Asking Albertans: what will the referendum cost us?

For this week’s No More Ls column, we asked four Albertans about how the upcoming referendum, and the resulting changes, could affect their wallets. Here’s what they said.

Next week, Albertans will be responding Yes or No to 10 consequential questions about the province’s future. They ask about immigration policies, constitutional relationships with other provinces and the federal government, and perhaps most critically, whether Alberta should hold a binding referendum to separate from Canada and form an independent country.

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On the other hand, not much attention has been given to how Albertans view the effects of the referendum for their personal finances. So we asked a former temporary foreign worker, an economist, an entrepreneur and corporate advisor, and an economics professor: how do you see the referendum results affecting Albertans’ wallets?

From the view of a former temporary foreign worker

“From the referendum questions, I gather that the intention is to exclude temporary foreign residents from the coverage of provincially funded programs, such as health care, education and other social services. Because of that, it is deeply concerning that the province will further burden TFWs with paying for monthly health care insurance coverage and education for their dependents.

“When I lived in B.C., I paid for the provincial Medical Service Plan when I was an international student. So, while I understand that this is not distinct to Alberta, I also cannot help but compare expenses in other provinces as against the income that TFWs earn.

“The minimum wage in Alberta is lower than in other provinces. Utilities and car insurance premiums seem significantly more expensive in Alberta, in my experience, compared to when I lived in B.C. For TFWs, whatever small relief they get from social services funded by the Province of Alberta is largely offset by more expensive living expenses in this province and lower monthly income earned by minimum wage earners.

“I do not anticipate any direct financial benefits that I will get from excluding TFWs from these provincially funded services.”

—F.F., Grande Prairie, Alta.

Name kept private for to protect their employment.

Learning from history helps, says an academic and economist

“A fundamental question to ask is why so many countries threaten to break away. Often it does not happen. I raise this since the question of ‘costs’ is part of a bigger picture.

“In the case of Alberta, there’s no question that the cost of separation will be negative in the short run and have uncertain benefits in the long run. Uncertainty in negotiations, even before declaring independence, will hurt investment, raise interest rates and slow the economy. Workers can lose jobs and income. Albertans would have less money to buy things.

“In the long run, the story is mixed. Some countries are worse off, some do better and some even succeed. The U.S. broke away from the powerful British Empire—trade, and more, was affected. However, it certainly succeeded. So did Ireland, although it took 90 years before it became richer than the U.K.

“Countries that succeeded had more flexibility to develop new relationships. Slovakia and Czech Republic did poorly in the beginning but later recovered, in part because they joined the European Union.

“Alberta would be able to fashion its tax and regulatory policy as it wishes. It could have a separate trade agreement with the U.S. in favour of its own interests.

“The Canadian-United-States-Mexico-Agreement [CUSMA] had to focus on other industries like the auto industry, which is irrelevant to Alberta. Whether in the long run independence would succeed in providing higher incomes for Albertans is not something easy to predict.”

—Jack Mintz, President’s Fellow of the School of Public Policy, University of Calgary

Use uncertainty as opportunity, shares this entrepreneur

“What concerns me most is the slow drip of uncertainty, and how this tends to delay decisions. Individuals and businesses are postponing investments, and too much energy is going into reading political tea leaves. I’m not panicking, but I dislike the prospect of expensive ambiguity; it has a knack for charging rent without ever moving in.

“Although this is not the case right now, I have considered that long post-referendum negotiations could also make financing, contracts, cross-border arrangements, and ordinary planning more complicated than they need to be for me, especially at such a critical juncture in my Canadian and U.S. business ventures.

“That said, there is a financial advantage in maintaining forward momentum when others freeze, and I do intend to use it to my advantage. While everyone is suspending expansion plans, investments and relationship-building, disciplined people can keep developing revenue streams, serving clients, and finding opportunities at better prices.

“When done properly, [the referendum] ultimately does nothing but set us ahead.”

—Heidi J. T. Exner, founding partner of Ethical Edge PI & Corporate Advisors, Calgary

The benefits of separation just aren’t there, says an economics lecturer

“ I don’t think there’s a mainstream economist who’s going to make the argument that Albertans’ lives will get better with a separation.

“You can take almost any economic measure that exists, and it will worsen as a result. The Alberta government will have an even worse deficit in the absence of higher taxes or cuts to public services. None of which sound like an attractive option for Albertans.

“Look,  I’ve lived in Alberta for 25 years and I get it. The face of Alberta has changed, rapidly, especially since COVID. Unfortunately, the economic reality is that the average immigrant pays more into the system than they get out of it. They work hard, pay their taxes and, for the most part, they don’t use public services in large enough numbers that they’re a net drain on the system.

“If the objective here is to get them to pay for the services they’re using, two problems arise: One, they already do. They contribute to the system like everyone else, and that’s municipally through property taxes and provincially through income taxes.”

“So, now what we’re asking is for them to contribute more, and this is based on your city of birth on your passport or your permanent resident card that will never go away.

“That’s a very risky proposition because what you do is you end up signalling to immigrants, whether from within Canada or from without, to go somewhere else. And all of a sudden those net contributors disappear. Well, who’s going to continue to pay for public services? If the net positive contribution goes away, it means the taxes of others have to go up, or the amount spent on those that remain have to go down.”

—Moshe Lander, PhD., senior lecturer in economics, Concordia University, resident of Calgary

Read more from this issue of The Get:

1. Is finance hard or is it ADHD?
2. What is free time? How much third places cost Canadians?
3. Prof Matthew Bidwell on how to keep and quit your job
4. How hard is it to fix errors with Uber and other rideshares?