Newsrelease

January 13, 1997
Edmonton, Alberta

Alberta Heritage Savings Trust Fund Business Plan

Consistent with new directions and legislation set out in the spring of 1996, a new business plan has been developed for the Heritage Savings Trust Fund. The business plan will be presented to members of the Standing Committee on the Heritage Fund for their review and approval on January 21, 1997.

Following an extensive public review of the future of the Heritage Fund, a number of changes have been made to establish a clear direction, set new objectives and implement a new governance structure for how the Fund is managed. The result will be improved accountability, a strong commitment to keep Albertans well informed about the status of the Fund, and a determined focus on getting the best return on investments. This business plan reflects those new directions.

The business plan sets out the following three goals for the Heritage Fund along with strategies for achieving the goals and performance measures:

1. earn income to support the government's consolidated fiscal plan
2. make investments in the Endowment Portfolio to maximize long-term financial returns
3. improve Albertans' understanding and the transparency of the Alberta Heritage Savings Trust Fund

With the new business plan in place, assets of the Fund will be divided into two portfolios: a Transition Portfolio and an Endowment Portfolio. Each portfolio will be managed independently and designed to meet specific investment objectives. The Transition Portfolio will be invested primarily in interest bearing securities with an emphasis on generating income to support the province's fiscal plan. The Endowment Portfolio will be invested in a diversified portfolio including interest bearing securities, Canadian equities and international securities with a long term return objective.

The business plan also reflects limits on the type of investments that can be made from the Fund. It can no longer be used by government for economic development or social investment purposes. From now on, the focus is on getting a solid return for investments rather than using the Fund as a tool for implementing government policies. In keeping with this direction, over the next ten years, the Transition Portfolio will be phased down and assets will be transferred to the Endowment Portfolio. By 2005, the business plan calls for all the Heritage Fund's assets to be invested in the Endowment Portfolio with the long term objective of getting the best return on investments.

In order to keep Albertans well informed about plans for the Fund and results, regular reports will be provided to Albertans and the Standing Committee will hold annual meetings around Alberta to report on the Fund's results and answer questions from interested Albertans.

A new Legislative Standing Committee operating at arms length from the government, is now in place to review and approve the business plan and ensure that the objectives and goals of the Fund are met. Members of the Standing Committee include:

• Clint Dunford, Chair, MLA for Lethbridge West
• Victor Doerksen, Deputy Chair, MLA for Red Deer South
• Debby Carlson, MLA for Edmonton Ellerslie
• Heather Forsyth, MLA for Calgary Fish Creek
• Jon Havelock, MLA for Calgary Shaw
• Paul Langevin, MLA for Lac LaBiche St. Paul
• Mike Percy, MLA for Edmonton Whitemud
• Peter Sekulic, MLA for Edmonton Manning
• Shiraz Shariff, MLA for Calgary McCall

At December 31, 1996, assets of the Heritage Fund totalled about $12 billion. The new business plan forecasts gross investment income to be $853 million in 1996-97. Investment income will decline to $768 million by 1999-2000. This decline is primarily due to the lower interest rate environment.

For further information, please contact:

Treasury Communications
(780) 427-5364

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