At the end of their exertions, even the reliable team of neoliberal apparatchiks assembled by Premier Danielle Smith’s favourite economist last June couldn’t come up with a “scenario” in which Alberta separation could be made to look like a good idea.
The final report on the cost of Alberta separating from Canada by the “independent advisory panel” hand-picked for the government by economist Jack Mintz of the University of Calgary’s School of Public Policy, The Economic and Fiscal Implications of Alberta Separation, was handed yesterday to a friendly journalist to spin as a “bombshell report,” and published on the government’s website.
Well, at least that got most of the talk about the significance of the NDP by-election victory in the Conservatives’ traditional Calgary-Shaw stronghold off the metaphorical front page.
It turns out that short of smoking banana peels it’s nigh on impossible to come up with a projection of how separation could be anything but an expensive disaster. This turned out to be true even for a group of people ideologically predisposed to thinking the best economic course forward for Canada would be to become as much as possible as the United States short of actually becoming the 51st state.
“These numbers are real ugly,” was the way Postmedia political columnist Rick Bell put it in his report yesterday, which sort of doubled as the government’s real press release.
“Up to five years after separation the GDP, the overall economy, would be down by about 10 per cent compared to no separation,” Mr. Bell wrote. “In the short term, a typical worker would earn almost $5,500 a year less than if Alberta had not separated. The government deficit could be … gulp … almost $26 billion in a year.” (Translation: Sorry, friends and allies in the separatist movement, but we just can’t make this work.)
And never mind the deficits. Debt would balloon as well – possibly soaring more than $400 billion as the new landlocked statelet took on its share of Canada’s debt.
The Gang of Five – long-time UCP advisor Dr. Mintz; U.S. resident and former Alberta Finance Minister Ted Morton; Business Council of Alberta President Adam Legge; Cenovus Energy Inc. Board Chair Alex Pourbaix; and former UCP “Blue Ribbon Panel” chair Janice MacKinnon* – tried two approaches.
Their report proffered what they called “a ‘smooth’ scenario in which negotiations with Canada are quick and favourable to Alberta,” and “a ‘difficult’ scenario in which negotiations are protracted and unfavourable to Alberta.”
Said the Government’s press release: “In both scenarios, the independent report shows the short-term impacts of potential separation would result in significant economic disruption and costs for Albertans. The report outlines that the cost of establishing a new country could range from $50 billion to $170 billion in the first five years following separation. These costs are in addition to impacts on economic growth and Alberta’s fiscal position…”
It’s appropriate that the panel chose a term derived from the theatre to describe its two projections, both surely far too optimistic.
The “smooth” scenario is pure political science fiction, a pipedream that sounds as if it were written by the same screenwriter who came up with separatist leader Keith Wilson’s naïve and utterly unserious “transition plan” for an independent Alberta.
The “difficult” scenario is unlikely to be as difficult as real life would turn out to be if Alberta set about breaking up Canada with a predatory United States salivating on the sidelines.
The panel provided no “realistic” scenario, such as the estimates by economist Jim Stanford and former Alberta Government finance official Lennie Kaplan, both of whom concluded separately that Alberta separation would cost something more in the order of $300 billion, followed by years of multi-billion-dollar costs.
Nor is there a “catastrophic” scenario – and, remember, that $400-billion transition cost estimate Premier Smith herself blurted out last spring came from somewhere too.
“There is certainly a scenario where Alberta’s economy and finances could be better after separation, once a transition period is over,” the report said. Perhaps that was a face-saver for Dr. Mintz, in case anyone remembered that back in 2018 he wrote in The Financial Post about how “Alberta has better reasons to Albexit than Britain did for Brexit.”
However, the report goes on to admit, “there is also a scenario where Alberta’s economy could be weaker and its finances much worse, not just immediately but for many years to come.”
“The panel concurs that separation results in short run economic costs for Alberta for uncertain net benefits in the longer run,” Dr. Mintz was quoted saying in the government press release. “However, we also stress that Canadians should be aware that Alberta’s separation will undoubtedly harm Canada as well.” Canadians are well aware of that, of course, one reason why the possibility of a “smooth scenario” is zero.
Meanwhile, whatever Premier Smith had hoped to do, it sounds as if her cabinet has decided for her.
“The panel’s assessment emphasizes that both the scenarios outlined in the report highlight how costly it would be for Alberta to separate from Canada in the short term and also highlight the substantial amount of uncertainty Alberta would face in the long term,” Finance Minister Jason Nixon said yesterday in a terse response to the panel’s report. “Alberta’s government has always been clear: we support a strong and sovereign Alberta within a united Canada, and that is what we will continue fighting for each day.”
If this indicates the cabinet’s true direction, it will not improve how Premier Smith is perceived by the UCP’s separatist base.
Nevertheless, Albertans will still have to vote in Ms. Smith’s divisive separation referendum on Oct. 19, as well as the nine noxious referenda described recently by Canadian Senator Paula Simons as “disingenuous, malicious referendum questions, push-poll riddles, designed to incite social division and undermine confidence in the courts and the country.”
Should Ms. Smith decide to move on for any reason, Mr. Nixon would presumably be a strong contender to replace her.
A new poll released yesterday by the Angus Reid Institute shows that Premier Smith is strongly disapproved of by more voters than any other Canadian premier.
While Ms. Smith’s overall approval rating is unchanged from the last quarter, the pollster said in a news release, “a majority of Albertans (56%) say they disapprove of her performance, including 43 per cent who strongly do so, the highest such level of strong disapproval in the country.”
*More background information on the panel is found in this June 13 AlbertaPolitics.ca post.