Get ready for another round in the Great Numbers War, another skirmish in the Battle of the Balance Sheets.
On Wednesday, the Calgary Chamber of Commerce released its own study on the economic costs of Alberta separation. It projected that the disruption of trading patterns and partnership could cause an eight per cent downturn in the Alberta economy. That’s $62 billion in economic activity and 175,000 jobs.
The Calgary numbers are more substantial than anything yet put out by the Edmonton Chamber, whose warnings against separatism have so far consisted mostly of claims that separatist talks are already pulling down Alberta businesses, even though national figures continue to show Alberta’s by far the strongest provincial economy in the country.
Calgary’s numbers are the work of well-known University of Calgary economist Trevor Tombe, an academic whose work I have always respected.
Of course, separatist leaders have objected to the idea that pulling away from Ottawa and Confederation could have anything but positive impacts for our province.
And as some pointed out when the Calgary report was released, Tombe, the report’s author, is himself a member of the pro-federalist organization Lead Not Leave.
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But even when you are on different sides of an issue, Tombe is a difficult man to disagree with.
He was one of the first economists to quantify the devastating effects of the provincial NDP government’s environmental policies on Alberta investment between 2015 and 2019 — tens of billions of lost income and well over 100,000 jobs.
Pulling apart the economic consequences of political policies is one of the things Tombe does best.
In this current instance, he looked at the effects of Brexit on the British economy following the 2016 referendum on the U.K.’s withdrawal from the European Union. From this experience, Tombe extrapolated what could happen here.
Trade costs would immediately go up due to “regulatory differences and potential tariffs” charged by other jurisdictions against an independent Alberta. The province could initially be excluded from international trade agreements that Canada is currently a party to, Tombe explained.
I also believe the federal government would be inclined to be punitive towards a exiting Alberta — imposing costs on a free Alberta and dragging its heels on divvying up pension money and tax revenues.
The negative consequences might not last forever, but for at least a few years, while Alberta negotiated its own terms in international trade, the dislocation brought on by leaving Confederation could be worth tens of billions in lost opportunities and transaction costs.
Would Ottawa let us continue to use the Canadian dollar? Would we want to? And if not, what would be the exchange costs of establishing a new Alberta dollar?
There would be a period during which some countries recognized the new Alberta currency, while other might be resistant.
According to Tombe, his calculations are based on “a change in trade cost informed from Brexit. It could be a little lower,” he conceded, or “it could also be higher,” because creating a separate country is bound to be more complex than merely extracting the U.K. from an economic union, rather than a political one.
I’d like to see the separatists’ own projections, not simply hear their reassurances that separation will be quick, easy and cheap.
Such claims just don’t make sense.
The Quebec separatist movement has always had its own academic economists to offer estimates of what independence would mean for Quebec government finances and for the province’s economy.
Where are the Alberta separatists’ economists?
It might be wiser for voters to wait until the end of summer when the Alberta government’s panel reports its estimates of the cost of separation.
Admittedly, the government is an interested party, so its numbers will be suspected by the separatists. And Tombe is on that panel, too.
Until the vote is held in October, expect the competing numbers to go swirling around in a confusing vortex.
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