The Costly Implications of a Separate Alberta
The University of Calgary's School of Public Policy has published "The Economic and Fiscal Implications of Alberta Separation," a report commissioned by the Alberta government to give voters a fact-based look at what leaving Canada would mean for the province's economy and finances. Prepared by a group of economists, trade experts, and public policy professionals, the report models two scenarios — a "smooth" separation in which negotiations with Ottawa and other trading partners go quickly and favourably for Alberta, and a "difficult" one marked by prolonged, possibly hostile talks with Canada and other countries.
In both cases, the report estimates that establishing a new country would cost $50 billion to $170 billion over the first five years, including the cost of new infrastructure, an expanded public service, and Alberta's share of the federal debt.
The $1.5-million report, commissioned by the Smith government in June, is not a single document but an overview report backed by separate technical papers examining different facets of separation — from how the transition would actually work logistically to the detailed fiscal modelling behind the cost estimates — giving outside experts and Albertans a basis to check the underlying assumptions and methodology.
The two scenarios diverge sharply over the longer term. Under the "difficult" path, restricted trade and market access could leave lasting damage: after 20 years, employment could be nearly 5% lower and Alberta's economy more than 16% smaller than if it had stayed in Canada, with the government facing a persistent annual deficit exceeding $30 billion despite higher taxes.
Under the "smooth" scenario, Alberta could retain access to major trade markets, expand resource development and potentially deliver some government services more efficiently — but the report cautions that any recovery would take years and would hinge on conditions, like sustained high oil prices, that Alberta has no control over.
An independent advisory panel chaired by economist Jack Mintz reviewed the report's methodology and findings, agreeing that separation would bring short-term economic costs and highly uncertain long-run benefits.
How credible is this report and which scenario is more likely?
If you’re going to read anything before you vote on the separation question, this is it:
The overview report has been written in non-technical language and is a manageable 24 pages long.
The report has been prepared by recognized experts who have been transparent in how they arrived at their numbers and conclusions.
An advisory panel that includes conservative economist Jack Mintz and former Alberta cabinet minister Ted Morton — both strong advocates for Alberta autonomy and a more decentralized federation — have agreed with the main conclusions of the report.
Which scenario is more likely — the “smooth” transition or “difficult” one?
The smooth scenario assumes that trade with Canada and the rest of the world is uninterrupted, that interest rates go up but come down again, that there is no more federal environmental regulation, that there is a favourable US government, and the energy sector expands with oil prices in line with current expectations. How likely are all of these things to occur?
It’s more likely that the rest of Canada and other trading partners do what’s best for them and negotiate tough deals with Alberta for access to markets and access to tidewater, taking advantage of Alberta’s relatively small size and dependence on foreign markets for oil. It’s also more likely that Alberta’s economy will continue to be dependent on oil prices that go up and down, and that our boom-and-bust economy will not have the cushion of the rest of Canada to fall back on. And this is before the impacts of AI and climate change have been fully felt.
Adam Legge, president of the Business Council of Alberta and member of the independent advisory committee, has told the Globe and Mail that the benefits outlined in the “smooth” scenario are highly unlikely and underline the limited upside of separation. Legge is quoted in a recent Globe and Mail article as saying that “the highest probability is that we would be landing somewhere in negative economic territory.”
Under the unlikely “smooth” scenario, average wages fall $1,241 in the first five years and rise a modest $1,851 after 20 years. Are Albertans prepared to bet on that risky scenario, when the more likely scenario says average wages fall $5,496 in the first five years and decline $11,957 after 20 years?
We’re voting to remain in Canada and hope that the vote is decisive to remain so that we end this costly and divisive conversation that is undermining confidence in Alberta’s economy and diverting attention away from more critical issues such as competitiveness, affordability, health care, education, and government accountability.
Voting to remain in Canada is clearly the best economic option for Alberta. We need to end this costly and divisive conversation that is undermining confidence in Alberta’s economy and diverting attention away from more critical issues such as competitiveness, affordability, health care, education, and government accountability.
See media coverage of the report below:
https://edmontonjournal.com/news/politics/alberta-separation-cost-report-debt
https://www.theglobeandmail.com/canada/article-alberta-separation-secession-cost-170-billion-report/