Alberta’s independence push looks like Brexit, not Quebec: St-Arnaud
‘There's cautious optimism,’ Servus Credit Union chief economist Charles St-Arnaud says about the Canada-Alberta relationship. / LINKEDIN PHOTO
Alberta's independence movement is rooted in economic frustration rather than cultural or linguistic identity, making it more similar to the Brexit vote in the U.K., than previous Quebec sovereignty issues, says Charles St‑Arnaud, chief economist at Servus Credit Union.
St-Arnaud, who grew up and studied in Quebec during the 1995 referendum, told Means & Ways that Alberta’s economic frustrations aren’t reflected in headline measures showing the province as one of Canada’s wealthiest. “Alberta is still the richest province in the country in terms of GDP per capita,” he said, but household disposable income, adjusted for inflation, is 10% lower than it was in 2014. “So yes, you might be richer. But as an individual, you feel frustrated that you're never feeling that you're getting ahead,” he said, pointing to the lingering effects of the 2015 collapse in oil prices, from $110 a barrel to $45.
The political response, he said, also mirrors Brexit. “The Alberta referendum is very similar to Brexit in its political motivation — the decision to hold a referendum is mainly to quiet a wing of the party and make the issue disappear,” he said. “In the U.K., Prime Minister David Cameron held the referendum to prevent a leadership challenge from the Euroskeptic wing of the Tory party, not because he wanted the U.K. to leave the EU. Premier Smith is holding the referendum for similar reasons: to shut down the independence supporters in her party, while herself campaigning to stay in Canada.”
One striking difference from Quebec and the U.K., St-Arnaud said, is the absence of prominent elected officials openly leading the cause, such as Quebec’s René Lévesque or Britain’s Boris Johnson and Nigel Farage. “I find it fascinating that none of Alberta's sitting MLAs or MPs have expressed support for independence,” he said. “It makes me think Smith and Poilievre have a clear directive that any show of support would mean being kicked out of caucus.”
St-Arnaud was senior investment strategist at Lombard Odier Investment Manager in London during the Brexit crisis and previously worked at the Bank of Canada, Morgan Stanley and Canada’s Department of Finance. He spoke to Means & Ways ahead of a keynote to the Canadian Club of Calgary on the Alberta referendum. The following was edited for length and clarity.
MW: Has sentiment shifted since Mark Carney became prime minister and moved to prioritize Alberta’s energy sector?
CS: There's cautious optimism. I can see it in Calgary’s business community. This year’s Stampede was very interesting to see there’s improved confidence in the business community that… we probably have a Prime Minister who understands what’s needed. So the MOU last fall was a first step. The submission of the pipeline project to the Major Projects Office was kind of another step… There's a lot of positive development, but Albertans are still thinking, “until something gets properly announced and a shovel is in the ground, I still have a bit of doubt.” If you're more on the independence side, you probably don't believe the federal government at all. But if you're more moderate, you're probably looking at what's happening and thinking, “things might be moving in the right direction.”
M&W: Even if the referendum only starts the legal process rather than actually separating, will it have an economic impact regardless?
CS: Yes, and no. There are a lot of similarities between what's happening [here] and Brexit in that the polling right now shows that most likely it will be voted down… My concern is that those discussions about independence do not go away and continue to be there.
When I look at Quebec, it's very interesting that from the ’80s and ’90s, Quebec was significantly behind the rest of the country, but as we got to the 2000s, when independence started to be more on the back burner… you start to see the economy of Quebec doing better. You see that disposable income per person in Quebec converging quite significantly to the national average over the past 15, 20 years… So is it a correlation? Is it a causation? I don't know, but there's something there where maybe spending time to put proper economic policy might have helped. So my concern is here in Alberta, are we going to start spending too much time on that?... The risk is that it’s going to linger and distract the governments and everybody else in the businesses from actually having an economic focus of where we want to be in the long-term.
MW: What can Alberta learn from Brexit?
CS: Not being complacent would be one. Two, listening to the concerns. The one thing I would say about Brexit is that it was never about the EU… The U.K. had gone through a very big influx of European immigration because of the freedom of movement between the EU and the U.K. At the same time the U.K. government was doing a lot of budget austerity… and the two collided… What I was hearing is that well, it takes way longer to see a doctor now, housing is getting expensive. None of those were actually EU-specific problems. They were U.K.-specific problems.
It's the same between Canada and Alberta… And on the Alberta side, I think blaming every single problem that happens in Alberta on the federal government, blaming everything that's happening in the oil industry on regulation, it's forgetting that since 2015, average oil prices have been $64 a barrel. Is that compelling for oil companies to invest tens of billions of dollars?
M&W: What would quell Western alienation?
CS: At the end of the day, it’s really, is the rest of the country willing to listen a bit more to what's happening out west?… How do you persuade Ontario that what Alberta is pursuing is also benefiting them? It's just that in Canada, you have a very, let's call it heavyweight Ontario, that kind of dictates. They're so big that all the economic data is influenced by what's happening in Ontario, and that's why… I do a lot of provincial analysis so you can get a bit more of that regional flavour… To quote Ted Lasso, “be curious, not judgmental.” There's a reason why people are unhappy. You might disagree, but maybe you should try to understand the point of view.
