The Government of the Northwest Territories (GNWT) created the NWT Heritage Fund on August 1, 2012 with the passage of the Northwest Territories Heritage Fund Act.
The purpose of the NWT Heritage Fund is to save a portion of future resource revenues for the benefit of future generations of NWT residents.
Each year the Legislative Assembly may approve funds to the NWT Heritage Fund. Once transferred, these monies become part of the principal of the Fund.
For the first twenty years of the Fund both the principal and income generated in the Fund will be retained within the Fund. After twenty years have passed, transfers out of the Fund into the Consolidated Revenue Fund may be made through a Special Act, although these transfers would still have to go through the regular budget process. The legislation limits the transfers out of the Fund to an annual withdrawal of 5 per cent of the year-end balance of the Fund, provided that the principal of the Fund is not removed. Even after the twenty year period is complete, annual deposits may continue to be made and will become part of the principal of the Fund.
Under the current legislation the Financial Management Board is the Fund’s trustee and monitors the performance of the Heritage Fund, appoints the auditor, and directs and supervises the Secretary of the Board in exercising the duties of investing and disposing of assets of the Fund. This is in keeping with the structure used for other public agencies. This will not prevent the establishment of an arms-length investment management body to oversee the administrative and investment functions of the Fund. However, in the first years, while the Fund is building principal, there is no need to incur the cost of additional administration. The legislation includes a requirement for the Legislative Assembly to conduct a review after ten years of the provisions and operations of the Northwest Territories Heritage Fund Act, including recommendations on how to seek public input and advice on expenditures from the Fund and whether independent oversight and management of the Fund is required.
The Legislative Assembly receives an annual report on the performance of the Heritage Fund.
The single objective of the Heritage Fund’s investment policy is to maximize the long-term growth in the Heritage Fund while avoiding undue risk. The investment management is guided by accepted investment principles.
In February 2014, the Legislative Assembly agreed to transfer each year 25 per cent of the annual amount of the GNWT’s net fiscal benefit from resource revenues, after sharing with the Aboriginal governments, to the Heritage Fund.
By accumulating financial assets for the future, by which point resources may have depleted, the NWT Heritage Fund will play an important role in preserving the benefits of resource development for future generations, thus improving the inter-generational equity of residents of the NWT.
Heritage Fund Resources