Separation could cost Alberta up to $170B, report says

Posted on September 24, 2026 by Ryan Dahlman

By Patrick Wachter
Southern Alberta Newspapers

An independent panel says Alberta would face significant short-term economic costs if it separated from Canada, while the province’s long-term economic outlook would depend heavily on how negotiations with Canada and other countries unfolded.

The advisory panel, chaired by economist Jack Mintz, submitted its assessment of a University of Calgary School of Public Policy report to Alberta Finance Minister Jason Nixon on September 8.

Panel members include Janice MacKinnon, Ted Morton, Alex Pourbaix, and Adam Legge.

The panel supported the overall findings of the university study, which examined two possible outcomes for an independent Alberta: a “smooth” scenario involving co-operative relations with Canada and international partners, and a “difficult” scenario marked by trade barriers, disrupted energy exports and greater uncertainty for workers and investors.

The panel stressed that neither scenario is guaranteed to occur in full.

Under the smooth scenario, Alberta’s gross domestic product would fall 2.2 per cent within five years of separation. Employment would decline by 0.7 per cent, and taxes would increase by $800 per person.

The province would also take on an estimated $208.8 billion in additional debt, bringing total debt to $324.1 billion, or 64.8 per cent of GDP.

The study estimates Alberta would face major costs to establish institutions of an independent country, including border controls, tax collection services, a military, and financial institutions such as a central bank.

Over the long-term, defined in the study as 20 years or more after separation, the smooth scenario projects GDP could be 3.4 per cent higher than it would otherwise have been. Employment could increase by 0.7 per cent, and taxes could decrease by $1,100 per person.

The province could also record an eventual annual surplus of $7.8 billion under the scenario.

The difficult scenario paints a significantly different picture.

The study projects a 10.1 per cent decline in GDP and a 10 per cent drop in employment within five years. Taxes would increase by $5,483 per person.

Short-term debt would increase by $327 billion, bringing total provincial debt to $442.3 billion, or 88.5 per cent of GDP.

After 20 years, GDP could be 16.2 per cent lower and employment could decline by 4.7 per cent under the difficult scenario. Taxes could increase by $6,598 per person, and the province could face a $31.3-billion government deficit.

The panel said the long-term outcome would depend on factors outside Alberta’s control, including trade negotiations, interest rates, and international energy markets.

The report also examined the potential economic impact on the rest of Canada.

Without Alberta, Canada’s overall GDP could fall by about 15 per cent, while per-capita GDP could decline by about 5 per cent, according to the study.

Canada’s trade balance with the rest of the world could also shift from a current 0.2 per cent surplus to a 3 per cent deficit, according to the report, putting downward pressure on the Canadian dollar.

The study estimates Alberta’s net federal tax contribution was $18.8 billion in 2024. Losing that contribution would increase pressure on the federal deficit and could require Ottawa to borrow more or increase taxes.

The departure of Alberta would also leave British Columbia geographically separated from the rest of Canada, potentially affecting trade unless transit agreements were established.

Separation would also require a number of legal and constitutional steps.

The process would include a provincial referendum, a federal assessment under the Clarity Act, and constitutional negotiations involving Ottawa and other provinces. Indigenous treaties and rights would also have to be addressed.

An independent Alberta would need to establish its own institutions and services, including a military. The study estimates a standalone military meeting minimum targets would cost between $10 billion and $25 billion annually.

The advisory panel said minimizing political and economic disruption would be in the interest of both Alberta and the rest of Canada.

The panel also expressed hope the findings would encourage other parts of Canada to consider reforms Alberta has long sought.

“Albertans have called for clear, credible information to make an informed decision in the Oct. 19 referendum,” Nixon said in a news release.

“The panel’s assessment emphasizes that both the scenarios outlined in the report highlight how costly it would be for Alberta to separate from Canada in the short-term and also highlight the substantial amount of uncertainty Alberta would face in the long-term.”

The Alberta Federation of Labour is calling on Premier Danielle Smith to cancel the Oct. 19 referendum following the release of the report.

AFL president Gil McGowan said the study’s smooth scenario depends on favourable conditions that cannot be guaranteed.

“The much more likely scenario from the report suggests that separation could literally decimate Alberta wages and living standards,” McGowan said in a release. “The risks far outweigh the very unlikely rewards.”