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Finance Minister Jim Flaherty at a news conference on 2015 Pan Am Games in Toronto on May 11, 2012.

Frank Gunn/Frank Gunn/The Canadian Press

NDP Leader Thomas Mulcair has it wrong when it comes to the oil sands, Finance Minister Jim Flaherty said Friday.

Mr. Mulcair told a CBC radio program last weekend that the oil sands are artificially inflating the Canadian dollar and hollowing out the country's manufacturing sector.

He called it the definition of Dutch disease – a reference to the Netherlands and how a natural gas find in that country led to declines in manufacturing in the 1960s.

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But Mr. Flaherty said the NDP Leader doesn't understand how the oil sands affect the Canadian economy.

Manufacturing in many western countries is contributing less to their GDP overall, even those without substantial oil and gas resources, he said.

"So I think his logic is off and doesn't make sense," Mr. Flaherty said after a news conference in Toronto about the 2015 Pan Am Games.

"In fact, what we see in Canada is a sharing of the wealth. When we have a strong resource sector, as we do in Western Canada and in Newfoundland and Labrador, then we see manufacturers all across the country – including Ontario – profit from that."

Those who try to divide Canadians in terms of economic prospects are not helping the country, he warned.

But the Finance Minister is the one who's dividing Canadians, NDP natural resources critic Peter Julian countered.

"The deterioration of manufacturing jobs is right across the country and it includes British Columbia and Alberta," he said in an interview from Burnaby, B.C. "So the Conservatives are trying to divide Canadians on an East-West basis. That deterioration in manufacturing and value-added jobs is taking place in the West like it is in the East."

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Mr. Flaherty doesn't see how it's affecting families, Mr. Julian said. About half a million manufacturing jobs have been lost on the Conservatives' watch. Family incomes are dropping and new jobs pay, on average, $10,000 less than ones that have been lost, he added.

"For Mr. Flaherty to say this is simply not a problem, that our government's not concerned at all about it, I think is showing real irresponsibility and it's a profound lack of leadership to say that's OK to have jobs that pay less for Canadians," Mr. Julian said.

Mr. Mulcair also told CBC he wants to see the oil sands developed in a responsible way that sees more refining done in Canada and less raw product sent abroad.

His comments have come under fire by Alberta Premier Alison Redford and Saskatchewan Premier Brad Wall.

If Mr. Mulcair thinks the oil sands are a disease, Mr. Wall said, what does the NDP think the cure is?

Ms. Redford said Mr. Mulcair needs to understand just how important the oil sands are if he wants to lead the country one day.

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But the NDP Leader isn't the only one to land in hot water over the oil sands.

Ontario Premier Dalton McGuinty drew Alberta's scorn earlier this year when he said he preferred a lower dollar to a growing oil and gas sector in Western Canada.

His remarks were characterized as unnecessarily divisive by Ms. Redford, who argued the whole country benefits by supplying goods to a strong resource sector.

Mr. McGuinty later tried to tone down his remarks saying he is proud of the work being done in all parts of the country.

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