Confederation Building in St. John’s, NL. Photo by The Telegram/File photo /THE TELEGRAMArticle contentSaving for tomorrow helps Newfoundlanders and Labradorians today.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY.Subscribe now to access this story and more:Unlimited access to the website and appExclusive access to premium content, newsletters and podcastsFull access to the e-Edition app, an electronic replica of the print edition that you can share, download and comment onEnjoy insights and behind-the-scenes analysis from our award-winning journalistsSupport local journalists and the next generation of journalistsSUBSCRIBE TO UNLOCK MORE ARTICLES.Subscribe or sign in to your account to continue your reading experience.Unlimited access to the website and appExclusive access to premium content, newsletters and podcastsFull access to the e-Edition app, an electronic replica of the print edition that you can share, download and comment onEnjoy insights and behind-the-scenes analysis from our award-winning journalistsSupport local journalists and the next generation of journalistsRegister to unlock more articles.Create an account or sign in to continue your reading experience.Access additional stories every monthShare your thoughts and join the conversation in our commenting communityGet email updates from your favourite authorsSign In or Create an AccountorArticle contentIf you see a shiny new car on a showroom floor, you don’t drain your retirement fund to buy it.Article contentArticle contentOr when you get a bonus at work, you don’t assume it will show up again next year. Instead, you use it to pay down your credit card or top up your savings.Article contentThat’s why Premier Tony Wakeham’s plan to liquidate the Future Fund to pay for his election promises is a bad move that endangers Newfoundland and Labrador’s financial future. The Future Fund was established by former premier Andrew Furey in 2023 to manage the province’s volatile resource revenues. That was a smart move.Article contentArticle contentThat’s because natural resource revenues are difficult to predict so the amount budgeted might not actually be the same by the end of the year.Article contentThat means when times are good and resource revenues are high; the provincial government spends. And then in tough times, the government drives up the debt and increases debt interest payments. That’s not sustainable.Article contentAnd Newfoundland and Labrador already has a huge debt problem.Article contentEvery Newfoundlander and Labradorian’s average share of the provincial debt is more than $35,000, the highest in Canada. Debt interest payments alone are projected at more than $1.2 billion this year, which works out to about $2,200 for every person in the province.Article contentIn the 76 years since Newfoundland and Labrador joined Canada, there have only been 10 provincial budgets that did not add to the debt. And six of those were simply the product of surging oil revenues rather than disciplined government spending.Article contentArticle contentAvoiding unpredictable swings in natural resource revenues is the core benefit of saving in the Future Fund. It sets the province up for the long term by saving to earn interest income. It also helps the province resist the urge to splurge on windfalls by capping the amount it can spend.Article contentThe Future Fund is an example of what is called a heritage fund in other jurisdictions. And when managed right, it can be very successful. The Alaska government established the Alaska Permanent Fund in the late 1960s. Since then, the state government has invested 25 per cent of its non-renewable resource revenue into the fund every year. From this investment, every single Alaskan receives an annual cheque from the fund. Each Alaskan got $1,000 this year.Article contentIn Norway, the government deposits 100 per cent of its oil revenues into its heritage fund. Today, it contains more than $2.8 trillion. Money that is generated from the fund covers almost 20 per cent of the Norwegian government’s budget. Alberta’s heritage fund is currently worth about $27.6 billion and Alberta Premier Danielle Smith announced that she plans to grow the Alberta Heritage Savings Trust Fund to at least $250 billion by 2050.
OP-ED: Newfoundland and Labrador should strengthen not scrap Futures Fund
