By ROGER TAYLOR Business Columnist

NOVA SCOTIA may be part of a giant political equation the federal Tory government has drawn up.

Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, a conservative think-tank, says the political scenario all starts with Ontario taxpayers being “sick and tired” of paying the bill for equalization.

He says the Conservative government in Ottawa may be willing to bet that by taking a hard line on equalization and the offshore accord with Nova Scotia and Newfoundland, it will gain more than enough seats in vote-rich Ontario to make up for the seats it may lose in Atlantic Canada.

The old “multiplication by division” political strategy has been a part of Canadian politics for years. But there is a risk: it may not work.

“This is just getting worse and worse for the feds, and they’ve got three provinces (Nova Scotia, Newfoundland and Labrador, and Saskatchewan) to deal with now,” Cirtwill says.

But the Tory government of Prime Minister Stephen Harper may have already given up on trying to recapture support in Atlantic Canada, Cirtwill says.

“I think that ship has sailed,” he says. “They could come tomorrow with a gold-embossed cheque for all the dollars that were clawed back over the last 20 years and I think that, from a political calculus, they’ve lost whatever goodwill that they’ve had.”

He says that if the federal Conservatives believe they have no prospects of getting voter support back, they may say: “Well, why bother?”

So where does that leave the Nova Scotia business community?

Valerie Payn, president of the Halifax Chamber of Commerce, says her organization has followed Premier Rodney MacDonald’s lead in trying to resolve the dispute with Ottawa.

“We would be pretty bitterly disappointed if we had a deal that was signed, sealed and delivered two years ago that said: ‘This is the offshore accord and it shall work in collaboration with the equalization formula as it exists today.’ And then have it change sort of midstream,” Payn told me Monday afternoon.

“We’re with the premier in trying to work out what is best for all of Nova Scotia and we support that.”

Nova Scotia’s approach has always been more reserved than Newfoundland’s, she says. The Halifax chamber supported MacDonald when he tried to negotiate a settlement, and now that it looks as though he has hit a roadblock, the chamber is still following his direction as he becomes a “little more assertive” on this matter.

“What we would like to see is a continuation of the bilateral agreement and not move away from it,” Payn says.

In the meantime, Cirtwill says he doesn’t expect the escalating tensions between Nova Scotia and Ottawa, and the province’s more aggressive attitude, to have a dramatic effect on the Nova Scotia business community.

“I think that certainly if you take a look at how Nova Scotia has handled this file . . . it’s been measured, it’s been thoughtful,” he told me in a phone call Monday. “I wouldn’t necessarily characterize it as right, but at least they’ve been balanced and reasonable in their behaviour.

“I think this is an isolated incident and doesn’t tie into a trend of overall unpredictability or, shall we say, an in-your-face sort of exercise.”

The Tory government of Premier Danny Williams of Newfoundland has been “basically treating all comers in that (aggressive) way,” Cirtwill says.

But the AIMS president isn’t a big supporter of the Nova Scotia government in this matter. He believes Nova Scotia’s position on equalization has been wrong from the start, adding that he doesn’t believe the federal government’s position is sound, either.

“Frankly, I think they’re both wrong. I think that the federal government should have done what the Conservatives in opposition said they were going to do, which was take non-renewable resources out of the equation. They haven’t done that, and I think Nova Scotia’s argument that they’re entitled to the maximum equalization benefit and 100 per cent of the oil and gas benefit just doesn’t fly.”

Cirtwill says he thought both sides would be able to find a negotiated settlement but now he’s not so sure.

In the meantime, he says, the Nova Scotia government is going to be “reasonably better off” than it was under the old equalization formula, which means there really shouldn’t be any immediate shortfall brought about by a vindictive federal government cutting funding to the province.

( rtaylor@herald.ca )

Roger Taylor’s column appears Tuesday, Wednesday, Friday and Saturday in the Chronicle-Herald.