The numbers Alberta separatists don’t want you to see
Gary Mason
For about a year now, Lennie Kaplan has been trying to get answers to a question: what kind of cost-benefit analysis has the Alberta United Conservative Party government done on the potential impact of separation?
Mr. Kaplan wasn’t just some nobody asking. He was a former senior manager in the fiscal and economic policy division of Alberta’s Ministry of Treasury Board and Finance. Part of that role was exploring ways to reform current federal-provincial fiscal arrangements.
In other words, he knew numbers and had a better grasp than most of what the breakdown of costs between Alberta ([url]https://www.theglobeandmail.com/topics/alberta/[/url]) and Ottawa looked like. More importantly, he had a sense of what the math might add up to if the province was to seek independence.
At the very least, he reasoned, any provincial government facing the threat of separation would surely be doing deep dives on what it would all mean for Albertans.
Earlier this year, he sent off an access to information request to the government asking for: “All memoranda, briefing notes, studies, reports, PowerPoint presentations, e-mails, attachments, spreadsheets and texts prepared by or for the Executive Council or received by Executive Council showing the economic and fiscal impacts on Alberta arising from Alberta’s independence/separation/sovereignty/sovereignty association from Canada, including but not confined to … [such] options as Alberta becoming a separate country, Alberta joining Saskatchewan and Manitoba as a separate country and Alberta becoming a state under the United States of America.”
Recently he got a response: “After a thorough search was conducted by Executive Council staff, no records responsive to your request were located.”
So, faced with an existential threat in the form of possibly separating from Canada, the Alberta government had done no cost-benefit analysis of what that could mean for residents. You know, the people whose lives would be profoundly impacted by such a move. Something that would put a lie to the preposterously fanciful numbers that the Alberta Prosperity Project offered up in its economic blueprint for the province as an independent nation.
Last July, the APP released a fiscal plan projecting a surplus in the billions within one year of separation. The group said Alberta’s economy could double within 20 years and the province would have the highest per capita GDP of any country in the world.
But now Mr. Kaplan has provided to The Globe and Mail his own preliminary calculations that show separation would be an economic disaster. His analysis indicates independence would reduce the Alberta economy – or nominal GDP – by $39.1-billion or 7.2 per cent in the first full year as an independent country, leading to a 4.8-per-cent contraction in Albertans’ household disposable income.
Other highlights of his research: Total employment in the province would fall by 45,703 jobs in year one of independence; personal income per person would fall by 6.2 per cent; retail sales would fall by 8.2 per cent; housing starts would fall by 10.5 per cent; residential investment would fall by 14.5 per cent, while nominal business investment would decline by 8 per cent. In his analysis, Mr. Kaplan points to at least a dozen economic metrics that are all negative if separation is pursued.
University of Calgary economist Trevor Tombe has also done some preliminary forecasting. He estimated there would be a 5-per-cent increase in the cost of importing to, or exporting from, Alberta, which would shrink the province’s economy by roughly 4 per cent in 2026, a year he used for illustrative purposes.
Mr. Kaplan, meantime, said a separate Alberta would also likely lose protections under current Canadian internal and international trade agreements and be required to negotiate new pipeline access and supply-chain arrangements. “I estimate that this could effectively increase Alberta’s trade costs by 12 per cent in 2028,” he wrote in an article released this week.
Premier Danielle Smith recently had her own surprise for the separatists, saying that the start-up costs for an independent Alberta would be in the neighbourhood of $400-billion. Just assuming its share of the national debt, she estimated, would be about $170-billion. And then the numbers only get worse from there.
It was good to see Ms. Smith taking a position on this matter. As encouraging – in the spirit of better late than never – is thatshe announced the government will conduct its own analysis of what independence would cost Alberta. The government is leaning toward having a blue-ribbon panel of experts look at the data and give the public an unbiased assessment of independence’s impact.
The government could do worse than calling up Mr. Tombe and Mr. Kaplan. After all, they’ve already started crunching the numbers, and the results aren’t pretty.
