Alberta split from Canada would damage province’s economy, study finds

Separating from Canada would cause significant economic damage to Alberta from which it would take years to recover, according to a study commissioned by the province’s government.

The report, a little more than a month before citizens vote on whether to hold a referendum on independence , said any secession process would dent gross domestic product by at least 2.2 per cent in the first five years in a good scenario, or more than 10 per cent in a poor one.

The province would take on at least $324.1 billion of additional debt, between its share of Canada’s current debt and costs associated with separation, according to the report by lead authors Martha Hall Findlay and Tim Sargent from the University of Calgary.

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In the long run, however, the province may see a bump in GDP of 3.4 per cent compared with staying in Canada — on the assumption that independence was a smooth process and the price of oil stays in line with expectations.

A more difficult separation process, in which the United States “takes advantage of Alberta’s lack of alternative options” to secure lower prices for oil, could result in a hit to GDP of 16.2 per cent, the study found. The authors caution that any long-term projections have greater uncertainty.

Alberta’s government asked for the report in June after Premier Danielle Smith called a fall referendum on a question that could begin the process for the province to separate from Canada.

Albertans head to the polls on Oct. 19 to vote on separation and nine other questions around immigration and provincial powers within Canada.

Rather than a simple yes or no vote, the separation question gives voters options for staying in Canada (called option one) or continuing the separation debate and having another vote (known as option two). The question reads: “Should Alberta remain a province of Canada, or should the Government of Alberta commence the legal process required under the Canadian Constitution to hold a binding provincial referendum on whether or not Alberta should separate from Canada?”