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Canada: Harper bets on oilsands to revive Canada's fortunes

Source:  Copyright 2012, Edmonston Journal
Date:  March 30, 2012
Byline:  Gary Lamphier
Original URL: Status DEAD
Photo


It may as well be called the Gateway budget.

If there were any lingering doubts about Stephen Harper’s commitment to opening up Asian markets for Alberta’s bitumen, they were extinguished with Jim Flaherty’s budget.

By moving to speed up reviews of major resource projects -- notably Enbridge’s controversial Northern Gateway oilsands pipeline to the West Coast -- while taking a pointed shot at the project’s critics, Thursday’s federal budget thrusts the oilsands to the top of Canada’s economic growth strategy.

In a week that saw Research In Motion, Canada’s humbled high-tech giant, plumbing even deeper depths, Flaherty unveiled a prudent, austerity-lite budget that champions the development of Western Canada’s natural resources as the best route back to federal budget surpluses.

Although there was no mention of it in the budget, the ghost of the ill-fated Mackenzie Valley Gas Pipeline project -- which was tied up in regulatory red tape for decades and ultimately doomed by the rapid growth of LNG (liquefied natural gas) -- clearly brought home the critical importance of getting projects like Gateway through the review process faster.

More broadly, for Alberta’s business leaders, this is a budget made in policy heaven. It addresses many of their key concerns -- including looming labour shortages, calls to reform the federal immigration system, aboriginal education and Employment Insurance -- while also underlining Western Canada’s growing economic importance.

Of course, CBC supporters will complain about budget cuts, civil servants in Ottawa will worry about layoffs after years of rapid growth in the public sector, and those who work in high-tech may gripe about reductions in scientific research tax credits. But for Alberta’s business leaders, there is much to celebrate.

“This is the first budget -- and I’ve been doing budget analysis for at least 20 years -- that I can honestly say has a clear western Canadian theme to it,” says Brad Severin, associate partner, tax services, with PwC Canada’s Edmonton office.

“It provides a great opportunity for the development of business in the western provinces. Absolutely, it’s good news for Alberta,” says Severin, who also serves as vice-chairman of the Alberta Chambers of Commerce.

Although the budget proposes $5.2 billion in program spending cuts, 19,200 civil service job cuts, and surprisingly aggressive reductions to National Defence spending -- reaching $1.1 billion a year by 2014-2015, along with $3.5 billion in deferred capital spending -- the Tories are clearly betting that stimulating economic growth is the key to wiping out this year’s projected $24.9 billion deficit by 2014-2015.

By supporting a new cycle of growth in the oilsands and other resource sectors, Flaherty’s budget echoes a theme espoused by former Tory cabinet minister Jim Prentice.

Now a senior exec with CIBC, Prentice has touted a “nation building” agenda that would include some $75 billion of resource-related infrastructure projects -- from hydro dams in Quebec to oilsands pipelines from Alberta to LNG plants on the West Coast -- as the best way to ensure Canada’s long-term prosperity.

Whether the Tories share Prentice’s vision remains to be seen, but Flaherty’s budget is clearly a step in that direction.

In addition to targeting the tax shelter status of charities that are engaged in political activities -- i.e., organizing opposition to the Northern Gateway pipeline -- the budget also contains measures to address legitimate concerns over possible tanker and pipeline spills.

Over the next two years, about $13.5 million has been set aside to improve pipeline safety, and a further $35.7 million has been allocated to improve tanker safety and inspections, emergency preparedness for oil spills, and to update charts for shipping routes.

“The other big thing of course is the clearing of the backlog of immigration applications and the requirement to have a Canadian person who is not resident in a region (where a job opening exists) reviewed for a position prior to a temporary foreign worker,” says PwC’s Severin.

“Those kinds of things are all focusing on the intense human resources need that we’re going to have here in Alberta,” he adds. “And there’s also the introduction of the new Western Innovation Program. It’s all aimed at expanding the western economy and allowing it to thrive.”

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