Gary Mason
For about a year now, Lennie Kaplan has been trying to get answers to a question: what kind of cost-benefit analysis has the Alberta United Conservative Party government done on the potential impact of separation?
Mr. Kaplan wasn’t just some nobody asking. He was a former senior manager in the fiscal and economic policy division of Alberta’s Ministry of Treasury Board and Finance. Part of that role was exploring ways to reform current federal-provincial fiscal arrangements.
In other words, he knew numbers and had a better grasp than most of what the breakdown of costs between Alberta ([url]https://www.theglobeandmail.com/topics/alberta/[/url]) and Ottawa looked like. More importantly, he had a sense of what the math might add up to if the province was to seek independence.
At the very least, he reasoned, any provincial government facing the threat of separation would surely be doing deep dives on what it would all mean for Albertans.
Earlier this year, he sent off an access to information request to the government asking for: “All memoranda, briefing notes, studies, reports, PowerPoint presentations, e-mails, attachments, spreadsheets and texts prepared by or for the Executive Council or received by Executive Council showing the economic and fiscal impacts on Alberta arising from Alberta’s independence/separation/sovereignty/sovereignty association from Canada, including but not confined to … [such] options as Alberta becoming a separate country, Alberta joining Saskatchewan and Manitoba as a separate country and Alberta becoming a state under the United States of America.”
Recently he got a response: “After a thorough search was conducted by Executive Council staff, no records responsive to your request were located.”
So, faced with an existential threat in the form of possibly separating from Canada, the Alberta government had done no cost-benefit analysis of what that could mean for residents. You know, the people whose lives would be profoundly impacted by such a move. Something that would put a lie to the preposterously fanciful numbers that the Alberta Prosperity Project offered up in its economic blueprint for the province as an independent nation.
Last July, the APP released a fiscal plan projecting a surplus in the billions within one year of separation. The group said Alberta’s economy could double within 20 years and the province would have the highest per capita GDP of any country in the world.
But now Mr. Kaplan has provided to The Globe and Mail his own preliminary calculations that show separation would be an economic disaster. His analysis indicates independence would reduce the Alberta economy – or nominal GDP – by $39.1-billion or 7.2 per cent in the first full year as an independent country, leading to a 4.8-per-cent contraction in Albertans’ household disposable income.
Other highlights of his research: Total employment in the province would fall by 45,703 jobs in year one of independence; personal income per person would fall by 6.2 per cent; retail sales would fall by 8.2 per cent; housing starts would fall by 10.5 per cent; residential investment would fall by 14.5 per cent, while nominal business investment would decline by 8 per cent. In his analysis, Mr. Kaplan points to at least a dozen economic metrics that are all negative if separation is pursued.
University of Calgary economist Trevor Tombe has also done some preliminary forecasting. He estimated there would be a 5-per-cent increase in the cost of importing to, or exporting from, Alberta, which would shrink the province’s economy by roughly 4 per cent in 2026, a year he used for illustrative purposes.
Mr. Kaplan, meantime, said a separate Alberta would also likely lose protections under current Canadian internal and international trade agreements and be required to negotiate new pipeline access and supply-chain arrangements. “I estimate that this could effectively increase Alberta’s trade costs by 12 per cent in 2028,” he wrote in an article released this week.
Premier Danielle Smith recently had her own surprise for the separatists, saying that the start-up costs for an independent Alberta would be in the neighbourhood of $400-billion. Just assuming its share of the national debt, she estimated, would be about $170-billion. And then the numbers only get worse from there.
It was good to see Ms. Smith taking a position on this matter. As encouraging – in the spirit of better late than never – is thatshe announced the government will conduct its own analysis of what independence would cost Alberta. The government is leaning toward having a blue-ribbon panel of experts look at the data and give the public an unbiased assessment of independence’s impact.
The government could do worse than calling up Mr. Tombe and Mr. Kaplan. After all, they’ve already started crunching the numbers, and the results aren’t pretty.
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