Alberta's referendum: the first step on a very long road

On Monday, October 19, Albertans will head to the polls for what could be one of the most consequential provincial votes in decades.

Except there is an important distinction that sometimes gets lost in the headlines: Albertans aren't actually voting on separation.

Question 10 asks whether Alberta should remain a province of Canada or whether the provincial government should begin the legal process required to hold a future, binding referendum on separation. The result of Monday's vote itself is non-binding.

In other words, even a victory for the separatist side on Monday would only be the beginning of a very long road.

And right now, even that first victory looks difficult.

Recent polling from Léger has 70% of Albertans choosing to remain in Canada, compared with 22% wanting to begin the process toward a second referendum. Other recent polls have shown similarly large leads for the remain side.

That hasn't made the final days of the campaign any less interesting. Quite the opposite. With polls showing a wide gap, the battle increasingly becomes one of turnout. More than 174,500 Albertans cast ballots on the first day of advance voting alone, exceeding the average daily advance-poll turnout during Alberta's 2023 provincial election.

For supporters of independence, Monday is therefore the first hurdle, and arguably the most important one. Without a victory now, there is no mandate to take the next step.

Winning Twice Would Still Not Mean Independence

Suppose, however, that the polls are wrong and the separatist side wins on Monday.

Alberta still doesn't leave Canada.

The province would first have to navigate the legal process necessary to hold a second referendum. Indigenous and treaty rights are already part of that process: an Alberta Court of King's Bench ruling earlier this year found that the provincial government had failed to meet its duty to consult First Nations before proceeding with an earlier separation petition. Alberta is appealing that decision.

Then comes the second referendum.

Even victory there would not amount to a unilateral declaration of independence. The Supreme Court's framework stemming from the Quebec secession question holds that a clear democratic mandate on a clear question would trigger negotiations, rather than automatically produce separation. A constitutional settlement would then have to deal with issues extending well beyond Alberta itself, including Indigenous and treaty rights.

The takeaway is fairly simple: Alberta could not simply vote itself out of Canada on Monday. A successful separation would involve multiple political and legal hurdles, negotiations and constitutional change.

Markets Don't Like Question Marks

For investors, that may actually be the more interesting part of the story.

The economic consequences don't necessarily wait until the end of a constitutional process. Uncertainty itself can influence decisions years earlier.

Businesses considering a long-lived investment have to think about future taxation, regulation, trade relationships and access to markets. Individuals face a similar calculation over where to build careers, buy homes or start businesses.

That human-capital question shouldn't be overlooked. Research cited in a recent Globe and Mail article found that Quebec lost more than 5% of its population in the decade preceding its 1980 referendum, with those leaving disproportionately highly educated and more likely to work in managerial occupations. That doesn't mean Alberta would repeat Quebec's experience, but it illustrates how political uncertainty can have economic effects well before constitutional questions are settled.

For Alberta investors, energy would obviously be at the centre of the discussion. Alberta possesses exceptionally valuable resources, but their value also depends on pipelines, customers, trade arrangements, capital and predictable rules. Separation could eventually change the framework surrounding all of them.

Importantly, however, Monday's vote doesn't change any of those things overnight.

For markets, the immediate issue is likely to be uncertainty. A decisive vote to remain would largely preserve the status quo. A surprise vote to proceed would introduce a new variable into decisions about investment, labour, trade and ultimately the valuation of Alberta-based assets.

That's why Monday is fascinating even though actual separation remains a distant and difficult prospect.

For the independence movement, this isn't the finish line.

It's an all-out battle just to get to the starting line.

Fraser Betkowski

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fund.