There’s a substantial and growing body of economic research that separation would be a catastrophe for Alberta and Albertans, especially working people.
As economist Jim Stanford observed in his Aug. 31 report on the false promises made by Alberta’s separatists and the grave risks their scheme presents, “economists are unanimous that the costs of establishing a separate country would be enormous, and that Alberta will experience a brutal recession if it happens.”
“Separatist leaders promise Alberta would become a utopia: a freedom-loving, unencumbered, low-tax, prosperous energy superpower,” he wrote in his report, False Promises, Big Dangers. “The economic reality of separation would be much darker: a small, landlocked country struggling to build its own national institutions … in an environment of intense division, uncertainty, and outward flight of both people and capital.”
Indeed, another report by the Calgary Chamber of Commerce, not exactly a hotbed of “Laurentian elites,” predicted that Alberta would suffer an exodus of businesses and jobs that would shrink the economy by $62 billion a year. And the right-wing Canada West Foundation weighed in with a report in which one author warned, “every Albertan should ask themselves one simple question: Can they be certain their employer, or their job, will still be here if Alberta chooses to separate?”
The work Dr. Stanford cites has been done by real experts in economics, people who actually know what they’re talking about – in other words, the kind of folks separatist leader Keith Wilson presumably had in mind when he told a CBC reporter that “Canadians, and many people in the world, are growing leery of the ‘experts say’ stuff …”
Mr. Wilson’s disdain for expertise is pretty clear from that remark and quite typical of the Alberta separatist movement, reflecting its origins in U.S. MAGA populism and the anti-vaccination Ottawa convoy siege in 2022.
Perhaps it is explained by frustration that real experts aren’t backing the economic fairy tales even the most respectable advocates of Alberta separation would like us to believe.
On the culture-war front, Alberta’s separatists can’t help themselves. On immigration, reproductive rights, and human rights, they just keep telling on themselves. It’s obvious that the society they dream of building in Alberta would be a racist, misogynistic, Christian nationalist dystopia.
If you have any doubts about what motivates that crowd, consider the recent social media comment by Bruce McAllister – executive director of Premier Danielle Smith’s office, no less – praising the election on Monday of neo-Nazis in a German state. This explains a lot, observed Mount Royal University political scientist Duane Bratt in a social media post, “for those wondering why Alberta is having a series of anti-immigrant referendum questions.”
As Dr. Stanford pointed out in his report, the separatist/United Conservative Party blame-Ottawa narrative is intended to leave the impression that “whatever is wrong in the province must be the fault of an intrusive, acquisitive federal government, perpetually interfering with the province’s affairs and stealing its resources, taxes and wealth.” He makes a compelling case that in reality most of the problems that plague working Albertans have been created right here in Wild Rose Country by successive Conservative governments, culminating in the now separatist-dominated UCP.
The economic fantasy the Alberta separatist movement perpetrates offers only hopium – the pipedream that we don’t have to wait for the sweet by-and-by to enjoy our pie in the sky. No, with a little help from Uncle Sam – or Uncle Don, anyway – and Alberta’s oil resources, we can all be as rich as Croesus if only we set out on our own.
That may be comforting to would-be separatists, the trouble is that none of what Dr. Stanford politely calls the “myths” of separation stand up to hard economic analysis.
“The real experience of separatist movements around the world confirms that separation would unleash unprecedented uncertainty,” the report states. “Workers in Alberta would pay a huge economic and human cost for separation.”
Dr. Stanford lists numerous ways separation would crush the economy and derail democracy in Alberta. Here is a Top 10 List, based on his observations, of the lies Alberta separatists tell:
Lie No. 1: We’ll all get rich. Forget about it. Former Alberta Finance Ministry official Lennie Kaplan estimates it would cost Albertans $300 billion to replace what the federal government does now. The true number is probably north of $400 billion. The costs of running them would be billions more each year. The new country’s debt would more than quadruple. Interest rates on the debt would soar. “Economists project a reduction in real GDP of as much as 10 per cent in the first year of independence – a loss in economic output of $60-billion or more or up to $12,000 per Albertan per year of recession.”
Lie No. 2: Business investment would grow. “Business leaders in Alberta are unanimous … even the possibility of separation would badly undermine investment and growth.” This is consistent with the U.K.’s experience after Brexit, Dr. Stanford noted. “Less investment means less job creation, slower growth and reduced incomes.”
Lie No. 3: Alberta would sell more to the world. As noted in this space yesterday, Alberta’s problems can’t be blamed on difficulty exporting petroleum, despite the UCP/separatist myth-making to the contrary. Alberta’s international exports grew 16 per cent over the past five years, triple all of Canada. “As a separate country, Alberta would be small and landlocked. International experience shows this is not a recipe for trade success.”
