Should Alberta's Heritage Fund be turned into a new "superfund" to stabilize the ups and downs of oil and gas revenues This is what the Financial Management Commission is expected to propose to Finance Minister Pat Nelson.

The Alberta government collected $2.4 billion in oil and gas revenues in 1998 and $10.6 billion in 2000, and should collect $3.7 billion this fiscal year (but we will wait-and-see). The annual average is about $3.3 billion per year, when converted into 2002 constant dollars. These ups and downs have contributed to Alberta's "roller coaster" budgeting, which harms prudent planning.

According to reports, the Commission will recommend using the Heritage Fund to provide stable, predictable, long-term funding for infrastructure. It would work as follows: all oil and gas revenues would flow into the Heritage Fund, rather than into general revenues. Each year the government would take $3.5 billion out of the Heritage Fund to spend in its annual budget. Or, if the average oil and gas revenues in the previous three years were less than $3.5 billion, the lesser amount would go into the budget. The year-to-year (and week-to-week!) changes in oil and gas prices would no longer cause spending sprees followed by cut-backs.

Providing stable, reliable funding for infrastructure and other important programs is an excellent idea. However, changes to the Alberta Heritage Savings Trust Fund Act and the Fiscal Responsibility Act must include three things.

First, Alberta needs spending control legislation like the state of Washington, which limits growth in government spending to the rate of inflation plus population growth. Ralph Klein recently slapped Albertans with $722 million in tax hikes to pay for a 45% increase in spending on government programs in six years (compared to only 12% population growth and 13% inflation during the same period). In contrast, Washington's law has kept billions of dollars out of the hands of politicians, leaving them in the pockets of the Washington taxpayers who earned them.

Second, Albertans needs taxpayer protection legislation, making it mandatory for any tax increases to be put to voters for their approval in a referendum. The onus should be on politicians to justify why they want to take more of our money. But as things are now, the onus is on Albertans to explain why we should be able to keep the money we've earned.

Third, the Heritage Fund should be built up to serve as a means to eliminate Alberta's personal income tax in the future. In a study commissioned by the Canadian Taxpayers Federation, University of Calgary economist Jean-Francois Wen shows how this is a realistic goal, which can be accomplished as early as 2015. But this goal cannot be reached if politicians spend 100% of oil and gas revenues, as if this money belonged to them rather than to Albertans. New legislation should require at least half of this money to be saved for the time when there is no more oil and gas.

If these three essentials make their way into new legislation, a new "superfund" will protect taxpayers and bring a welcome end to Alberta's "roller coaster" budgeting.