Ontario should look to socialist Norway if it wants to capitalize on the rich mineral deposits of the far north’s Ring of Fire.
Like Canada, Norway has a resource-based economy, exploiting extensive reserves of oil, natural gas minerals and lumber. Half its export revenues come from oil and gas.
Unlike Canada, Norway is not in hock up to its eyeballs. In fact, it’s the second-wealthiest country in the world. Every Norwegian is, theoretically, a millionaire. That’s a million kroner, which translates to about $177,000 US apiece.
That’s because, unlike many other resource-rich countries and provinces, Norway put its oil revenues, from taxes, fees and ownership stakes, into a fund where politicians couldn’t get their spendthrift hands on them.
The money was invested in financial markets outside Norway. It grew. Their sovereign wealth fund, created a mere 20 years ago, now controls about one per cent of all publicly traded shares in the world.
It’s a rainy-day fund, set up because oil won’t flow forever. And Norway’s oil production has dropped to one-half of what it was in 2001, according to Huffington Post business editor Daniel Tencer in a recent article.
Meanwhile in Alberta, where oil production generally keeps increasing, the debt per capita is at least $1,925 per person, according to Canadian Taxpayers Federation calculations.
Alberta established a Heritage Trust Fund in 1976, but stopped contributing to it. According to a report last month by the Macdonald-Laurier Institute, the total topped out a $17 billion, about one-tenth what it could have grown to with a strategy like Norway’s.
Moreover Alberta keeps drawing on that to pay government expenses. Only about 8.6% of resource revenues from 1997 to 2005 were saved, according to the Canada West Foundation. And that was in the oil boom days.
Saskatchewan also launched a Heritage Fund in 1978 to “provide a perpetual source of development and social capital for the people of Saskatchewan,” according to a government report proposing its revival.
But perpetuity didn’t last long. The government tapped into the fund and assets flowed into general revenues The fund was abolished in 1992.
British Columbia announced last year it was creating a wealth fund with profits from a proposed liquified natural gas industry. The results remain to be seen.
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