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Minister’s Message

The Industry Portfolio experienced a busy and successful 2007–2008. As Minister of Industry, I am pleased with the progress made on our mission to foster a competitive, knowledge-based economy that benefits all Canadians.

A competitive economy is one that provides jobs and opportunity to Canadians, and top-quality products and services to consumers. Our economic performance underpins the quality of life we enjoy in this country, and the Department is making important contributions to this mission.

The Industry Portfolio is composed of Industry Canada and 10 other agencies, Crown corporations and quasijudicial bodies. These organizations collectively advance Canada’s industrial, scientific and economic development, and help ensure that we remain competitive in the global marketplace.

As a country, we must remain focused on how we can continue to provide an innovative and entrepreneurial economic environment, help our businesses capitalize on opportunities, and provide choice and quality to consumers. The global marketplace continues to evolve, changing with it the dynamics that influence Canada’s performance. I am proud to say that the Industry Portfolio is playing its part:

• We are working to make our market for wireless services more competitive, this year launching the policy framework for the Advanced Wireless Services spectrum auction. The framework aims to provide more choice and better service for consumers and businesses — something that we believe will also lead to lower prices.
• We issued guidelines clarifying the application of the Investment Canada Act as it relates to foreign state-owned enterprises investing in our country to ensure that Canadians continue to enjoy all the benefits that foreign investment delivers.
• We instituted an independent Competition Policy Review Panel to review and report on key elements of Canada’s competition and investment policies and to ensure that they are working to the full benefit of Canadians.
• We created an Automotive Innovation Fund to provide support to automotive firms undertaking large-scale, strategic research and development (R&D) projects to build innovative, greener and more fuel-efficient vehicles. Similarly, investments made through the Strategic Aerospace and Defence Initiative continue to encourage strategic R&D that will result in innovation and excellence in new products and services.

One of my key priorities as Industry Minister continues to be our country’s science and technology (S&T) strategy, Mobilizing Science and Technology to Canada’s Advantage, announced by Prime Minister Harper in May 2007.

• Budget 2008 included measures and initiatives in support of our S&T Strategy that total $654 million over the next three years.
• We put in place the new Science, Technology and Innovation Council to provide the government with objective policy advice on Canada’s S&T issues.
• The government allocated $105 million in 2007–2008 to support the operations of seven new Centres of Excellence, pilot projects that have the potential to make Canada a global leader in fields of research that offer a strategic opportunity for Canadian industry.
• This past March, Canada’s two-armed robot, Dextre, was successfully installed on the International Space Station.

The Department is also working to maximize opportunities for Canadian firms to succeed:

• Through the Industrial and Regional Benefits Policy, we secured over $1.6 billion in commitments from major global contractors, which will result in huge opportunities for Canadian firms.
• We extended BizPaL, an online service that simplifies the business permit and licensing process, into seven provinces and territories, and we continue to reduce red tape through our Paperwork Burden Reduction Initiative.

This has been a year of progress and success, and it is my pleasure to present Industry Canada’s Departmental Performance Report for 2007–2008. I am committed to building on these successes in 2008 and beyond, and I will continue to work with officials in the Industry Portfolio to make Canada more efficient, productive and competitive, expanding opportunity for our firms and providing benefits to consumers.

Tony Clement
Minister of Industry

Section 1: Overview of the Department

1.1 Summary Information

Raison d’être

Responsibilities

The Minister of Industry is responsible for carrying out Industry Canada’s mandate through the Department as well as the Industry Portfolio. The Minister has jurisdiction over policy issues relating to industry; trade and commerce; science; consumer affairs; corporations and corporate securities; competition and restraint of trade, including mergers and monopolies; bankruptcy and insolvency; intellectual property; telecommunications; investment; small businesses; and regional economic development for Ontario.

The Deputy Minister and Senior Associate Deputy Minister are accountable for the stewardship of Industry Canada. They provide strategic direction and sound management, so that the Department effectively contributes to achieving the government’s priorities and its wide range of activities is well coordinated and produces concrete results.

From an operational point of view, Industry Canada’s governance structure is functionally expressed through its committee structure. The governance structure exists within the Department at both the working and senior management levels, and the committees provide oversight and decision-making authority in a number of areas, including policy, procurement and contracting.

