Too often Canadians’ attitude towards the important benefits of natural resource development is “out of province, out of mind.” But economies don’t end at the border. We seem to understand that all too well when considering developments in our neighbour to the south, and not at all when considering what is happening in a different part of our own country.
Yesterday KPMG, one of the world’s most respected professional services and auditing firms, released a report on the national impacts of Western Canada’s oil and gas sector. The study, commissioned by the Fédération des chambres de commerce du Quebec, reinforces the fact that economic development in a single region can benefit all Canada.
No one would be surprised to find out that Alberta and Saskatchewan receive the bulk of the economic benefits of the oil and gas exploitation happening in their provinces, but there are significant spin-off benefits for other parts of the country as well. Ontario received $3.5 billion in economic benefits from oil and gas development in the West, comparable to the contribution made by the province’s agricultural sector ($4 billion). Western oil and gas created 10,000 direct and indirect jobs in Quebec, about the same amount created by the province’s casinos.
These economic benefits are generated because energy customers in the West order goods and services from firms in central Canada. Examples include businesses like West Penetone, a chemical manufacturer that derives almost 50% of all its sales from the oil industry. West Penetone does almost all of its manufacturing in Quebec, and has leveraged its connections to the Canadian oil and gas industry to find new export markets in Europe. Since becoming a supplier to the oil industry, its profits have grown four fold.
Oil revenues also provide taxes to governments, helping to fund services important to Canadians. The study found that federal government received $5 billion in taxes in 2012, about the same as Canada’s overall foreign aid budget in 2013. That money is shared by all Canadians through federal government services and equalization payments.
The overall message is a simple one, but it’s worth repeating; Canadian business share strong ties, and what lifts one region of the country can be a source of economic prosperity for all.
Click here to read more about the Economics Impacts of Western Canada’s Oil Industry.