Alberta would face short-term economic losses even under a “smooth” separation from Canada, while a more “difficult” departure could leave its economy substantially smaller and its citizens markedly poorer decades later, a new government-commissioned report projects.
The University of Calgary’s School of Public Policy analysis models two scenarios ahead of the Oct. 19 referendum. Premier Danielle Smith’s government commissioned the independent study in June to examine the economic and fiscal consequences of leaving Canada. The school retained control over its final report.
Adam Legge, president of the Business Council of Alberta and a member of the expert panel that reviewed the work, said the potential gains must be weighed against substantial risks.
“The upside is marginal,” Legge told The Hub. “The downsides are quite significant.”
Under the report’s smooth scenario, inflation-adjusted GDP would be 2.2 percent lower within five years than if Alberta remained in Canada. After more than 20 years, it would be 3.4 percent higher.
That scenario assumes uninterrupted trade, temporarily higher borrowing costs, and a stronger energy sector. Total Alberta debt would reach $324.1 billion, including an assumed $158.3-billion share of federal debt.
Under the difficult scenario, GDP would be 10.1 percent lower in the short term and 16.2 percent lower over the longer term. Total debt would reach $442.3 billion.
Long-term annual wage income would be $11,957 lower per person, with taxes $6,598 higher. The smooth scenario instead projects wage income $1,851 higher and taxes $1,148 lower.
“Are Albertans willing to roll the dice to pay a thousand dollars less?” Legge asked.
The figures describe differences from a future in which Alberta remains in Canada, rather than cumulative losses or gains. Legge described the comparisons as a “snapshot in time.”
He said the scenarios were not the most extreme outcomes researchers could construct. Rather, they reflected assumptions he considered reasonable about borrowing costs, trade barriers, energy markets, and the expense of assuming federal responsibilities.
“You could create both economic miracles and economic catastrophes, depending upon the assumptions that you put into each of the variables,” he said.
Many decisive factors would be beyond Alberta’s control, Legge said, including the terms other governments would accept and how financial markets would assess a new country.
The report lands just over a month before Albertans vote on 10 referendum questions. Four concern immigration and access to services, one concerns proof of citizenship for voting, and four propose Constitutional changes.
The final question offers two options: Alberta remaining a province of Canada, or the provincial government beginning the Constitutional legal process required to hold a binding referendum on separation. The October vote on that question is itself non-binding. Elections Alberta lists the complete ballot wording.
Legge warned that a vote to pursue a separation referendum could stall investment. He said many business leaders currently continue investing because they discount the prospect of separation.
“Investors would just say, ‘Let us know when you figure this out. And then we’ll consider.’”
His organization recently launched a campaign supporting Alberta remaining in Canada, while calling on Ottawa to address the grievances driving separatist sentiment.
“Our firm perspective is that Alberta should remain in Canada,” he said.
Adam Legge, one of the key expert advisers who reviewed a highly anticipated, government-commissioned cost-benefit analysis of Alberta independence, sits down with host Falice Chin to break down the top-line numbers. Fresh off the press, the report models two dramatically different futures: a “smooth” separation that produces modest gains only after decades of disruption, and a “difficult” one marked by deep economic losses, lower wages, higher taxes, and soaring debt. Legge, who heads the Business Council of Alberta, explains why he believes even a less severe outcome somewhere in the middle may not be worth the risk—and why many of the variables at play are beyond Alberta’s control.
This podcast is generously supported by Don Archibald. The Hub thanks him for his ongoing support.
