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Lorne Gunter: Uncertainty rising with threat of referendum on Alberta separatism

The provincial government’s search for a major private investor to build a pipeline to the West Coast is reportedly stalled by the uncertainty surrounding a potential separatism referendum this fall.

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There have been a lot of warnings lately, mostly from committed federalists, that Alberta separation would cause massive capital flight from the province. Unemployment would rise substantially. Per capita income would fall. The provincial budget would produce deep deficits.

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Maybe. That’s certainly what happened in Quebec.

After the Parti Quebecois won a majority in Quebec in 1976, hundreds of companies pulled up stakes and left the province because of the uncertainty of separation. The trend continued after the PQ announced its first independence referendum in 1980.

Prior to the rise of separatism, Montreal had been the financial capital of Canada. The city had been home to more head offices than the next three busiest cities (Toronto, Vancouver and Calgary) combined.

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In a few short years, Toronto had become our financial and professional hub. Montreal was second fiddle. Real estate values collapsed. Nearly 700 businesses left town and took with them their office rents and their employees’ spending and purchases of homes, cars, restaurant meals, furnishings, clothing and more.

Montreal never got its old glory back. It now is third in corporate headquarters behind both Toronto and Calgary.

But would that happen here?

There’s a good chance Alberta’s economy would suffer, but then again, maybe not that much.

There’s evidence Alberta is already suffering. The provincial government’s search for a major private investor to build a pipeline to the West Coast is reportedly stalled by the uncertainty surrounding a potential separatism referendum this fall.

But there are two big differences between Quebec’s efforts to leave Confederation and a possible move by Alberta to do the same.

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For one, financial assets are comparatively easy to move — much easier than oil and gas deposits. If you are doing business in banking, insurance and bonds, you can leave one jurisdiction for another fairly quickly and painlessly.

You can’t move the world’s third largest oil and gas reserves. If you want to do business in the oil patch, you have to do it in Alberta.

The other difference is Alberta is likely to have a low-tax, pro-business, less-red-tape government. That wasn’t the case in Quebec. The PQ was left-leaning and hostile to business. It also imposed language laws that added billions to costs for businesses.

It’s likely after a brief period of uncertainty and decline, Alberta would be at least even economically to where it is now, if not ahead. Over a decade or so, more investment might even come into Alberta than could otherwise be expected.

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It’s also likely average Albertans would have more money in their pockets because they would not be disproportionately taxed to finance Ottawa’s exorbitant equalization scheme. Since Quebec is the largest recipient of equalization, Quebecers may have less money when they are made to pay full price for their own social programs and for their children’s tuition.

The biggest economic worries created by the current leading separatist group, the Alberta Prosperity Project (APP), is their admiration for U.S. President Donald Trump, who is an economic dunce, and their own belief in questionable (flaky?) economic ideas.

The APP, for instance, wants to underwrite a new Alberta dollar with gold, oil and bitcoin. Cryptocurrencies are too unreliable, though. In the past six months, Bitcoin has lost nearly 43 per cent of its value. That’s hardly the stability a new dollar would need.

Of course, Trump loves cryptocurrency. He and his family have made nearly Cdn$3 billion from the creation of their own crypto, according to Forbes magazine.

And far from improving the American economy, Trump’s tariffs have driven growth down and prices up.

Ninety per cent of the cost of Trump’s tariffs has been borne by American companies and consumers. He made his supporters believe foreign companies and governments would pay, probably because that is what he has convinced himself. But instead, tariffs have been a big cause for U.S. inflation.

If an independent Alberta were run with the same economic mentality, our new country’s economy would suffer, bigtime.

lgunter@postmedia.com

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