Smith’s Referendum Gamble: Immigration, Sovereignty, and the Politics of the Deficit

Last week, Danielle Smith took to the airwaves with a primetime Address to the Province where she announced a provincial referendum focused on immigration and constitutional reform. While the subtext was a focus on growing fiscal pressures and their impact on delivering services, the political reaction was fierce and indicative of the tenor to be expected in the legislative session beginning this week.

The October 19, 2026, referendum will ask Albertans to vote on a sweeping series of questions pertaining to jurisdiction over immigration, eligibility for provincial services like health care and education, proof-of-citizenship requirements for voting, and structural constitutional reforms aimed squarely at strengthening Alberta’s autonomy within Confederation.

In a single address, Smith tied oil prices, deficits, immigration levels, and federal overreach into a narrative that Alberta is carrying disproportionate costs, Ottawa is making unilateral decisions, and structural change is needed.

The next day, Smith went further with this argument.

The immigration system, she said, used to work and was once “one of the single biggest drivers of our success”. Now, however, she claims Ottawa has “upended 40 years of policy” by placing less emphasis on individuals who can “immediately contribute to our economy” and have “increased the volume of newcomers to an unprecedented level”. This argument builds on the Premier’s criticism of the former Prime Minister in her address, where she called out “Justin Trudeau’s disastrous open border immigration policies, which have caused an unprecedented strain on our health care, education, and other social programs.”

Smith emphasized that every province is running a deficit this year. Alberta’s red ink, in her telling, is not an outlier but rather part of a national pattern exacerbated by federal decisions. Every $1 drop in the price of oil means $750 million less in oil royalties for the province. Oil prices have fallen sharply since 2023, turning a $12 billion surplus at $90 oil into a large deficit at $60 oil.

The fiscal story is not simply that Alberta is running deficits. It is that those deficits are being driven by factors beyond the control of the provincial government.

The Premier is not calling for zero immigration. Rather, she emphasized wanting greater authority to offer permanent residency to skilled workers, or a model “similar to what Quebec has had since 1991”. That comparison is deliberate. Quebec has long exercised unique powers over immigrant selection and United Conservatives have consistently cited their desire to have the same privileges as Quebec. By invoking that model, Smith is reframing aspects of her proposal as parity, not provocation.

The proposed referendum questions are crafted to focus on prioritizing economic migrants, imposing waiting periods for non-permanent residents to access social supports, potentially charging “reasonable” premiums for health and education, and requiring proof-of-citizenship to vote. When pressed by journalists comparing a health premium to a head tax, the Premier pointed to Ontario’s health premium for non-permanent residents as not violating the Canada Health Act or necessitating federal intervention.

As expected, the NDP is having none of it.

The official NDP response from Deputy Leader Rakhi Pancholi was blunt: “Cut the bullshit. Call the election.” She accused the Premier of trying to distract Albertans from a “UCP budget that will contain billions of dollars in deficits” and “from separatism” while rejecting any attempt to shift blame onto oil prices and immigration. She highlighted that the UCP did not campaign on nine new referendum questions and pointed to Smith’s previous calls for higher immigration levels and population growth under the ‘Alberta is Calling” campaign.

This response defines what the next eight months will look like. The NDP strategy will be to undermine the UCP framing of immigration as a central fiscal challenge, tie constitutional reform arguments to separatism, and demand a general election as the legitimate forum for direct democracy. But the polling complicates that challenge.

With the UCP maintaining a polling advantage, demanding an election is less threatening than it might appear. It even risks reinforcing the perception that the government is acting from a position of strength. The referendum allows Smith to define the political question before the scheduled 2027 election. It’s no longer a question of budgetary management, but whether Alberta should assert greater control over immigration and federal-provincial relations. The constitutional component is central to that framing.

Abolishing the Senate, allowing provinces to opt out of federal programs without losing funding, prioritizing provincial laws in shared jurisdiction, and shifting judicial appointment authority are not completely new ideas. They represent a long-standing current in Western Canadian populist politics that hasn’t always fallen on the right of the political spectrum. Abolition of the unelected Senate has been a basic tenet of NDP policy since the party was first established.

While advocating for constitutional reform, Smith continues to reject outright separatism, positioning the UCP’s approach to sovereignty “within a united Canada.” The distinction is deliberate. Separatism remains a minority position among the broader electorate, even if it resonates within segments of the UCP base. By emphasizing Quebec-style powers rather than separating, the Premier seeks to consolidate a majority without alienating too many moderates. The language is assertive without crossing the line.

The NDP is aware of the vulnerability in that tension. Pancholi’s remarks deliberately linked the referendum to separatism, CPP withdrawal, and charter breaches. This strategy attempts to raise the perceived stakes and force moderates to consider whether this referendum is just another step towards something more disruptive. The NDP’s call to “denounce separatism and proudly stand on Team Canada” signals they topline messaging the intend to use.

Opposing the referendum is not without political risk. Public frustration with federal policy, particularly around immigration, is not imaginary. Nor is service strain. If the opposition fails to acknowledge those concerns, it risks appearing disconnected from lived experiences and beholden to its own base.

Outside the Legislature, the implications for businesses and non-profits are significant. Changes to eligibility for provincially funded programs will alter labour market dynamics. Waiting periods and premiums for non-permanent residents affect employers reliant on temporary foreign workers and international talent. Conflict with Ottawa introduces regulatory uncertainty, especially in sectors dependent on federal approvals and funding. The referendum campaign itself may influence investor sentiment if it signals prolonged federal-provincial confrontations.

The risk for the UCP is overreach. Referendums can only simplify complex issues so much. They elevate emotion and polarize the electorate. If turnout is low or margins narrow, the mandate of the government to implement its desired changes may be weakened.

The risk for the NDP is miscalculation. If voters perceive the referendum as an effective means to manage growth pressures and protect Alberta’s interests, dismissing it as a distraction could backfire.

One thing is certain. A legislative session that was expected to revolve around oil prices and spending restraint has expanded dramatically.