The Alberta Transition Council says Alberta could have between $22.2 billion and $32.1 billion left each year after becoming independent, but a University of Calgary economics professor says the estimate omits major costs and rests on assumptions that diverge from current fiscal conditions. The council’s projections appear in two reports about the cost of separation and Alberta’s ability to support itself as a country.

The reports, “Budget and Costing” and “Forward to Freedom: Can Alberta Afford Independence,” were prepared by the independence group. The first estimates a one-time transition cost of $4.96 billion over three years, averaging about $1.65 billion annually during a 36-month transition. It also puts the permanent cost of operating a separate Alberta at approximately $3.63 billion a year.

The council says those figures do not capture the full cost of separation. Its report says the transition estimates should not be confused with pensions, benefits and other payments made directly to Albertans, or with federal transfers Alberta now receives and would have to replace with provincial revenues after independence. It describes those as separate fiscal flows rather than additional transition expenses.

The council deliberately left out estimates of Alberta’s share of federal debt and federal spending on services for First Nations and Métis people, which it says costs between $3.1 billion and $3.8 billion annually. The report says, “Including a speculative debt figure would therefore make the transition cost estimate less useful rather than more accurate.”

Dennis Kalma, the council’s co-lead and the principal author of both reports, said he did not want to speculate about figures that do not exist because the future of the economy is unknown. He said the reports should be considered together. “What we wanted to do is say this is sober, serious, supportable documentation that people can look at and say, yeah, this is about as bad as could be, and still looks pretty good,” Kalma said.

Postmedia spoke with Trevor Tombe, an economics professor at the University of Calgary, about the surplus estimates and the reports’ assumptions. He compared them with a University of Calgary report released the previous week, which put the cost of separation between $50 billion and $170 billion. The estimates differ substantially, in part because the council’s reports assume no federal debt and budget for only half the military spending Alberta would need under the current NATO target.

Tombe said those two choices alone account for about $11 billion a year. He cautioned against treating any estimate as definitive because there is no precedent for a province leaving Canada. “Any exercise like this shouldn’t be seen as a definitive forecast because the act of separation is such a dramatic development where we don’t have any experience with it - no province has exited before,” he said. “What they have laid out here departs from current fiscal reality in a pretty significant way.”

The council’s companion report, “Forward to Freedom,” assesses whether Alberta could support itself after a transition to independence. Its calculations use the Government of Alberta’s 2026-27 budget, rather than predicting how a new economy might function after separation. The report says that, after paying for every service Albertans currently receive and federal functions Alberta would assume, the province would retain between $22.2 billion and $32.1 billion annually.

The report translates that projected surplus into $4,390 to $6,350 for every Albertan each year. It also runs a “stress test” that assigns Alberta a $6.2 billion share of the national debt. Kalma said the province would still show a projected surplus under that scenario.

“Alberta has put so much money into Canada, and which assets actually accrue back to Alberta that are of value, and if there’s not many assets that are done in Alberta, why would we expect to inherit a big part of the national debt,” Kalma said.

Tombe said the surplus calculation does not include interest an independent Alberta would inevitably have to pay on its share of federal debt. He also called the figure “artificially high” because items such as Old Age Security and Guaranteed Income Supplement payments are removed from the government budget and placed in a pension plan that workers would fund, rather than being paid from government revenue.

“Extraordinary claims require extraordinary evidence, and setting up a separate country is not going to be something that is cheap, or would result in a higher surplus for Alberta, that should be one’s common sense default perspective,” Tombe said.

The debate follows the University of Calgary report’s estimate that separation could cost between $50 billion and $170 billion. The council’s reports present a different accounting approach, including a debt-free baseline in their main estimates and a debt allocation only in the stress test. Their surplus figures are based on the current provincial budget and do not attempt to forecast a newly independent economy.

Based on reporting by Edmonton Journal.