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Ontario Finance Minister Dwight Duncan (R) delivers the provincial budget as Premier Dalton McGuinty looks on at Queens Park in Toronto, March 27, 2012. (REUTERS/Mark Blinch/REUTERS/Mark Blinch)
Ontario Finance Minister Dwight Duncan (R) delivers the provincial budget as Premier Dalton McGuinty looks on at Queens Park in Toronto, March 27, 2012. (REUTERS/Mark Blinch/REUTERS/Mark Blinch)

Ottawa betting on the West for economic prosperity Add to ...

With an increased focus on the resource sector that fits neatly with its efforts to shrink Ottawa’s footprint, the federal government is accelerating the westward shift of economic opportunity – at least for now.

Federal officials insisted on Thursday that helping mining and other developments by reducing the regulatory burden will have nationwide benefits – and will ultimately help Ontario rebuild its struggling economy. But in the short term, it’s oil-rich Alberta, and to a significant extent neighbouring British Columbia and Saskatchewan as well, that are celebrating.

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Swift and positive responses from the Western provinces reflected that reality, with Alberta Premier Alison Redford taking a break from campaigning to enthuse that there’s “much good news” in the budget that will make her province even more competitive, and B.C. Finance Minister Kevin Falcon saying it “struck the balance between some modest spending discipline without going overboard.”

Reaction in Central and Eastern Canada was much more guarded. Ontario Finance Minister Dwight Duncan did not address the resource policies directly, instead directing criticism toward what he called “weak-kneed” attempts at pension reforms. While voicing several complaints on other fronts, Quebec Finance Minister Raymond Bachand acknowledged that streamlining regulations could be “excellent” news for his province’s major resource projects – but added that his province wants to take a closer look to ensure proper environmental protections will be maintained.

In the months leading up to the budget, there was evidence that relations were fraying between Ottawa and some of the provinces, with warnings from Mr. Flaherty that economically strained provinces had to get their fiscal houses in order. And that same tension was evident in discussions over health care – with some regions, including Central and Eastern Canada, arguing they would suffer under the weight of their changing demographics

But beyond any desire to pick regional winners and losers, Stephen Harper seems convinced that resource development is the surest path to a brighter economic future for the country as a whole.

To make it quicker and easier for resource-development projects to get off the ground (or into it), the budget vows that all regulatory reviews will take no longer than two years to complete.

Potentially more controversial is the commitment to pursue a “one-project, one-review” system for environmental assessments. Where adopted, it would prevent dual federal and provincial reviews from simultaneously taking place – likely bringing criticism in some cases that Ottawa was ceding its oversight duties to revenue-hungry provinces.

Meanwhile, the budget serves as a reminder of the Conservatives’ impatience with environmentalists meddling in Alberta’s oil sands, sending a shot across their bows with a vow to crack down on political activity by organizations with charitable status. And prominent among the budget’s austerity-oriented spending cuts is the axing of the National Round Table on the Environment and the Economy, which the government says has outlived its usefulness.

While the latter moves are likely to find the most favour in Alberta, the budget goes to lengths to paint the resource focus as a national project. Objecting to the idea that the regulatory changes are aimed primarily at the West, a federal official offered a list of mining opportunities in Ontario where development could be accelerated – citing $50-billion in chromite reserves in the northern “Ring of Fire” alone.

But with Premier Dalton McGuinty having recently griped about a disproportionate national focus on natural resources at the expense of other opportunities, his government is likely to be disappointed at the budget’s lack of support for other industries that Ontario is trying to develop as it seeks to rebuild its economy.

After previously helping to bail out the province’s auto sector, the federal Conservatives have turned their attention almost entirely away from manufacturing. (The exception is a massive shipbuilding investment that will benefit B.C. and Nova Scotia.) Mr. McGuinty might find some solace in modest changes to employment insurance, which could draw benefits in Ontario somewhat more level with those in Atlantic Canada. But then, with many of the 19,200 cuts to the federal workforce coming in Ottawa, the budget also takes thousands of jobs away from his province.

For Ontario and other provinces, ancillary benefits from the Western resource boom – including offshoot opportunities for the finance sector – could help bring the national benefits the Conservatives are promising. But Ottawa appears willing to let them join the Western provinces in fending for themselves, even if they’re currently less well-positioned to do so.



With reports from Karen Howlett, Josh Wingrove, Rhéal Séguin and Justine Hunter

Follow on Twitter: @aradwanski

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