BASED ON THE NOTION THAT THE best time to plant a tree is 40 years ago and the next best time is today, Peter MacKinnon says Saskatchewan should start saving some of its resources wealth for future generations.

MacKinnon, recently retired former president of the University of Saskatchewan and dean of law, was tapped by Premier Brad Wall in October 2012 to undertake a study of heritage-type funds as part of the Saskatchewan Party government’s growth plan.

The initiative was inspired by the New Democratic Party’s Bright Futures Fund, which was part of the official Opposition party’s platform in the 2011 provincial election campaign. While the NDP’s election promises were derided by Wall at the time as a $5.2-billion spending spree, the Bright Futures Fund concept was generally well received by voters.

Ever the populist, Wall has now seized on the idea of creating a heritage fund, similar to the fund set up in Alberta in the 1970s. And MacKinnon is seen as a respected, knowledgeable and neutral expert whose opinion would carry considerable weight.

MacKinnon has delivered his report, which calls for the creation of the Saskatchewan Futures Fund, a permanent savings fund that would capture a portion of the province’s $2 billion-a-year in non-renewable resources revenue.

MacKinnon’s report recommends that the government cap the percentage of resources revenue it retains annually at 26% of total government revenue (based on an average of the preceding five years). Anything above 26% would be treated as surplus and would go into the fund.

Or the government could choose to use half or all of the surplus resources revenue to pay down the government’s $3.8-billion debt, which is costing the province $340 million a year in interest payments.

Another option would be to set aside $100 million in the 2014-15 budget as seed money for the fund – an amount that is not even a rounding error in the $12-billion budget.

MacKinnon, while flexible on the fund’s terms, is adamant about the need for the fund to be managed independently of the government. He is also determined the fund should be started as soon as possible – presumably, in the 2014-15 budget.

Having studied 60 heritage funds from Norway to Alaska and Alberta, MacKinnon came up with several key findings. He believes that governments, like drug addicts, need to wean themselves gradually from dependence on non-renewable resources revenue. History shows that overreliance on resources revenue leads to overspending, large deficits and debts.

Heritage funds should be fairly simple and straightforward in their purpose and objectives. Funds with mandates that are too broad or multi-faceted often fail to meet their targets and are abandoned.

Successful heritage funds require spending discipline by government. MacKinnon’s report concludes: “We owe it to our children and grandchildren, and to their children and grandchildren, to take a deliberate and balanced look at how we can secure today’s resources wealth into the future.”

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