The termination of a federal immigrant investor fund will cost P.E.I. tens of millions of dollars a year for business development and millions in revenue, say provincial officials.
The program allowed potential immigrants a pathway to citizenship by putting up money for investment in a business in Canada. The federal government doled out that money to the provinces, which in P.E.I. amounted to $40 million to $45 million a year.
Companies that borrow from the fund have to pay it back in five years, so it can be returned by Ottawa to the investors.
The P.E.I. government called that money the Century Fund. It has been used in recent years for several high profile projects.
- $16.3 million for the Holman Grand Hotel.
- $15 million for compressed natural gas generator at Cavendish Farms.
- $16 million for Wyman blueberry plant.
The Century Fund is administered through the Island Investment Development Inc. In 2013 IIDI held more than $204 million in loans through the fund.
The province also generated revenue with the fund by loaning out the money at an interest rate of four per cent. It did not pay any interest to the federal government.
Not meeting Citizenship and Immigration objectives
Flaherty said Ottawa wants make way for new programs that will better meet the needs of Canada's marketplace. Sheridan said that came as a complete surprise to him.
"These types of decisions have always been at least negotiated, something that we would talk to each other about," he said.
Charlottetown MP Sean Casey also criticized Ottawa for its unilateral action.
"There was absolutely no discussion, no consultation with the province," said Casey.
"This is another challenge for P.E.I. business to get access to capital."
Egmont MP Gail Shea, P.E.I.'s representative in the federal cabinet, defended the decision.
"Obviously it's not producing the kind of outcomes Citizenship and Immigration want," said Shea.
"I would hope that businesses on Prince Edward Island were not going have any negative effects because of changes to this program."
Sheridan said the change will hit the province's bottom line.
"It makes you wonder what kind of government would do this without any kind of pre-knowledge or any kind of consultation," he said.
Shea said P.E.I. should not be in a position where it was relying heavily on the immigrant investor money.
"I would sure hope that Prince Edward Island is not banking on this program to balance their books," she said.
"If that's the case we certainly have a lot of work to do."
Flaherty said Ottawa wants to make room for new programs.
Provincial nominee program remains
While the immigrant-backed Century Fund is on the way out, a provincially-administered program that attracts immigrant investors remains.
Officials say the scrapping of the federal program will not affect the immigrant investor section of the provincial nominee program.
Ottawa did shut down the PNP once, in 2008.
A new program was launched in 2012. Since then P.E.I. has been nominating 400 immigrants a year.
The new program includes categories for entrepreneurs who own their own businesses, and for temporary foreign workers already on P.E.I. in designated professions such as truck drivers.