Establishing independent Alberta would be costly, unpredictable: government-commissioned report

Alberta’s separation from Canada would be costly in the short term and highly unpredictable in the long term, a new report from the University of Calgary School of Public Policy released Wednesday says.

The report was commissioned by Alberta’s government in June.

It lays out two possible scenarios — a “smooth” option, in which negotiations to exit from Canada would be quick and favourable to Alberta, and a “difficult” option, in which those negotiations would be protracted and unfavourable to the province.

“There is certainly a scenario where Alberta’s economy and finances could be better after separation, once a transition period is over,” the report reads. 

“However, 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.”

Earlier this year, Premier Danielle Smith estimated it would cost almost $400 billion in transitional costs, plus somewhere in the neighbourhood of $25 billion to $50 billion in annual costs for Alberta should it separate from Canada.

In the short term, the U of C report states that separation would cause significant economic disruption for Albertans, with the cost of establishing a new country ranging between $50 billion and $170 billion over a five-year period.

The report states that separation would give Alberta the freedom to set its own environmental laws, which could potentially boost the energy sector.

However, independence could also make the province more dependent on shipping its oil through the United States. The U.S. might be co-operative, the report states, or it might try to “take advantage of Alberta’s lack of other options.”

In addition, the report states that an independent Alberta would be vulnerable to swings in oil prices, no matter what eventual situation is worked out in relation to its ability to get oil to markets and its production capacity.

“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,” wrote Finance Minister Jason Nixon in a statement.

“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.”

Over the past months, various groups ranging from the pro-independence group the Alberta Prosperity Project to the Calgary-based public policy think-tank Canada West Foundation have released reports, trying to sketch out what, exactly, it might look like in practice should Alberta decide to separate.

The APP has estimated a transition cost of approximately $6 billion. For the Canada West Foundation, former Treasury Board senior manager Lennie Kaplan estimated that setting up an independent Alberta would cost more than $200 billion, with ongoing costs of more than $50 billion annually.

More to come.