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The Great Rethink: It’s time to reassess how our provinces manage natural resource wealth

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“Governments aren’t always effective in placing the money in the right spots,” he said. “The future wealth is disappearing because of incompetent management.”

Oddly, Canada’s most disadvantaged communities follow the Hartwick Rule to the letter and, partly due to strict regulations, have turned physical assets into financial assets.

The future wealth is disappearing because of incompetent management

Werner Antweiler

Laurence Booth, a professor of finance at the University of Toronto’s Rotman School of Management, said the Indian Act requires that one asset be replaced with another, so bands have been forced to save their resource wealth and, in a frustrating exercise for many bands, ask the federal government before they’re allowed to spend.

Jim Boucher, the former long-time chief of the Fort McKay First Nation in northern Alberta, said his community has been saving natural resource revenues as required in a trust, which has helped diversify the community’s revenues and now generates $5 million per year.

“Our philosophy was that we never had a deficit because we couldn’t rely on anybody to bail us out,” he said.

Jim Boucher, chief of the Fort McKay First Nation in northern Alberta, in 2014. Photo by Vincent McDermott/Fort McMurray Today/Postmedia Network files

Asked whether it’s frustrating that the provincial governments haven’t followed the same strict rules, Boucher said Canadian provincial governments have a history of running deficits.

“We didn’t want to be like the province,” he said.

Political calculus has been a driving factor in many resource-wealth decisions in Canada over the years, and that has led to some questionable decisions.

Geoffrey Morgan

2020-09-11 13:49:02

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