Fact Check: Would Alberta’s economy collapse under independence?

Constantin Colonescu, a professor of economics at MacEwan University, wrote a piece for The Conversation with some dire predictions of economic catastrophe if Alberta were to become independent. His conclusions were drawn from some terribly low estimates of the fiscal imbalance within Canada, however.

The professor acknowledges that Alberta pays more into the federation than it receives, but breaks the figure out to an annual figure of $850 per citizen. Fraser Institute ***ysis using Statistics Canada data shows Alberta generated roughly $77 billion in federal revenues in 2024 against about $52.5 billion in federal spending in the province, for a net contribution of $24.5 billion that year. The article’s $850-per-resident fiscal dividend understates this reality. With a population around 5 million, $24.5 billion is closer to $4,500–$5,000 per resident. That’s a rather large discrepancy.

Under independence, Alberta would retain essentially all federal taxes and premiums currently collected within its borders from personal and corporate income taxes, GST, EI and CPP contributions, etc. There would be a large, recurring surplus to cover services previously provided by the federal government. The article’s broader balance sheet still leaves most of this retained revenue uncredited relative to the obligations it ***igns.

The pension picture looks much the same. Colonescu estimates the pension differential at $225 per resident and makes ***umptions of large fiscal obligations ***umed. Albertans have been large net contributors to the Canada Pension Plan. From 1981 to 2022, the ***ulative net contribution was $53.6 billion. Alberta workers paid roughly 14.4% of premiums while receiving about 10% of benefits. Annual net contributions remain material at around $3 billion per annum. That works out to about an additional $600 per resident annually, which could be retained in an Albertan plan. Over decades, the compounding advantage is substantial. The article deliberately chooses a modest pension dividend.

The article ***umes a six per cent increase in trade and regulatory costs under independence, with 30 percent p***ed on to consumers. There is little to back such an ***umption within the piece. There is a good probability that Alberta’s trade relationship with the United States would improve upon independence, and it wouldn’t serve Canada well to put tariffs upon the energy products it buys from Alberta. Interprovincial movement of goods has been more of a barrier for Alberta than international movement anyway.

There will be start-up costs and new capital expenses for an independent Alberta. But those are short-term, and the costs are eclipsed by the savings in leaving the federation. Like many other doomsayers, Mr. Colonescu glosses over the fact that Alberta already pays for the services and transfers coming from Ottawa plus a great deal more. They paint expenses such as debt servicing or OAS payments as if they would be new expenses. Those costs would just be brought home.

Among the cases to be made against Alberta independence, the economic one is the weakest. Thus the need to apply such absurdly low estimates to figures as seen in Colonescu’s article.