Fact Check: Albertans would assume no new debt if the province became independent
Alberta would hold the same amount of debt per person if it were to become independent.
Scare headlines from some economists and politicos have been claiming the debt owed by Albertans would jump from $27,000 per person to between $80,000 and $90,000 per person if the province became independent. This is misleading, as Albertans are on the hook for that much cumulative debt whether the province becomes independent or not.
Think of it this way. Let’s say the Alberta government has a Visa card and is carrying a balance of $111 billion. The Alberta government also shares a family Mastercard with the rest of the country, and it has a balance of around $1.5 trillion. Albertans are stuck with a chunk of the federal balance. It’s just a matter of where the debt is being held.
If Alberta were to become independent, there would be negotiations about what share of that federal debt would be taken on by the new country. There are capital assets that Albertans have an interest in which would remain in the rest of Canada, and there would be some which are considered federally owned and would remain in Alberta. There would be arguments made about Alberta’s overcontribution to the pot over generations, along with other variables impacting just how much debt the province would take responsibility for.
Even in the worst-case scenario that an independent Alberta took a share of the federally held debt based on a straight population measure, it wouldn’t mean a penny of new debt would have been assumed. Existing debt would have just moved to a new part of the ledger. Think of it as debt consolidation.
Some costs may be incurred with debt servicing if Alberta doesn’t garner a bond return as effectively as the federal government. That would be an operational expense rather than the assumption of new debt, though.
Alberta is as capable of mismanaging finances as the federal government is. That’s reflected in the current provincial debt load. It can’t be assumed the province would manage the debt better as an independent country or not. The control in the matter would land fully with Albertans, though, rather than in the hands of Ottawa politicians.
The bottom line is Albertans would hold just as much debt per person the day after a positive vote for independence as they did the day before.
Cory Morgan
Cory Morgan is an Alberta-based columnist, political commentator, and longtime advocate for Western Canadian independence. He is the author of the recently updated book The Sovereigntist’s Handbook, a grassroots guide for independence supporters and political activists.
http://sovereigntistshandbook.com/
