of goods like trade agreements and standardized truck weights.

The fundamental purpose of an economic corridor is to make it easier to transport goods. Ultimately, if you can’t move it, you can’t sell it. And if you can’t sell it, you can’t grow your economy.

CEC: Which resources make the strongest case for transport through economic corridors, and why?

Gary Mar: Economic corridors usually move many different types of goods.

Bulk commodities are particularly dependent on economic corridors because of the large volumes that need to be transported.

Some of Canada’s most valuable commodities include oil and gas, agricultural commodities such as wheat and canola, and minerals such as potash.

Rail cars carry commodities through Saskatchewan. Photo courtesy CN Rail

CEC: How are the benefits of an economic corridor measured? 

Gary Mar: The benefits of economic corridors are often measured via trade flows.

For example, the upcoming Roberts Bank Terminal 2 in the Port of Vancouver will increase container trade capacity on Canada’s west coast by more than 30 per cent, enabling the trade of $100 billion in goods annually, primarily to Asian markets.

Corridors can also help make Canadian goods more competitive, increasing profits and market share across numerous industries. Corridors can also decrease the costs of imported goods for Canadian consumers.

For example, after the completion of the Trans Mountain Expansion in May 2024 the price differential between Western Canada Select and West Texas Intermediate narrowed by about US$8 per barrel in part due to increased competition for Canadian oil.

This boosted total industry profits by about 10 per cent, and increased corporate tax revenues to provincial and federal governments by about $3 billion in the pipeline’s first year of operation.

CEC: Where are the most successful examples of these around the world?

Gary Mar: That depends how you define success. The economic corridors transporting the highest value of goods are those used by global superpowers, such as the NAFTA highway that facilitates trade across Canada, the United States and Mexico.

The Suez and Panama canals are two of the most significant trade infrastructure projects ever built, facilitating 12 per cent and five per cent of global trade, respectively. Their success is based on their unique geography.

Canada’s Asia-Pacific Gateway, a coordinated system of ports, rail lines, roads, and border crossings, primarily in B.C., was a highly successful initiative that contributed to a 48 per cent increase in merchandise trade with Asia from $44 million in 2006 to $65 million in 2015.

China’s Belt and Road initiative to develop trade infrastructure in other countries is already transforming global trade. But the project is as much about extending Chinese influence as it is about delivering economic returns.

Piles of coal awaiting export and gantry cranes used to load and unload containers onto and from cargo ships are seen at Deltaport, in Tsawwassen, B.C., on Monday, September 9, 2024. CP Images photo

CEC: What would need to change in Canada in terms of legislation or regulation to make more economic corridors a reality?

Gary Mar: A major regulatory component of economic corridors is eliminating trade barriers.

The federal Free Trade and Labour Mobility in Canada Act is a good start, but more needs to be done at the provincial level to facilitate more internal trade.

Other barriers require coordinated regulatory action, such as harmonizing weight restrictions and road bans to streamline trucking.

By taking a systems-level perspective – convening a national forum where Canadian governments consistently engage on supply chains and trade corridors – we can identify bottlenecks and friction points in our existing transportation networks, and which investments would deliver the greatest return on investment.

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