‘Massively overstated’: Economist says cons significantly outweigh pros of Alberta separation

Moshe Lander, Concordia University economics professor, speaks with Alberta Primetime host Michael Higgins about the costs associated with Alberta separation.

This interview has been edited for clarity and length.

Michael Higgins: You’re a longtime resident of this province. You have a foot in Quebec, but you have a big foot in Alberta as well.

So what do you make of a growing number of Albertans seemingly embracing talk of separation?

Moshe Lander: I understand the frustration, I do get it, but the solution is not to say, ‘We quit and we’re going to take our ball and go home, or take our oil in this case and go home’. It’s to continue to try and make a compelling argument for why Canada should be more supportive of Alberta. That’s what politics is about. That’s what parliament is for.

When the premier says that it’s Ottawa that’s doing this, let’s not forget that Ottawa, as she refers to it, is made up of 343 parliamentarians from all over this country that represent a variety of different political parties, and what they’ve said over the last 10 years is that you have not made a compelling case for why we should be supportive of the requests you’re making.

Every province is going to say that they have their own gripes and complaints, but the issue to me is that if the premier can cannot make that case, we either need a new premier who can make the case, or she needs to do a better job of trying to sell why Canada should find this to their benefit, and to be more supportive.

But the idea of going to the people and saying, ‘Do you want to be a part of this country or no?’ That’s not what Canada was built for, and it’s not what our institutions were designed for.

MH: Let’s say Alberta decides to go it alone. Would it be a clean financial break with the federal government, as in we wouldn’t owe Ottawa anything?

ML: No, and there would be lawsuits every which way. So let’s even set aside the lawsuits in the decades that it would take to disentangle it.

Alberta has a problem right now paying its public sector employees, yet the public sector in Alberta would instantaneously grow if it were to become an independent country. You would need a diplomatic corps, you would need a central bank, you’d need border control, and in this case, border control would be because it’s now an international border on all four sides.

You would have to have your own police force. So the RCMP would no longer be doing it for you. You would need a diplomatic corps that’s going to set up embassies in Ottawa, and presumably there would also need to be consulates in Vancouver and Halifax and Toronto.

So this government would instantaneously find that its costs go up, but that central bank that they would create would also be there to try and make sure that Alberta doesn’t live by boom and bust, which is exactly what we’ve done for decades. Anytime the oil price goes up, the interest rate would go up right behind it, and so I don’t know that that’s necessarily what Albertans want.

You would give up your passport. You would give up the ability to travel easily, because you’d now have to get permission to fly out and into Alberta because you’re flying through international airspace.

How many companies would decide they want to get out of there? How many people would decide they want to get out of there as well? Even the freedom fighters that decide that they want to leave Canada and find an alternative to the U.S., I don’t know that the net inflow would be enough to offset the net outflow of capital and people. That means taxes would go up.

You have First Nations and Indigenous people that you’d have to deal with who say that that’s our oil and you’re not touching it, and you’d also have to deal with strong sentiment in Calgary and Edmonton that say, we don’t want to leave. If you can break apart Alberta from Canada, can you break apart Calgary and Edmonton from Alberta?

MH: So that’s a long list, and it sounds like it could leave Alberta in somewhat of a financially precarious position. But would there not be a financial upside in no longer having to contribute to the rest of the country through equalization?

ML: There would be some benefit there, but that would be small, and what Alberta is trading on right now is its demographic dividend. Alberta is younger than the Canadian average for now, but there’s nothing to say that that would continue to be the case.

So where you would have net contributors to a private pension system over time, as that group ages, it’s entirely possible that you could see, like what the rest of Canada has, an inverted pyramid where lots of seniors and very few young people.

Especially if what I’m saying it comes true that our taxes are going to have to go up to pay for all of these services that are now going to have to be delivered entirely within a sovereign Alberta. So the benefits there, I think, would be massively overstated, but the other part of it is that our economy has for decades relied on non-renewable resource revenue as the major source of government revenue. The nature of non-renewable is that at some point it will run out.

The more that people push for pipelines, I get it, the more that people view that that resource is trapped. I get that too, the faster that resource runs out. So then what? The government has been very resistant over decades, as to trying to transition away from oil. The carbon tax would have been an easy way to just say, ‘You can keep doing what you want. You’ve just got to pay your proper price for it, and if that means that you want to move towards something else, like solar, then there’s the incentive to do so’.

That might also help make the economy a little more diversified, so that it could withstand if it wanted to go down an independent path at some point in the future.

MH: As a professor with Concordia University, you also have the benefit of exposure to the Quebec dynamic. What was the economic tale of the tape in terms of the long-term impact of separation discussions in that province?

ML: Let’s not date me here, I’m not that old. I was around during the time, but it was during my formative years as an undergrad student. The damage has been done, and I can see that 30 years after, businesses fled Quebec because they don’t like uncertainty.

We’ve been talking for the last three months about the economic uncertainty around tariff talk. You think that we want to have a five to 10-year conversation about economic uncertainty around Alberta?

Businesses make 30-to-50-year decisions when they decide to invest in a project, and if they decide that it’s not profitable, the last thing that you want is them to decide it’s unprofitable, because there’s now an extra level of uncertainty.

So the disappointing part of this entire exercise is that you’re calling me on as an economist to try and explain it yet we have, as our premier, somebody with a degree in economics.

She’s being a little coy and a little shy about saying, ‘Well, I’d like to be in Alberta’. She can be a lot clearer in saying, ‘Look, I have that degree in economics, and I will tell you, like every other economist, this will not work unless you get a miracle of coincidences that all simultaneously happen, where only then could it maybe work?’

If she were to be more explicit and say, ‘I get your frustration, I’m going to double down, I’m going to work harder, but this is not on the table, and I’m not going to allow it to go through’, I think that that additional level of uncertainty could at least be contained and allow us to focus on what the real issues are, which are a variety of scandals that this government currently has going for it, and the ongoing issues that it wants to raise with Ottawa and the new government.