Industry Canada has a number of senior management committees that work to support senior executives and, ultimately, the Minister. These committees enable the development and delivery of policies and programs and oversee the management of the complex departmental machinery. The committee structure is traditional in nature — divided among operations (Management Committee and Executive Committee), policy (Deputy Ministers’ Policy Table) and independent oversight (Departmental Audit Committee). These committees support the Deputy Minister and the Senior Associate Deputy Minister in fulfilling their management responsibilities for the Department. This structure provides strategic direction and oversight, which facilitate the achievement of the Department’s three strategic outcomes.

Organizational Changes within Industry Canada

The Department’s organizational chart reflects a number of organizational changes that occurred in 2007–08 and are outlined in further detail below. It is important to note that this year’s performance report is based on the Department’s Program Activity Architecture (PAA). Given the timing of these changes, they were not reflected in the 2007–08 PAA and are therefore not reflected in this year’s performance report.

The organizational changes include the following:

• Operations Sector: The previous Operations Sector was split into the Small Business and Marketplace Services Sector and the Regional Operations Sector following a realignment of Industry Canada’s operational agenda.
• Policy Sector: The Policy Sector was split to create a more focused Strategic Policy Sector and a new Science and Innovation Sector with better focus on innovation in its broadest term.
• Security and Prosperity Partnership of North America (SPP): Following the North American Leaders Summit in Montebello, Quebec, in August 2007, the Minister of Industry was designated as the lead Minister for SPP, a trilateral means through which Canada engages in dialogue, priority-setting, collaboration and action with its North American counterparts to improve the security, prosperity and quality of life of North Americans. In this capacity, Industry Canada will support the Minister in working closely with his Canadian colleagues, and his United States and Mexican counterparts, to identify and advance initiatives within the five priority areas: Enhancing the Global Competitiveness of North America; Safe Food and Products; Sustainable Energy and Environment; Smart and Secure Borders; and Emergency Management and Preparedness.
• Technology Partnerships Canada (TPC): In February 2007, Industry Canada’s Technology Partnerships Canada (TPC) was renamed the Industrial Technologies Office (ITO), the Special Operating Agency with the mandate to manage both the Strategic Aerospace and Defence Initiative (SADI) and projects previously contracted through the TPC program. SADI was not announced until April 2, 2007, and as a result was not reported in the 2007–08 Report on Plans and Priorities (RPP).

Machinery of Government Changes

In 2007–08 the following machinery of government changes impacted Industry Canada:

Aboriginal Business Canada (ABC) — ABC was transferred from Industry Canada to Indian and Northern Affairs Canada (INAC) as of December 2006. Given that the change occurred late in the fiscal year, the Main Estimates for 2007–08 did not reflect the transfer. For this reason, the financial and human resources related to ABC were included in Industry Canada’s 2007–08 RPP, but are not reported against in this DPR. The transfer was reported, however, in the 2007–08 Supplementary Estimates and is reflected in the 2008–09 Annual Reference Level Update.

Mackenzie Gas Project (MGP) — The MGP was transferred from Indian and Northern Affairs Canada (INAC) to Industry Canada on December 10, 2007. The MGP is a proposed 1,220-kilometre natural gas pipeline system through the Mackenzie Valley in the Northwest Territories that will connect northern onshore gas fields with North American markets and has the potential to make key contributions to Canada’s role as an energy superpower. Given that the process of transferring the funding from INAC to Industry Canada will be completed in 2008–09, additional performance reporting will be provided in subsequent DPRs.

National Science Advisor (NSA)¹ — The NSA was transferred from the Privy Council Office (PCO) to Industry Canada as of May 2006. Due to the timing of this transfer, the NSA was not reflected in the 2007–08 Program Activity Architecture on which the RPP and this DPR are based. In the interim, the financial and human resources associated with the NSA are included with Corporate Services, and the resources are divided across all programs and services.

Strategic Outcomes

In order to effectively pursue its mandate, Industry Canada aims to achieve the following three strategic outcomes.

1. A fair, efficient and competitive marketplace
2. An innovative economy
3. Competitive industry and sustainable communities

The strategic outcomes are depicted in the following diagram:

A fair, efficient and competitive marketplace

• By advancing the marketplace, we are developing and administering economic framework policies that promote innovation and competition and instill business, investor and consumer confidence.

