Economic Letter

David Bond is a retired bank economist who resides in Kelowna.

Well, there appears to be a rising sentiment, certainly within Alberta and probably also in Saskatchewan, for some form of separation from the Canadian federation or “Wexit.”

It has been encouraged by the intemperate speechifying of Jason Kenney, Alberta’s premier.

What is to be gained if one or more provinces vote to secede from Canada?

First, the present outflow of tax revenue would remain in the new “Federation of Alsask” in future. Secondly, unless the new national government voted to accept the existing Canadian legal framework, there would be a complete absence of legislation governing virtually all aspects of both criminal and regulatory legislation. There would no longer be any MPs from Alsask in the Canadian House of Commons. There would also be no more federal transfers of funds for health care and other programs — which would no longer be applicable in the new country anyway.

Canadian government services would no longer be delivered within the new nation except via the Canadian Embassy in the new capital (probably Edmonton) and Canadian consulates (probably in Calgary and Regina).

The new nation would have to establish its own postal system and join the international weather system. Moreover, Alsask would need to have a central bank and either its own currency — or an agreement to use the currency of another nation — thereby foregoing any independent monetary policy. Alsask would no longer send anyone to the annual meetings of western premiers or of all premiers nor would it be invited to participate in federal-provincial meetings.

Citizenship is a thorny matter. Those who were citizens of Canada at the time of separation would probably continue to hold citizenship as long as they wished. But, whether their future offspring would qualify for Canadian citizenship would have to be negotiated between the two governments. The new government would have to create an immigration authority and a customs department and establish border controls at its frontiers.

Transfers of federal property to the new government would have to be negotiated along with the existing pension and other personal liabilities of the federal government. Moreover, the treatment of both surface and air transport would have to be agreed to in a formal treaty. In short there would be a mountain of work that would need to be done before separation could be accomplished.

But, think of the advantages the new nation of Alsask would achieve!

First, it would deal as an equal with Ottawa and Washington. Of course, its leverage with Ottawa would be reduced from the level enjoyed prior to separation. After all, the party in power in Ottawa (from time to time) would not have to worry about winning elections in the former provinces any more.

In dealing with the U.S. as an independent nation, Alsask would rank very low on the list of allies and preferred trading partners for the U.S. (if, indeed, the U.S. still has such a list). Perhaps it might obtain a true free trade agreement with the U.S. but the terms would really be dictated by Washington — otherwise what would be the benefit for the U.S.?

If Alsask wanted to join the U.S., statehood could be a long way off depending on what party controls each government. And if it did become a state, it would be one of 51 rather than two of 13 provinces and territories.

Finally, think of the practical problems that would arise. I’ll use the example of land transport on the railroads and roads. The major routes run east-west, but for Alsask would that still be true? Building or upgrading north-south routes could be very expensive.

And how could it administer and regulate both roads and railroads so as to harmonize with Canadian rules? Adopting Canadian rules, however, would mean surrendering any role in developing the regulatory structure.

To me, it seems that Wexit is a foolish idea promising only confusion and regret. A better policy would be for Kenney to climb down from his soapbox and find ways of improving relations with Ottawa and all Canadian jurisdictions.

Because, independent or not, the 1980s are not coming back.