Alberta Separation Study Reveals Economic Risks and Transition Costs

A new report commissioned by the Government of Alberta examines the potential economic and financial impacts of Alberta separating from Canada. The University of Calgary’s School of Public Policy outlines two scenarios: one with a smooth transition and another with difficult negotiations and higher costs.

In the smooth scenario, Alberta’s GDP would initially be 2.2 per cent lower but rise 3.4 per cent higher after 20 years. Employment would initially drop 0.7 per cent before increasing by the same margin in the long term. Wage income per person would be $1,241 lower in the short term and $1,851 higher after 20 years. In the difficult scenario, GDP would plummet 10.1 per cent in the short term and 16.2 per cent in the long term, with wage income per person falling $5,496 in the short term and $11,957 in the long term.

The report highlights significant transition costs, including the need for 70,000 additional public servants and $50 billion in spending over five years. An independent Alberta would also have to develop its own systems for federal programs like Old Age Security, Employment Insurance, and the Canada Pension Plan. The report warns that Alberta could become more dependent on the U.S. for oil exports, potentially leading to unfavorable negotiations.

An advisory panel reviewing the report concluded that separation would result in short-term costs and uncertain long-run gains. The panel also noted that the rest of Canada would face economic impacts, including a three per cent trade deficit and a 15 per cent GDP decline. The panel urged Alberta to consider the broader implications before proceeding with separation.