The Nova Scotia government fears the shutdown of the Enterprise Cape Breton Corporation could have an impact on economic development in the area.
Economic Development Minister Michel Samson said Thursday the province has a number of questions about Ottawa's decision, particularly in light of a series of provincial reports that show the need for help to get the economy moving in rural areas of the province.
"Why the federal government would think this was a good time to do this, I'm at a loss," he said.
Rob Moore, the minister of state responsible for both Crown agencies, said Wednesday that Ottawa plans to roll the Cape Breton agency into the Atlantic Canada Opportunities Agency.
He said all employees of the development corporation in Cape Breton will keep their jobs at the agency's Sydney office and there are plans to employ staff again at an office in Port Hawkesbury.
Moore also said Ottawa will maintain the level of economic development funding delivered through the Cape Breton agency when it becomes part of ACOA.
"Let me be clear: this decision in no way impacts the level and quality of service that business owners and community leaders in Cape Breton expect and are accustomed to receiving," Moore said in the statement.
Samson's concerns are focused in two areas: the possible loss of a dedicated budget to meet Cape Breton's needs and the length of time it will take to get decisions made on projects for the island.
The Cape Breton agency was able to make decisions locally, Samson said, but now that could shift to Halifax or Moncton, N.B.
"Our concern is that this is going to take more time, it's going to mean more red tape. And this is all happening at a time when we have a high unemployment rate in Cape Breton," he said.
"This is not the time to be making decisions take longer through the federal system."
Samson said he believes projects the province was working on in partnership with the federal agency are now in limbo.
"It's hard to be business as usual when you are changing the structure of the business that we've been working with," he added. "Now it appears it is more of a satellite office."