Published Nov 20, 2024 • Last updated 21 minutes ago • 3 minute read
You can save this article by registering for free here. Or sign-in if you have an account.
Article content
The Smith government recently fired the CEO and all 10 board members of the Alberta Investment Management Co. (AIMCo), the $169 billion asset manager that manages the Alberta Heritage Savings Trust Fund and several public pensions including the Alberta Teachers’ Retirement Fund.
Advertisement 2
This advertisement has not loaded yet, but your article continues below.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
Unlimited online access to articles from across Canada with one account and fewer ads.
Get exclusive access to the Calgary Sun ePaper, an electronic replica of the print edition that you can share, download and comment on.
Enjoy insights and behind-the-scenes analysis from our award-winning journalists.
Support local journalists and the next generation of journalists.
Daily puzzles including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
Unlimited online access to articles from across Canada with one account.
Get exclusive access to the Calgary Sun ePaper, an electronic replica of the print edition that you can share, download and comment on.
Enjoy insights and behind-the-scenes analysis from our award-winning journalists.
Support local journalists and the next generation of journalists.
Daily puzzles including the New York Times Crossword.
REGISTER / SIGN IN TO UNLOCK MORE ARTICLES
Create an account or sign in to continue with your reading experience.
Access articles from across Canada with one account.
Share your thoughts and join the conversation in the comments.
Enjoy additional articles per month.
Get email updates from your favourite authors.
THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.
Create an account or sign in to continue with your reading experience.
Access articles from across Canada with one account
Share your thoughts and join the conversation in the comments
Enjoy additional articles per month
Get email updates from your favourite authors
Sign In or Create an Account
or
Article content
Why?
According to the government, the shakeup was necessary due to AIMCo’s rising operating costs, management fees and staff costs, which have not produced a higher return on investment. Finance Minister Nate Horner said things weren’t going to change “without a major reset.”
However, Premier Smith’s dismissal of the entire AIMCo leadership team may also pave the way for government control of AIMCo’s investments, or as one columnist put it, turn AIMCo into “the province’s cookie jar.” This would be bad news for Albertans invested in AIMCo’s funds, particularly if the government forces AIMCo to increase the share of assets invested in specific companies and projects in Alberta—whether in the oil and gas sector, artificial intelligence or any other industry the government may favour. (This would not be unprecedented; Quebec’s Caisse de dépôt, which manages the Quebec Pension Plan among other plans, has a dual mandate to optimize risk-return and invest in the province.)
Calgary Sun Headline News
Get the latest headlines, breaking news and columns.
By signing up you consent to receive the above newsletter from Postmedia Network Inc.
Thanks for signing up!
A welcome email is on its way. If you don’t see it, please check your junk folder.
The next issue of Calgary Sun Headline News will soon be in your inbox.
We encountered an issue signing you up. Please try again
Article content
Advertisement 3
This advertisement has not loaded yet, but your article continues below.
Article content
But if increased investments in Alberta promised higher risk-adjusted returns, AIMCo’s independent investment managers would need no direction from the government to shift investment strategy. This is not to say that private investment managers are omniscient, but they’re at least as capable as government bureaucrats in identifying investment opportunities.
So why would the Smith government—or any government—want control of public pension assets? Again, to promote its own investment objectives, whatever those may be. In this scenario, the current number one priority of AIMCo—that is, to maximize returns for investors—would take a backseat to the government’s priorities. Of course, some might argue that AIMCo’s investors are also likely to be Alberta residents who might benefit indirectly from investment reallocations. For example, AIMCo investments in local companies might help create jobs and increase wages for AIMCo investors, while AIMCo investments in the housing sector might improve housing affordability for AIMCo investors living in Alberta.
Advertisement 4
This advertisement has not loaded yet, but your article continues below.
Article content
But there’s a problem with that argument—while AIMCo investors would bear the costs of government-directed investment strategies, the indirect benefits would be broadly distributed to many residents of the province who did not invest their money in local companies or local housing projects. This would amount to an indirect and unlegislated effective tax increase on a specific set of Albertans to benefit other Albertans.
Finally, politicians and political parties are primarily concerned about staying in power. To win elections, politicians promise financial benefits (including government subsidies) to voters who are most likely to benefit from those promises and vote in their favour, while effectively passing the costs on to residents who either don’t vote or who are unlikely to base their voting behaviour on the government’s promises (at least to the same extent as the beneficiaries of those policies). Put differently, if the government effectively controls a portion of AIMCo’s investment strategy, it may promise to use pension assets to
curry favour with specific voters. That’s not a recipe for an efficient allocation of private financial capital meant to benefit investors under the AIMCo umbrella.
In sum, all Albertans should want the Smith government to maintain the independence of AIMCo from government intervention.
Steven Globerman is a senior fellow at the Fraser Institute where Tegan Hill is director of Alberta