As Alberta’s finance minister and treasury board president, I am ultimately responsible to Albertans for how their tax dollars are spent. When you’re looking at an annual budget of nearly $75 billion, that’s a weighty responsibility.
One of the government agencies I oversee is the Alberta Investment Management Corporation (AIMCo). As Alberta’s investment agency, AIMCo is responsible for managing pension funds and the provincial Heritage Savings Trust Fund for non-renewable resource revenue. That puts over $160 billion under its management. Dollars that directly impact Alberta workers, pensioners and taxpayers.
We expect responsible management of those dollars, but in recent years, AIMCo’s operating costs, management fees and staffing have increased significantly without a corresponding increase in returns for its client funds. This is unacceptable. It is time to restore Albertans’ confidence in the agency.
The Canadian pension model was built on the assumption that internal management would be more cost-effective. Yet in AIMCo’s case, we’ve seen the opposite occur. Between 2019 and 2023, the cost of salaries, wages and benefits increased 71 per cent and head count increased 29 per cent, while the proportion of funds managed internally dropped from 82 per cent to 67 per cent.
At the same time, other operating costs have ballooned. For example, AIMCo’s leadership chose to rent their New York office space in One Vanderbilt, Manhattan’s highest-rent building in 2023, despite more affordable and reasonable options being available. This rental agreement is not just exorbitant, it fails to provide value for clients and instead creates costs for clients above market rates.
AIMCo’s higher costs — without a corresponding improvement in returns — have been of concern not just to government, but to many of AIMCo’s clients for some time. That’s why our government has taken the necessary steps to reset AIMCO’s focus, restore confidence in its leadership and return its sights to achieving the best possible returns with low operating costs.
One of these steps was to rescind all board appointments. We are actively working to name a permanent chair within the next 30 days, after which we will establish a new board.
In the interim, I was appointed the sole director and chair for AIMCo for a short period. To be clear, I did not make investment decisions during my brief tenure as the sole director and chair, nor did I give direction on the investment approach. We have now named a permanent chair.
Yesterday, Alberta’s Cabinet approved the appointment of the Right Honourable Stephen Harper as the new board chair of AIMCo, with four previous board members also returning. Their mandate will be to achieve higher returns at lower cost.
As a former Prime Minister of Canada and leader of a G7 nation, Stephen Harper is the right choice to lead AIMCo as they embark on a mission to invest in the best opportunities globally, and we expect skilled finance professionals to continue to make investment decisions that are monitored by the executive team. Investments will continue to be diversified across asset classes, geographies and sectors, and abide by a strict due-diligence process that weighs expected returns and risks.
I want to assure Albertans that AIMCo’s mandate remains unchanged, and investments will continue to be made at arm’s length from the government with a returns-first mindset. Economic development has never been part of AIMCo’s mandate, and it never will be under this government.
The decision to reset AIMCo was not taken lightly. It was taken to protect Albertans’ pensions and the Heritage Savings Trust Fund, and to restore confidence in Alberta’s investment agency. We have found a strong board chair for AIMCo, one who will do what is best for Albertans, who has served all Canadians in the past and has the global reputation and connections necessary to ensure the best returns with the lowest risk.
National Post
Nate Horner is Alberta’s Minister of Finance and Treasury Board President.