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AIMCo evades questions at Heritage Savings Trust Committee meeting

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NDP Opposition Finance Critic Shannon Phillips (Photo: David J. Climenhaga).

If anyone expected definitive answers about the Alberta Investment Management Corp.'s underperformance compared to that of the Canada Pension Plan Investment Board at Friday's meeting of the legislature's standing committee on the Alberta Heritage Savings Trust Fund, they were disappointed.

Unlike the previous 26 of the committee's quarterly meetings over the past seven years, AIMCo, as the provincial Crown corporation that manages the Heritage fund is better known, didn't bother sending either its chief executive officer or chief investment officer to answer MLAs' questions.

What answers were provided by stakeholder relations officer Mark Prefontaine and recently hired investment strategy officer Amit Prakash sounded, as is typical of such affairs, like scripted talking points prepared in advance to address anticipated queries.

NDP finance critic Shannon Phillips took AIMCo to task for that absence.

"This year we've seen AIMCo significantly underperform its peers yet again," she told the committee. "This has cost Albertans billions of dollars. We've seen over the past year reports omit key financial return information for Albertans."

"So this committee comes together to discuss the management of the Heritage fund by AIMCo, but we have no CEO, we have no acting CEO, we have no chief investment officer, we have no board chair here to answer our questions," she said.

"I believe that shows a pretty serious oversight and disrespect," she continued. "So I guess my first question is this: Where are your bosses? Where is the acting CEO? Where's the chief investment officer? Where's the board chair? Why aren't they here today to answer questions about the annual report that we received less than 24 hours ago?"

Prefontaine's answer was about what you'd expect under the circumstances, smoothly assuring committee members at the in-person and virtual public meeting that AIMCo's commitment "is to be accountable and transparent."

As for Phillips' displeasure at the absence of AIMCo's top executives, he went on, "with all humility and due respect, I do take exception that it's viewed as any level of disrespect. That's not our intention. We always intend to have senior leadership in front of this committee to respond to questions."

Top managers missing in action would have been irksome even if the Kenney government were not openly trying to figure out how to grab Albertans' portion of the Canada Pension Plan's investment fund and hand it to AIMCo -- to which Section 19 of the Alberta Investment Management Corporation Act says the government can "issue directives that must be followed by the Corporation, the board, or both…"

But given Premier Kenney's recent assertion he's "personally become increasingly bullish and supportive of the prospects of an Alberta Pension Plan" -- meaning he thinks he has a way to make it happen -- the missing managers and the delivery of AIMCo's annual report to committee members hours before the meeting smack of an attempt to limit the effectiveness of Opposition questions, and their interest to news media.

In the event, notwithstanding the importance of the topic to large numbers of Albertans, no mainstream media outfit seems to have seen fit to write a story on the meeting, at which UCP MLAs pitched softballs and left the heavy lifting to the three NDP committee members.

In fairness to media, the committee, nowadays chaired by Lacombe-Ponoka MLA Ron Orr, meets four times a year and rarely produces much discussion of interest to reporters.

On the other hand, never since the Lougheed Government set up the committee in the 1970s has an Alberta Government been eyeing a takeover of the CPP with plans to hand the vast amounts of cash it invests on behalf of ordinary working Albertans to the same underperforming Crown corporation that manages the Heritage fund.

Phillips asked why committee members were given so little time to examine AIMCo's report before the quarterly meeting -- "so we have five business hours before this committee meeting to actually review an annual report for some, oh, I don't know, 17, 18 billion dollars in assets!"

"This just undermines Albertans' trust in your ability to manage billions of dollars on our behalf," she observed.

Government staff blamed the delay on the time the auditor general took looking over the report.

AIMCo's 2.5 per cent return on assets under management in 2020 compares unfavourably to the CPPIB’s 12.1 per cent. But NDP labour critic Christina Gray pointed out that AIMCo's long-term performance is also worse than the CCPIB's.

Prefontaine suggested at one point it's because the CCPIB, generally considered one of the world's top investment management agencies, takes bigger risks.

NDP advanced education critic David Eggen asked about the higher performance bonuses paid by AIMCo to executives and contract investors.

"We're not gonna be apologetic for the increased fees that indicate increased performance," Prefontaine responded.

But if you were looking for a coherent explanation of why AIMCo underperforms the CCPIB at Friday's meeting, you looked in vain. Readers can watch the committee meeting for themselves if they are willing to invest the time.

Prefontaine's name will be familiar to Albertans who pay attention to public sector pension issues. A former assistant deputy minister of finance in the Alberta government, he played a key role in 2014 in the Redford government's unsuccessful effort to reduce Alberta public service pension benefits.

Those dramatic changes, which then-finance-minister Doug Horner said the Progressive Conservative government intended to unilaterally impose, resulted in large public demonstrations by public sector employees that ultimately played a role in the defeat of the PC government by the NDP in 2015.

After the 2015 election, Albertans learned from the finance department's 2014-15 annual report that the claims made the year before by Horner and premier Alison Redford about public service pensions being unsustainable were untrue.

"The next time right-wing fear mongers try to panic Albertans into making unjustified concessions and swallowing unnecessary cuts, I hope we all remember how wrong they were when they claimed our pensions were insolvent," Alberta Federation of Labour president Gil McGowan said at the time.

That's something to keep in mind if Kenney, as expected, puts a referendum on the ballot during October's province-wide municipal elections to try to get Albertans to agree to pulling out of the CPP and creating an Alberta pension plan managed by AIMCo.

David Climenhaga, author of the Alberta Diary blog, is a journalist, author, journalism teacher, poet and trade union communicator who has worked in senior writing and editing positions at The Globe and Mail and the Calgary Herald.

Image: David Climenhaga/Used with permission

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