An independence organization is the latest group to try to price out what it might cost should Alberta decide in the future to become a sovereign nation.
The Alberta Transition Council (ATC) released a budget and costing plan this week which estimates about $5 billion in one-time expenses, while predicting that an independent Alberta would have a potential budget surplus of between $22.2 to $32.1 billion each year.
“This is affordable, this is doable and actually well within the means that Alberta has today. So our view is we can become independent, we can operate as an independent country and we can be successful financially,” said Dennis Kalma, the principal author of the ATC financial reports, in an interview with CBC News.
Having between $22 billion to $32 billion left over every year is money that could be used for different priorities, Kalma said, such as lowering taxes, paying down debt, building savings, or service and infrastructure improvements.
“Canada is a bigger organization. It’s not known for its efficiency and a smaller country could do some simplification,” said Kalma.
ATC’s figures vary drastically from a similar report by academics at the University of Calgary’s School of Public Policy.
A former treasury board senior manager called the ATC financials “magic” for ignoring hundreds of billions of dollars in costs, while also not detailing potential cuts in financial supports to seniors, low-income Albertans, and parents.
The ATC is the same group that previously released a 214-page “transition plan,” laying out a range of regulations and institutions that would need to transition to Alberta’s control from Ottawa.
Lawyer Keith Wilson, who leads the Alberta Transition Council and is also a leader with the independence group Let Alberta Decide, said the important point is not simply whether the books balance.
“It is whether there could be meaningful financial room left after Alberta pays for the services and responsibilities of a country,” Wilson said in a news release.
This is the latest in a long line of reports trying to envision what would need to happen and what it would cost if Alberta residents decide to leave Canada.
Last week, the University of Calgary School of Public Policy estimated that the cost of establishing a new country would range between $50 billion and $170 billion over a five-year period and would be highly unpredictable over the long-term.
Former Treasury Board senior manager Lennie Kaplan also contributed a projection to a report from the Canada West Foundation, a Calgary-based think-tank. Kaplan estimated setting up an independent Alberta would cost more than $200 billion, with ongoing costs of more than $50 billion annually.
After reviewing the ATC’s reports, Kaplan described “magic as a prevailing theme,” since it should not be assumed that by virtue of Alberta becoming independent it can grow its way out of deficit and debt.
“Uncertainties and risks are treated as things to negotiate later on after separation,” said Kaplan in an email. The ATC “does not model output, employment or trade, and it makes no claim about the size of the economy in any future year.”
In addition, the reports do not cost continued access to trade agreements, among other issues, said Kaplan, which will “need to be reconciled by the ATC.”
Establishing independent Alberta could cost up to $170B over 5 years: report
The biggest omission, experts say, is the ATC anticipating that an independent Alberta would not inherit its share of the federal debt.
In contrast, the U of C report forecast Alberta’s debt would balloon as it takes on a portion of Canada’s federal debt, rising to between $324 billion and $442.3 billion — requiring the province to spend billions more than it currently does on paying that debt’s interest.
The ATC explained the federal debt was omitted since no settlement has been negotiated and the outcome cannot be known in advance.
For Trevor Tombe, an economics professor and contributor to the U of C’s report, the ATC’s decision to not account for any debt whatsoever being taken on by an independent Alberta, is “not a realistic scenario to contemplate.”
In addition, the ATC does not adhere to military spending to align Alberta with the international commitment of two per cent of GDP and does not include spending on First Nations and Métis programs.
The ATC also lists considerable savings “after replacing everything Canada does” currently for Alberta, however Tombe said those figures envision “a scale of services that are far lower than what currently exists,” and there is only leftover cash because of cuts.
For instance, the federal government provides individual benefits to seniors and low income individuals. There are other supports such as the Canada Child Benefit and grants to individuals and businesses.
The ATC proposes paying for the existing federal Old Age Security program by including it in a new Alberta Pension Plan, as opposed to covering the cost in an annual budget, as the federal government currently does.
“That’s an unsustainable strategy,” said Tombe, unless taxes or worker contribution rates were increased.
“Those are big ticket items and largely accounts for the gap between their numbers and what we had from the School of Public Policy,” he said.