Lie No. 4: We’ll still trade with Canada. There are no guarantees. “Separatists blithely assume that negotiations with the rest of Canada would retain free access to markets in other provinces. But this is wishful thinking. Even a 10-per-cent reduction in interprovincial exports from Alberta would be sufficient to cause a major recession here.”
Lie No. 5: We’ll be free to travel and work in Canada. Don’t bet on that. Despite propaganda to the contrary, that’s not what happened after Czechoslovakia’s peaceful “Velvet Divorce.” Slovaks called it the “Sandpaper Divorce,” because they got ground down. “No one knows if the rest of Canada would welcome Alberta with the same rights and freedoms they have today. Albertans would retain only the real right to live in their own separate, small country.” It’s said here Albertans can forget about this, especially if our new MAGA government starts forcing immigrants to leave en masse, sticking Canada with a refugee crisis.
Lie No. 6: We’ll stop subsidizing Canada. The problem with this one, as Dr. Stanford points out, is that we don’t actually subsidize the rest of Canada. “This argument is blatantly false, no matter how often separatists repeat it. The Alberta government pays no money to Quebec or any other province. To the contrary, the Alberta government receives substantial fiscal payments from the federal government – totalling about $14 billion this year. Those transfers would stop if the province separated, leaving a major hole in the new country’s budget.” In fact, the paper shows, most Albertans get more back from federal programs and services than they pay in federal taxes.
Lie No. 7: Taxes will be lower. Nope. Not happening. And because federal taxes are more progressive than Alberta taxes, working people would have to pay even more to make up the difference after separation. Given the beliefs of the separatist crowd, taxes would likely become even less progressive after separation. So, “not only would separation increase the total amount of taxes that must be collected, but that larger burden would be shared less fairly.” Services would, naturally, deteriorate. So get ready to pay more for less. And don’t expect a separatist government to increase resource royalty rates to cover the difference.
Lie No. 8: Living standards will rise. No again. Alberta now has the highest GDP in Canada. “Economists are unanimous that separation would reduce Alberta GDP and wealth, not increase it. Public services would be put under further pressure because of the enormous costs and debts associated with setting up new national institutions.” Given the ideology of the separatist movement and the likely financial crisis, say good-bye to public health care.
Lie No. 9: Our resources will be all ours. Not so fast. Ottawa and First Nations would still control legal rights to large swathes of land in Alberta. “Alberta would constitute a legal quagmire lasting for years, dramatically enhancing the uncertainty facing businesses and property developers.” Some separatists are bound to suggest violence to cut the Gordian knot, but that’s not exactly going to encourage a favourable investment climate, is it?
Lie No. 10: We can still use Canadian money. Reassuring, perhaps, to the separation curious, but basically hooey. And that also goes for using the U.S. dollar – backed by more than $40 trillion in debt. Alberta could continue to use the Canadian dollar, but don’t expect any cooperation from the Bank of Canada. Ditto with the U.S. dollar, which would put Alberta in the same company as Somalia, East Timor and Panama. “The challenge of creating a monetary system in an independent Alberta is perhaps the most daunting economic hurdle that advocates of separation must confront,” Dr. Stanford wrote. “the most likely result of separation would be monetary debasement, widespread defaults, and a breakdown in normal monetary circulation.” And brace yourself for currency controls if you wait too long to try to escape this mess.
Unfortunately, unlike a normal Top Ten list, none of these are funny.
Then there’s the biggest lie of all, although it’s not really an economic one. To wit, that by voting for separation in Ms. Smith’s referendum on Oct. 19, we’re just “sending a message to Ottawa.”
The idea we should vote to “Let Alberta Decide,” as Mr. Wilson’s group puts it, is a trick. It’s intended to divide the country and create the conditions in which separation is inevitable, even if it becomes universally obvious it’s a mistake, like the Slovaks’ Sandpaper Divorce, or the United Kingdom’s disastrous Brexit breakup with Europe.
“Just flirtation with the pipedream of separation undermines the economic, political, and social well-being of Albertans,” Dr. Stanford wrote. “And the longer this pipedream is kept alive, the more the damage will grow.”
If separation became reality, jobs and incomes would be at risk. Federal programs like Employment Insurance, the Canada Child Benefit and the Canada Pension Plan would disappear. Taxes would have to rise. Services would disappear. The Canadian Charter of Rights and Freedoms would be gone – to be replaced by what, the right to bear arms? So would the full rights of Canadian citizenship. Alberta students who wanted to study in Canada would have to pay full international tuition fees. The population of the new country would be bitterly divided.
Said Dr. Stanford: “The utopian promises of separation would in reality jeopardize most of what generations of workers in Alberta have worked for: a society which harvests this province’s unique abundance of human and natural resources, to build a society of opportunity, fairness, and inclusion.”