Finance Minister Joe Oliver lectured Canada's two largest provinces about their deficits and debt levels, saying he fears provincial governments will reverse the nation's economic recovery by taking on too much debt. 

Speaking at the International Economic Forum of the Americas meeting in Montreal on Monday, Oliver also urged the G7 economies to deal with their debt problems.

“I am concerned, frankly, that we may slide back, back to deeper budgetary deficits and higher debt,” Oliver said. “In these uncertain times, it is essential that governments achieve a solid fiscal grounding.”

The average budgetary deficit among G7 countries – which includes France, Germany, Italy, Japan, Britain and the U.S. as well as Canada – is 5.9 per cent of gross domestic product.

Oliver touted Canada's projected surplus for 2015-16 of $6 billion.

Urges Ontario to cut debt

He applauded the Liberal budget handed down in Quebec last week, which will balance the books by 2015-16, saying it showed admirable restraint.

And, on the eve of an Ontario election, he urged the province to make similar cuts and move toward a “serious commitment to growth and a balanced budget.”

Oliver said he's not trying to intervene in Thursday's vote.

"No matter which party wins the election, I will encourage the new government to make a serious commitment to growth and a balanced budget," he said.

Oliver later told reporters that Ontario could soon face higher rates and even a ratings downgrade unless it gets its debt under control.

"Canada cannot arrive at its potential if the biggest province remains in difficulty," he said.

Quebec and Ontario were hit hard by the decline in Canadian exports and manufacturing in the last five years, but Oliver said he is confident the poor export performance will soon reverse itself.

The finance minister said he is not concerned that fiscal restraint in Ontario and Quebec might slow the economies in those provinces, which have unemployment rates above the national average.

Pitch for oil exports

The former natural resources minister used the meeting to pitch to more than 3,000 delegates the large oil and natural gas reserves in Western Canada — 168 billion barrels of proven oil reserves and 37 trillion cubic metres of natural gas.

But he said those products cannot be exported to Europe and Asia, unless Canadian pipelines are built. Canada`s oil currently sells at a discount to the world price because of transportation bottlenecks, a problem Oliver says costs the economy $30 billion.

"Canadians need to understand the consequences of not moving our resources to tidewater," he said. Ottawa is expected to make its decision on the Northern Gateway pipeline in the next week. Oliver refused to say if cabinet would approve the controversial pipeline, but emphasized that Canada`s future lies with the oil industry.

"So the choice is stark. Head down the path of economic decline, higher unemployment, limited funds for social programs like health care, continuing deficits and growing debt or achieve prosperity and security now and for future generations through the responsible development of our resources."

With files from the Canadian Press