The idiot's guide to being a resource minister.

• Author: Robinson, David
• Position: ECONOMICALLY SPEAKING - Claude Gravelle - Greg Rickford

Here is sonic bedtime reading for Claude Gravelle, Greg Rickford and Kyle Fawcett. The Three Amigos are the most influential resource ministers in Canada.

Mr. Gravelle and Mr Rickford are familiar to Northerners. Fawcett is Alberta's new minister of Environment and Sustainable Resource Development. They are in charge of much of Canada's natural resource wealth and they have access to the three most powerful politicians in the country They are responsible for getting Canada's resource policy right. This modest column should help them do their jobs.

The Idiot's Guide to Being a Resource Minister is actually called Guidelines for Exploiting Natural Resource Wealth, by economist Rick van der Ploeg from the Oxford Centre for the Analysis of Resource Rich Economies. The guidelines were written for resource ministers in resource-rich countries like Canada.

Five recommendations summarize 100 years of research in resource economics. If we compare Canada's resource practice to the recommended policies, we can produce report cards for each of the Three Amigos. Let's mark each jurisdiction out of 20 for each guideline.

Guideline 1: Live off the interest on your resource wealth, not the capital.

The Alberta government has a Heritage Fund in place, but it actually deposits only a small proportion of its oil and gas revenues. Oil income has been used to keep taxes low, so every Albertan could buy a pickup truck or two. Instead of living off the interest on their resource wealth, Albertans have been squandering most of their inheritance. Despite its name, the Northern Heritage fund is just a checking account. It has nothing to do with investing resource revenues. Canada has no Sovereign Wealth Funds. It looks like Alberta earned three out of 20, and the others get zero.

Guideline 2: Avoid the Dutch disease and build an intergenerational fund to smooth consumption.

The poster child for good management is Norway's Petroleum fund, now called the Government Pension Fund Global, which has grown to $857 billion. In Canada, resource revenues belong to the provinces. The province has run down the fund by $22 billion over the last six years. It has $17.4 billion left. Alberta should probably get negative points.

The federal government was just as bad. The Harper government relied on oil revenue to reduce its monster deficits. For Canada as a whole, spending the oil money as it came in drove...