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I read a couple of weeks ago that the value of Norway’s sovereign wealth fund had grown to a record US$1.09 trillion... yes, over a thousand billion dollars; more than $195,000 for each Norwegian citizen
This fund, also known as the Oil Fund, was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector in global, not local financial markets. This restriction was wisely imposed to maximise returns and reduce overheating in the national economy. One observer has noted that “The return on the wealth fund investments in global financial markets has been so high that it can be compared to having discovered oil all over again!”
Our oil-rich province of Alberta, under Premier Peter Lougheed, created the Alberta Heritage Fund in 1976 that was also planned to grow with royalties obtained from the oil companies operating in the province, "to save for the future, to strengthen and diversify the economy, and to improve the quality of life of Albertans.”
It’s worth noting that Norway and the province of Alberta have similar populations around five million people. However, financial returns over the years from the Alberta fund have only amounted to $17 billion, or a little over a paltry $3,000 per person....mainly because of politically motivated expenditures.
The province squandered its gains on non-essential and unwise investments and creating a bloated, overpaid public service; while proudly boasting of having the lowest taxes in Canada, including no sales tax which prevails to this day. Premier Ralph Klein, ever the politician, even sent $400 “Prosperity Bonus” cheques, known as "Ralph Bucks,” to each Alberta resident not in prison, at a cost of $1.4 billion.
The final nail in the coffin was a mid 1990s decision to direct all income earned to sidestep the fund and be added to general revenues to help balance the province’s books. For the same reason the Alberta government has recently announced five per-cent wage rollbacks for all public sector workers; and finally imposing a sales tax cannot be out of the question.
In recent years, Norway has repeatedly been ranked as “the best country to live in” in the United Nations Human Development Report. This annual ranking is based largely on average levels of education and income, combined with life expectancy, but also factors such as human rights and cultural freedom.
Norway has one of the best welfare systems in the world, ensuring that those who are unemployed or unable to work are given adequate support to lead dignified lives. Norway also has one of the lowest crime rates in the world.
Ironically, for an oil rich country, electric vehicle sales are booming at 49 per cent of total annual sales...a direct result of reduced sales taxes on EVs, heavy sales taxes on gas guzzlers, and gasoline at well over two dollars a litre.
It’s clear that Norwegians favour equitable wealth distribution and equal opportunities for all. Of course, this would not be achievable under a partisan “first past the post” electoral system, where competing political ideologies of the major parties would make significant compromises out of the question.
Fortunately, Norway’s parliament features “proportional representation” with 169 seats, of which 150 are elected directly from their 19 constituencies, and an additional 19 "levelling seats" allocated to make the representation in parliament match the popular vote for the political parties. And currently there are nine parties that exceeded the 4% popular vote threshold needed to qualify for these levelling seats.
There are some aspects of life in Norway that we Canadians may have some difficulty with. For example, Norway is an expensive country to live in for those with above average income – but paradoxically not so much for those with lesser financial resources. As Norwegians are fond of saying, “In Norway, everything you need is cheap and everything you want is expensive. In the US, everything you need is expensive and everything you want is cheap”.
I wish I knew more about that nation’s true financial situation. I'm left wondering how much taxes citizens pay and how large their government is - in other words, is Norway a socialist paradise that gets away with nanny-statism and vast welfare resources only because it has oil?
Truth is, it does sound like they have done a lot of things right, and even though they "lucked out" with oil, they've clearly managed their good fortune prudently.
Alan Walter is a retired professional engineer living in Oxford. He was born in Wales and worked in Halifax. He spends much of his time in Oxford, where he operates a small farm. He can be reached at [email protected].
