Muhammad Amanullah — September 17, 2026
A new report examining the potential economic consequences of Alberta separating from Canada has identified major financial costs, estimating that establishing an independent country could cost between $50 billion and $170 billion during the first five years.
The costs would be separate from the potential effects of secession on economic growth, employment and Alberta’s overall fiscal position.
Why Was the Report Commissioned?
The report was commissioned by the Alberta government and prepared by the University of Calgary’s School of Public Policy to provide residents with information about the potential economic consequences of separation ahead of the October 19 referendum.
The report notes that secession would involve more than a political or constitutional change. Alberta would have to establish several systems and institutions that are currently operated or administered by the federal government.
Costs Could Reach $170 Billion
According to the report, the initial five-year cost of establishing a new country could range from $50 billion to $170 billion.
These costs could include establishing new government systems and infrastructure, hiring additional public-sector employees, assuming responsibilities currently handled by the federal government and meeting other administrative requirements.
Negotiations over Alberta’s share of Canada’s federal debt and assets could also affect the overall financial burden associated with separation.
Two Possible Scenarios
The report examines two potential scenarios for Alberta’s separation.
The first is described as a “smooth transition,” in which negotiations with Canada are completed relatively quickly and under favourable conditions.
The second is a “difficult transition,” in which negotiations could become lengthy and complicated, while Alberta could face obstacles involving trade, market access and other economic issues.
Potential Economic Shock
Under the difficult-transition scenario, the report identifies the possibility of significant long-term economic losses for Alberta.
According to the estimates, approximately 20 years after separation, Alberta’s economy could be 16.2 per cent smaller than it would be if the province remained part of Canada.
Employment could also decline under this scenario, while the income of an average worker could be approximately $12,000 lower per year than it would otherwise be if Alberta remained in Canada.
Higher Taxes and Rising Debt
The difficult-transition scenario could also result in higher taxes for Alberta residents.
The report estimates that the government’s annual budget deficit could remain above $30 billion, while total public debt could increase substantially.
Under the difficult scenario, Alberta’s government debt could reach approximately $442 billion, including existing debt and additional borrowing resulting from post-separation deficits.
Potential Long-Term Benefits Under a Smooth Transition
The report also outlines potential long-term economic benefits under a relatively smooth transition.
If an independent Alberta were able to maintain access to major global trading markets, the province could potentially expand development of its natural resources.
Under this scenario, the report identifies the possibility of long-term growth in Alberta’s economy, improved employment and a lower tax burden for residents.
However, even under a smooth transition, economic pressure could remain during the initial years, and government debt could increase significantly.
Separation From the Federal System
The report examines a range of issues that would arise from separation, including fiscal policy, administration of federal programmes, labour mobility, international trade and the division of Canada’s debt and assets.
An independent Alberta would need to establish its own government machinery, information-technology systems, offices and other administrative infrastructure.
It could also have to create new institutions to provide services that are currently delivered under federal authority.
Canada Could Also Be Affected
An advisory panel established for the Alberta government has also concluded that separation would involve significant economic costs for Alberta in the initial period, while potential long-term benefits remain uncertain.
The panel noted that the consequences would not be limited to Alberta and could also affect Canada’s broader economy.
As a result, the October 19 referendum could have implications not only for Alberta’s future but also for the province’s economic, financial and trade relationship with the rest of Canada.
