The unnoticed death of a billion-dollar endowment
Given plummeting oil prices and the ensuing talk of austerity in Alberta, a program designed to think long-term, to change the way we approach social and cultural problems, and to invest in long-term projects outside the fluctuations of a resource-based economy is an idea worth considering.
If someone pitched it now, the province’s progressives would likely rally behind it. But we had it, and it was killed, and no one noticed.
This past March, in an announcement that was overshadowed by Alison Redford’s pending resignation as premier and the surrounding scandal, the Progressive Conservatives announced the creation of the Social Innovation Endowment Account (SIE), a billion-dollar fund established to encourage new ideas and approaches in social services and the cultural sector. It was to be the largest social endowment in Canada.
That it came into effect on April Fools Day was probably a bad sign.
The fund would have set aside $1 billion from the Alberta Heritage Savings Trust Fund over the next two fiscal years, using the interest (and only the interest) to support projects that promote new ideas and approaches in social services and the cultural sector. It would have meant $22.5 million in funding for those groups in 2015, and twice that in 2016 and beyond, small beans in terms of the overall budget, but highly significant for the sector. By comparison, the total granting budget for the Alberta Foundation For the Arts in 2012-13 was $23.5 million.
Earlier this month, in an announcement that was overshadowed by the controversy over Bill 10 and the collapse of the Wild Rose party, the PCs killed the endowment, citing changing economic circumstances and a need for fiscal prudence. A billion-dollar cut, overshadowed by a bill that never should have existed in the first place, and by the nonsensical behaviour of the official opposition.
The SIE wasn’t the only fund killed off by Bill 11, the Savings Management Repeal Act, which received Royal Assent on December 17. Bill 1, which introduced the SIE, also created the Agriculture and Food Innovation Endowment ($200 million) and the Alberta Future Fund, a loosely defined fund that would total $1 billion by 2024, to be used for projects and initiatives in the province’s long-term interest, both of which have been axed. A transfer of $200 million to the Alberta Heritage Scholarship Fund for trades apprenticeships is the only part of Bill 1 to survive, since the money had already been allocated.
Finance minister Robin Campbell, who tabled Bill 11, told the Edmonton Journal that “In today’s fiscal reality, and trying to get a budgetary process where we’re not so dependent on oil all the time, we’re going to have to be very prudent” and that “The money will continue to sit in the Heritage Trust Fund, and grow and collect interest.” And of course, with the massive drop in oil prices, few are going to argue with the notion that the province needs to tighten its belt, and no one will be surprised that arts and social services are going to be among the first to feel the pinch.
Keep in mind, though, that while the numbers being tossed around are in the billions, this isn’t a billion-dollar savings—it doesn’t free up a dime for essential services. The only money spent on the endowments would be interest, leaving the principle untouched. This repeal just puts the cash and interest back in the Heritage Fund, where it’s off-limits to any spending (in theory at least, although historically the province has been terrible at re-investing). Seeing as the whole idea behind the funds was to encourage the kind of innovation that could help the province move away from a resource-based economy, it’s questionable whether the repeal is actually more prudent.
We can’t know whether the SIE, the agriculture endowment or the future fund would have led to genuine innovation. It could have been completely mishandled–“turning part of our Heritage Fund into a slush fund,” as Rob Anderson put it shortly before returning to the PCs, but it was at least a relatively bold, forward-looking project, and it deserves better than having both its birth and death overshadowed by party politics. When a multi-billion-dollar program is created for our benefit, then cut just as quickly, we should at least have the decency to notice.