‘Alta-exit': Economist thinks Alberta could separate from Canada

Jack Mintz, a President's Fellow at the University of Calgary's School of Public Policy, wrote in the Financial Post Wednesday that an "Albexit could be the next big shock." His column was published one day after the federal government pledged more than CAD $1.6 billion in loans to support Alberta's ailing energy sector, a move most in the industry say is ineffective.

 

For the third time in three weeks, thousands of Calgarians and Albertans have protested, demanding better support for the struggling oil and gas sector, blaming all levels of government for policies that have directly led to the economic depression the province has been experiencing since 2015. Of the province known for its independent, pioneering, and entrepreneurial attitudes, Mr. Mintz said Alberta could go the way of the British with Brexit; “If it's really put to the wall, I think it could end up being an independent country,” he said.

 

Mr. Mintz calls ‘Alta-exit’ the province’s "nuclear option" and separating from Canada would enable Alberta to develop its own trading relations. Despite being landlocked, the United States (U.S.) remains the province’s largest customer for oil. “They have their own shale oil. They have their own resources. Why would they need to help Alberta get its oil to market? Right now, there's a lot of heavy oil that's in demand. In fact, markets are quite tight for heavy oil. So, actually, there would be a real desire to have oil from Alberta. And, in fact, right now the one major competitor is Venezuela, and we know what's happening to that country.

 

With increased taxation and more onerous regulations introduced by the provincial and federal governments in recent years, foreign investment has deserted Alberta because investors have determined it to be too risky and volatile a jurisdiction to reliably do business.

 

Mr. Mintz continued: “When you're a country you have more control over things, and so you can also bargain differently as well. Don't forget British Colombia, for example, has pipelines going from B.C. gas fields through Alberta going to the rest of North America. B.C. might be willing to make a deal under very different circumstances.

 

Two weeks ago, Mr. Mintz wrote another column outlining at least four ways the federal government could seriously help Alberta’s energy industry and is choosing not to. He wrote, “Alberta is desperate ...

 

Albertans blame the federal government for that [lack of pipeline infrastructure]. So they should. It is constitutionally responsible for inter-provincial transportation, whether it was canals in the 1860s or pipelines, highways and trains today. Prime Minister Justin Trudeau gets called out most for badly fumbling the pipeline file, although some problems go back further than his mandate. And the Trudeau government did approve Enbridge’s Line 3 expansion. It is also committed to building the Trans Mountain pipeline expansion, but that’s been paralyzed by a court ruling that found the Trudeau government bungled the evaluation and approval process.

 

“But Trudeau has also seemed ambivalent about Albert’s oil business, even suggesting that the sector should disappear in the coming decades. He ultimately blocked the Northern Gateway pipeline proposal with a tanker ban applying only to Alberta oil and not other fuels. His government’s repeated moving of the regulatory goalposts saw TransCanada withdraw its application for Energy East to New Brunswick. And Trudeau rewarded the B.C. government’s attempts to block Trans Mountain by showering B.C. with infrastructure money. Most recently, his government has been pushing Bill C-69, adding gender, social and climate issues for project proponents to consider in regulatory processes, potentially discouraging any pipeline projects in the future.

 

“No wonder the empty-handed prime minister and minister of finance were met with mass protests upon visiting Calgary recently.
— Jack Mintz

 For the province to ever attract and retain what was once a sentiment of nearly guaranteed investment, Alberta needs a change in the dynamic between the two levels of government that has been adversarial since the government of Prime Minister Pierre Elliott Trudeau in the 1970s.

 

Alberta’s next provincial election will be held in the spring of 2019, and the new coalition party the United Conservatives are anticipated to return the province to conservative governance. In that event, Prime Minister (PM) Justin Trudeau would face a fierce opponent in Premier Jason Kenney, who has already threatened to shut off the taps of oil and natural gas to the rest of the country. Kenney may well leverage that stronger negotiating power and entertain serious discussion of succession.

 

A federal election will follow in the autumn, though it is not as clear, as in the case of Alberta, that the federal Conservative party, as currently led by Andrew Scheer, is capable of toppling PM Trudeau’s Liberal majority government. For Alberta, the prospect of both conservative provincial and federal governments working collaboratively to restore Canada’s economic engine may be the only option Albertans see ahead should they choose to remain part of Confederation.


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