Who wants to be a millionaire? How about everybody? But we can’t all live the dream of becoming marvelously wealthy, can we?
Not in Canada we can’t. Or maybe we should say we don’t feel wealthy despite our envied economic status among nations of the world. We tend to take for granted our resource, land and water wealth but we don’t think of ourselves as being rich.
But it might be different in Norway, where theoretically, everybody’s a millionaire.
The Reuters news agency reported the other day that the value of Norway’s sovereign wealth fund, powered by the country’s well-managed share of the North Sea oil fields, has passed $828.66 billion in value.
That equals 5.11 trillion Norwegian crowns, making every one of Norway’s 5,096,300 citizens a millionaire, at least in terms of the local currency. Break out the champagne, you Norwegians.
Or maybe not. Champagne is expensive and when you get right down to it, the reason Norway is wealthy is that it has been prudent about managing its North Sea petroleum wealth since the first well hit back in 1969.
That means champagne binges have been rare indeed while the cautious Norwegians keep salting away cash for the cold sobriety of the inevitable rainy day.
So the sovereign fund, known as the Government Pension Fund Global, invests in stocks, bonds and assets around the world, much like our own Canada Pension Plan does. By the way, the CPP has about $193 billion in the kitty and it’s considered a very successful plan. But it’s no Norway.
Under Norwegian law, the sovereign fund must invest most of its holdings outside the country, which spreads the risk across the global economy. It also has helped Norway avoid the so-called Dutch disease of a high currency that dampens competitiveness for its domestic products.
The government in Oslo also maintains a direct share in the North Sea bounty through its state-owned oil company, Statoil. In Canada, we think it’s bad business to own an oil company and sold off Petro-Canada years ago.
Here in the East, we’ve already forgotten that Petro-Canada doggedly kept drilling offshore in the 1970s and 1980s and has to be given at least some credit for the current oil boom in Newfoundland and Labrador.
But that was then, this is now. Ottawa pocketed the profits from the Petro-Canada sale and used them to puff up the federal books.
Successive governments had been divesting shares and the Liberals under Paul Martin sold off the last chunk in 2004.
The final stake was sold for $3.2 billion, not much more than the $2.4 billion in dividends Statoil paid into the Norwegian state treasury in 2012. Now Petro-Canada is a subsidiary of Suncor Energy and the dividends go to Suncor’s shareholders.
But then, Canada is a country of robust free-marketeers, isn’t it? We don’t believe the state has a place in the bedrooms of the oil patch. It does seem odd then that we also charge a top tax rate of 54 per cent, a healthy chunk above Norway’s 46 per cent top rate.
And Norway has a Cadillac slate of social services and supports to pay for and a population about the size of Toronto’s to do it.
To be fair, Reuters also points out that money is leaking via subsidy to people who wouldn’t be eligible for it in Canada. A significant percentage of Norwegians — as many as one in five — collect unemployment benefits instead of working.
Critics would call that a negative consequence of wealth and a distortion of what Norway’s welfare state set out to achieve. The government in Oslo still claims an unemployment rate of three per cent.
The status of every Norwegian as a millionaire is one of those theoretical facts that are interesting but possibly not all that relevant. What is important is that the Norwegians recognize that oil is a non-renewable resource that should not be squandered.
It’s not entirely clear we are doing as well in Canada. Event as oil gushes on the Grand Banks, unemployment remains high in Newfoundland and its young people are still moving west.
Even Alberta has been prone to boom and bust. Things are booming right now, they might not always be.
Perhaps Canada should take a page from the Norwegian playbook and salt away a few loonies for the day when oil alone can’t keep everything afloat.
-Dan Leger is a Halifax-based writer and commentator.