How much would Alberta separation cost?

Money. It's a big factor in the Alberta separation debate. Premier Danielle Smith says people need a realistic price tag on separation so voters can make an informed decision on referendum day. But figuring out the math on that? Easier said than done. Here's one number. I think I came up with almost $400 billion worth of transitional costs that we'd have to assume. That was in June. A few months later, her government released a report it commissioned. It laid out two transition scenarios – smooth and difficult. But the final word on that? The report says no amount of analysis can easily predict what the impact on Alberta's separation might be. But there's no shortage of people trying to do that. From separatist groups to federalists to independent think tanks, all of their estimates are in the billions of dollars, sure. But just look at the range. Let's start with this one. More than $200 billion in one-time transition costs and another nearly 60 billion a year in ongoing costs. Compare that to a one-time 5 billion dollar cost spread out over three years and more than 3 billion annually to run Alberta. This figure doesn't factor in Alberta's share of the existing federal debt and other costs up in the air and awaiting negotiation. More on that in a minute. Here's one more. From about 3 to 6 billion up front with ongoing costs around the 100 billion dollar mark. Let's look at what financials could factor into these calculations starting with one-time costs an independent Alberta would pay to run a government solo without Ottawa's help just think about setting up all those federal agencies postal service military tax collection just spitballing here but you'd likely need your own defense resources from uniforms to fighter jets government buildings workers and a crew to hire and train them desks computers software some of those costs will be contingent on negotiation with Canada. Take Alberta's share of the national debt. The premier estimates it's at $170 billion, which is a one-time cost, with about $10 billion a year in interest. That's an ongoing cost. Other things to negotiate? Potential contributions to NATO, trade agreements here and worldwide. In most cases the ongoing costs add up to billions, but a lot less than the initial blow of transition. How can Alberta pay for all of these expenses? Some separatist groups think the nature of this province's strong economy gives it the upper hand in negotiations. Here's what Let Alberta Decide has to say. They cannot relocate our natural resources, our expansive agricultural production, our oil and gas. Another group, Stay Free Alberta, argues there is enough tax money going to Ottawa right now to support a fiscal surplus if Alberta separates. If that's true, will it stay true? A report from the Calgary Chamber of Commerce predicts Alberta separation would shrink the provincial economy by $62 billion a year. Alberta economist Trevor Toom based his figures on the measured effect of Brexit in the UK, pegging job losses as about 175,000. The Canada West Foundation, a nonpartisan think tank, crafted its own report echoing the concern. Business will leave Alberta as it did in Quebec around the time of its last sovereignty referendum. Then there's other costs, like social programs. The report also warns that independent Alberta would have to start its own public pension system from scratch. Alberta toyed with doing this already, but the plan was unpopular. Post separation, the report assumed debt per person in Alberta could rise considerably from where it sat in 2024. And that's its best case scenario. Some on the pro-separation side think these reports overemphasize the negatives of leaving Canada. Let's go back to Let Alberta Decide's co-head. Keith Wilson says this is where their own transition plan differs. It assumes risks can be negotiated and managed. He believes Alberta's contributions to Confederation mean the independent country is owed a $300 billion credit. An idea he says is missing in other reports. We're not starting from scratch, right? Those people who work at the airports, we're not going to blow up the airport. It's still there. All we're doing is changing the payroll. We're not going to destroy all of the infrastructure that's in place to deliver the few services that the federal government does provide to Albertans. That will all be there. Now let's get back to the School of Public Policy report, the one commissioned by the government. It takes uncertainty and puts it on two very different tracks. Our job was to be as impartial as possible. So we've ultimately looked at if there's a separation and it's relatively smooth, what then would be the economic and fiscal implications, given all those other contexts. Then we also looked at what if it's not so smooth? What if it's chaotic? The smooth scenario goes like this. Short term, wages drop. Interest rates go up for people and businesses, so that car payment is higher, just like your mortgage and line of credit. Businesses, in the best case scenario, face uncertainty in the short term. With potential for higher costs to borrow and invest. That uncertainty can make it tough to attract workers, too. An independent Alberta would also mean a new regulatory environment. And that could come with its own costs and hurdles. Government spending would go up in the short term, but the report says government could operate more efficiently and save money here and there. One example it gives? Alberta's landlocked, so we don't need to pay for a Coast Guard. In the smooth scenario, things could stabilize and even improve after 20 years. This paper posits a surplus, $7.8 billion, leaving room to cut taxes and spend more on Albertans, depending on outside factors like the price of oil. Now for the difficult transition picture. In the short term, there are job losses. Employment drops by 10%. Workers might leave for opportunities outside of the newly formed country. Setting up services for people could be a mess. Think gaps in employment insurance checks, pension payments, income tax mistakes. The report says cost of living could shoot up if Alberta's borders are treated like an outside country instead of a province. Businesses, they could be caught in the middle of two sets of regulators and face higher costs as a result. Companies with assets outside of Alberta, they might look to leave. Government transition costs might be higher in the short term. The report lays out a scenario where Alberta is forced to take on more of the federal debt when negotiations don't go as planned. The government isn't as efficient, so services cost more. Volatile economic factors, a bad credit rating cripples the newly formed country's borrowing power. The report says in this scenario, Alberta spends more than it can make up in revenues, even without having to pay into equalization. The deficit is almost 26 billion dollars. Getting back in the black would mean raising taxes or cutting spending. And in the long-term picture, Alberta comes out of separation with a smaller economy than if it had stayed in Canada. So what do people following the separation debate think about this government commission school public policy report? I went and saw a palm reader who I think will have more accuracy than this particular report. You never know what kind of a deal we could we could come up with and And I really believe without government overreach and regulation from Ottawa, I think Alberta's economy will thrive. The notion that the government of Canada would cheerfully hand over what Alberta thinks is its fair share is frankly naive. I don't think that a lot of time should be spent thinking about the rosy scenario. Is this the clarity voters need or do all these numbers and asterisks provide a bit of paralysis by analysis? Alberta's finance minister is pretty confident. The numbers confirm why I'm voting on October 19th to remain in Canada. There's just too much risk to the province, but too much risk in particular to Albertans. The premier has thoughts too. People have to make their own choice about how much stock they put on that report. I'm personally of the view that things are going so well right now. And an expert panel appointed to review the analysis points out Alberta is a powerful force within Canada. If the province leaves in both smooth and difficult scenarios, yes, Alberta's GDP falls in the first five years post-separation. But Canada without Alberta, the panel assessment suggests the country will be less of a middle power with 15% lower GDP, adding it hopes Canadians can realize what the country has to lose. Takeaways from academics, numbers won't necessarily make up minds. Lots of people have made their decision, they have reasoned this out based on their own feelings or analysis, and they're not going to move. For those people who are undecided, you know, is there something in this report that would move them? I mean, it's possible. It's unlikely that any new piece of information like this from what you might consider the establishment sources is going to change any minds. The report concludes economics are only one part of the equation. some of the independence calculus hinges on politics and legal factors, swings in world oil prices. That's all outside of the report scope and Alberta's control.