An innovative economy

• By fostering the knowledge-based economy, we support foundational investments in science and technology to create new knowledge and equip Canadians with the skills and training they need to compete in the global knowledge-based economy.

Competitive industry and sustainable communities

• By supporting business we anchor and support business innovation and productivity, because businesses are the organizations that create wealth and generate jobs.

Program Activity Architecture

The chart below illustrates Industry Canada’s complete framework of program activities and sub-activities, which feed into and contribute to progress toward the Department’s three Strategic Outcomes.

Industry Canada – Program Activity Architecture

*Minor differences are due to rounding.

¹Chief Information Office Sector is now part of Internal Services and is no longer displayed separately, starting in 2006–07, figures were provided for 2005–06 only.

²Non-respendable revenue and services received without charge are not included in the Main Estimates or Total Authorities of the Department.

1.2 Summary of Performance^*

^* Details on performance for the Program Activity expected results will be provided in section 2.

^**This was a one-time study that does not allow for trend analysis.

Risk Analysis

Industry Canada’s capacity to achieve its strategic outcomes depends on its ability to identify, manage and mitigate department-wide risks. Industry Canada continued to make progress in 2007–08 to advance integrated risk management. Specifically, the Department addressed the Management Accountability Framework (MAF) results by developing a departmental risk management framework and a corporate risk profile. The risk management framework sets the context and provides a common approach to managing risk proactively, and ensures key risks pertaining to the Department’s policy, regulatory, program, and corporate activities are identified, mitigated and communicated. An important component of the risk management framework is the identification of roles and responsibilities for all employees. The corporate risk profile was based on an external and internal scan, a review of the Department’s MAF results, and a departmental risk rating process. The results were presented, discussed and communicated at key departmental committees. Monitoring and reporting of risk management is performed via existing governance structure and stewardship mechanisms (e.g., Management Committee and Departmental Audit Committee).

Expenditure Profile

Industry Canada’s total actual spending for 2007–08 was $1.36 billion. This represents a 13-percent increase from 2006–07 spending, which was primarily due to an increase in grants and contribution programs, including $105 million for seven Centres of Excellence, $58 million for the Program for Strategic Industrial Projects (PSIP), $10.5 million for the Strategic Aerospace and Defence Initiative (SADI) and $10.5 million for the Perimeter Institute.

Over the past three years Industry Canada has delivered a planned reduction in operating expenditures while delivering benefits to Canadians. This has been achieved through a number of spending restraint measures, with a particular focus on travel and professional services. Additionally, Industry Canada has strengthened information technology management practices while containing costs.

D

Voted and Statutory Items^*

This table illustrates the way in which Parliament approved Industry Canada’s resources, and shows the changes in resources derived from supplementary estimates and other authorities, as well as how funds were spent.

^*Minor differences are due to rounding.

Human Resources

Compared with the 2006–07 Departmental Performance Report, Industry Canada decreased in actual Full-Time Equivalents (FTEs) from 5,521 to 5,422 for 2007–08, a difference of 99 FTEs. This is primarily due to various factors, which include:

• Productivity gains in mature sectors allowing Industry Canada to streamline its regions.
• The transfer of resources to Indian and Northern Affairs Canada (INAC) following the transfer of responsibilities for the Aboriginal Business Canada (ABC) program (as noted in the Machinery of Government Changes section above).

¹The National Science Advisor retired on March 31, 2008. The activities mandated to the National Science Advisor were assumed by the Science, Technology and Innovation Council (STIC), the Department of Industry and other parts of the government as appropriate.

²Conference Board of Canada, Death by a Thousand Paper Cuts: The Effects of Barriers to Competition on Canadian Productivity, May 2006, p. 24.

³IMD World Competitiveness Yearbook 2007

⁴Statistics Canada, Domestic Spending on Research and Development (GERD)

⁵Ibid.

⁶www.conferenceboard.ca/documents.asp?rnext=2047

⁷http://www40.statcan.ca/l01/cst01/busi02a.htm

⁸Statistics Canada, Business and Government Use of Information and Communications Technologies

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