Peter MacKinnon will suggests Saskatchewan establish a new heritage fund for its non-renewable resources. (CBC)

A new report put together by former University of Saskatchewan president, Peter MacKinnon, suggests the province should develop a sovereign wealth fund to manage revenues earned from non-renewable resources such as petroleum, potash, and uranium.

In a draft report the province mistakenly sent out attached to an unrelated press release, MacKinnon recommends the Saskatchewan Futures Fund be run separate from the government and that it not be used as a "rainy day" relief fund when the province runs into financial trouble. 

"Today we use these revenues to grow our economy, pay down public debt, build vital infrastructure and fund public services like education and health care. Through a futures fund we have the opportunity to sustain and stabilize our use of this revenue by ensuring a portion of it is permanently saved and invested to grow and generate income over time," writes MacKinnon. 

The report examines four different examples of heritage funds — Saskatchewan attempted a similar idea in the 1970's, but was eventually shutdown by 1992 — it also looks at funds from Alberta, Alaska and Norway. 

Mackinnon writes glowingly of the Norwegian Government Pension Fund Global, the largest sovereign wealth fund in the world. With assets of nearly $1.1 trillion U.S., most of it earned on resource royalties, it’s the largest sovereign wealth fund in the world.

The Norwegian fund yields more than $15-billion a year in the interest for Norwegian taxpayers. That amount of annual interest, the report notes, is almost the same as the current total size of the Alberta Heritage Fund.  

The report outlines 10 recommendations, stating how the fund should be run and what type of investments should be made, it suggests the fund should have its own CEO appointed by a board of directors, it also says there should be a cap on how much revenue the province can pull from non-renewable resources, and guidelines on how the fund should be established. 

This model closely parallels the structure of the Norwegian sovereign fund.

The final draft of the report is expected to be released next week. 

MacKinnon - A Saskatchewan Futures Fund.pdf