Separation referendum has economic repercussions no matter the result: analyst

Ruhee Ismail-Teja, with the Calgary Chamber of Commerce, joins Alberta Primetime's Michael Higgins to discuss the business community's feelings on separation.

On Friday’s Alberta Primetime, Calgary’s mayor says he wants his city to be a place of stability and certainty at a time when Albertans are contemplating a referendum question on separation. Ruhee Ismail-Teja, vice-president of policy and external affairs for the Calgary Chamber of Commerce, joins Alberta Primetime’s Michael Higgins to revisit the conversation.

This interview has been edited for length and clarity.

Michael Higgins: Let’s pick up first on new polling of your members around this issue of separation. Of note, 48 per cent are very or somewhat likely to leave the province and relocate their businesses if Alberta votes to begin the separation process, and 74 per cent see no tangible benefits in Alberta separating from Canada. This willingness to pick up and relocate out of Alberta, do you read that as an emotional response or one rooted in economics, fiscal reality?

Ruhee Ismail-Teja: It’s a combination of all of the above, but it’s certainly a very economic-driven feeling that people have, and part of that is around uncertainty and the level of uncertainty that businesses have been facing for quite a number of years, between the geopolitical context that persists, inflation, and increased costs, disruptions to supply chains. Businesses’ ability to withstand this challenge right now is very limited, and we see that there’s absolutely an anticipatory feeling from businesses around that. Around 50 per cent would consider leaving the province, and have indicated that they would be likely (to). We also see that one in five businesses have already slowed their expansions within Alberta, and 15 per cent are actively looking at contingency plans to be able to leave the province, depending on how things go in October. So, the impact that we’re seeing is not only emotional, but it is very much impacting the way that businesses are operating right here today. And that’s a fundamental shift from where we were even just a few months ago.

MH: In terms of engagement, how closely are your members actually watching the whole separation dialog? Where does it land on the radar?

RIT: One of the most surprising findings that came from this poll was just how many members are paying attention. Ninety-one per cent of our members indicate that they are closely following this referendum, and the impact that it could have. That makes sense when we think about the level of impact to businesses, thinking about the change in regulatory environment that could come with it, the impact to the labour force and ability to attract and retain talent, possible impacts to capital markets, and the lending rates that businesses would be able to access based on current government rates. The level of uncertainty is really quite extensive, and that’s hampering businesses’ ability to plan for the future. Eighty per cent are already feeling that it has an impact on the current state of the economy, and of course, that’s impacting the way they’re thinking about their expansion plans, both in the short and long term, right here in Alberta.

MH: This is already resonating where decisions are being made, even confidence in the road forward?

RIT: We are seeing that there’s an erosion of confidence in the market. Part of that comes from concerns around recessions and the fact that with so many people looking at the economy and worrying about a slowdown, that in fact does create headwinds for businesses. We also see that reflected in some of the data that we commissioned by Trevor Tombe, that says the impact on our economy is not only going to be felt in the long term, but in the immediate term, with a $10 to $15 billion impact on investment this calendar year.

MH: What really strikes you about the data about the conclusions that Trevor Tombe brought to the table?

RIT: One of the most interesting pieces is just how trade-exposed Alberta is. Fifty-five per cent of our economy in Alberta hinges on interprovincial trade or international trade. That puts us far ahead of all other provinces in terms of our dependency on markets that are beyond our Alberta border, and that includes jobs, that includes GDP. Part of what we’re looking at in the long term, that Trevor uncovered, is that secession could mean a $62 billion hit to Alberta’s economy, that means a decrease of six per cent in GDP per capita, which means people on average feel six per cent poorer. It also means 125,000 jobs that could be at stake with that shrinking economy. What we looked at in particular is the impact of that interprovincial and international trade, and that’s particularly important, given the geopolitical context and the shifting trade relationships that we have, it is one more barrier to two businesses being able to expand in the current environment.

MH: That jobs hit, that’s a significant one

RIT: Absolutely, and one in three jobs are actually connected to interprovincial and international trade, so that’s just what would be at stake. We also know that the number of businesses that would be impacted would be much higher, and some of that means looking at the way the regulatory system would change. Going from having federal regulation and basically the rules of the game for businesses and those fundamentally changing it also means prolonged uncertainty. It means that both businesses and residents would be on the hook for the cost to set up a new country and would likely see higher taxation. There are several components within this research that indicate just how significant an impact of separation would be. We look at cases like Brexit, like the Quebec secession. In one case, one of those went through, and the other didn’t, but both had dramatic impacts on the economy, not only in the short term but in the long term, and so part of our role as the Chamber is to be able to unpack the economic numbers and have a really clear picture and be able to share that with Albertans ahead of Oct. 19.

NH: And in doing so, what message then do you hope or expect all of this to send to Albertans across the province, politicians and otherwise?

RIT: It’s a very serious time for the province, and there is a lot at stake that hinges in the balance. It is important to understand that this is not a time to send a message to Ottawa. The Alberta and federal governments have worked very closely together on several policy files, and we’re in a dramatically different place than we were a year ago. There are challenges, and governments have done an excellent job at demonstrating the fact that there is a path forward, and that we can actually move this country forward together. It doesn’t mean there are no challenges, but it does mean that the trade-offs for Alberta, for our economy, and for everyday Albertans are massive.