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Section II: Analysis of Program Activities by Strategic Outcome

2.1 Strategic Outcome - The western Canadian economy is competitive, expanded and diversified

WD’s programs encourage business development, innovation and community economic development, and are supported by the department’s leadership and coordination role in furthering western interests and responding to western challenges.

WD works to improve the economic competitiveness of the West and the quality of life of its citizens by supporting a wide range of initiatives designed to expand the western economy, create employment opportunities, and ensure prosperity for citizens and communities over the long term.  Furthermore, the department stimulates economic activity, increases the business productivity and competitiveness of western firms, reduces the region’s dependence on primary industries, and encourages investments in innovation.

WD utilizes a number of economic indicators to gauge the competiveness, growth and diversity of the western Canadian economy in order to better understand the environment which it is attempting to influence.  The charts below depict the five-year trend of Canada’s and Western Canada’s performance against four indicators, two related to economic development and two related to diversification.  In terms of economic development, the year-over-year real GDP growth rate for the West peaked at 4.6 percent in 2006 before declining in both 2007 and 2008, and turning negative in 2009 due to the global economic crisis.  In 2010, GDP growth was positive again at 4.2 percent⁵ and has exceeded the national rate in four of the last five years.  The West’s labour productivity growth – real GDP per hour worked –was 1.5 percent in 2010⁶, representing an increase in the rate of growth over 2009 due to the economic recovery.

Development and Diversification

Performance Indicators		2006	2007	2008	2009	20106
Real GDP growth	Canada	2.8%	2.6%	0.5%	-2.9%	3.4%
	West	4.6%	2.7%	0.8%	-3.7%	4.2%
Labour productivity growth (change in real GDP per hour worked)	Canada	2.15%	-0.6%	-0.2%	1.3%	0.9%
	West	1.4%	-1.9%	0.5%	1.0%	1.5%
Primary production as a percentage of GDP	Canada	7.1%	6.9%	6.8%	6.5%	6.6%
	West	15.6%	14.9%	14.4%	14.4%	14.5%
GERD as a percentage of GDP	Canada	2.0%	2.0%	1.9%	1.9%	n/a
	West	1.0%	0.9%	0.8%	n/a	n/a

In terms of diversification, primary production in the West as a percentage of GDP was 14.5 percent in 2010⁷, which represents a slight increase in the share of GDP from 2009. Ideally, the percentage of primary production should decrease over time as a reflection of a more diversified economy. R&D intensity, as measured by GERD as a percentage of GDP, decreased slightly from 1.0 percent in 2006 to 0.9 percent in 2007⁸ and decreased further in 2008 to 0.8 percent, which falls short of the target for stable growth of 1.3 percent per year. Ideally, the percentage of R&D expenditures should grow over time in order to support the growth of the knowledge-based economy.

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Source: Statistics Canada

A summary of performance and analysis for each of WD’s Program Activities is presented below.  The Program Activities’ analyses are structured as follows:

• A description of the Program Activity, taken from the Main Estimates, is provided;
• A table of the financial and human resources utilized in 2010–11 to support the Program Activity is provided, followed by a table summarizing results against targets at the Program Activity level.  (The Performance Status Legend, below, outlines the five-point scale used to assess performance against targets at the Program Activity level.  This is the same scale that was used in Section I to assess WD’s performance against priorities.);
• An explanation of the performance status in the table is provided in the opening paragraph of the Performance Summary and Analysis;
• Activities or outputs summarize projects that WD approved under the Program Activity in 2010–11, including examples of projects approved in support of departmental priorities.  (WD’s main output performance measures are “number and value of projects approved.”  For complete descriptions of these approved projects, please refer to WD’s public Web site.);
• Impacts or outcomes summarize the impact of projects that realized final results during 2010–11, based upon the outcome performance measures specific to the Program Activity;
• Examples of recently completed projects that had exceptional impact are provided (For complete descriptions of these completed projects, please refer to WD’s public Web site.); and
• Each sub-section ends with Lessons Learned that arise from either program evaluations or WD’s experience in the Program Activity area in general.

The Policy, Advocacy and Coordination sub-section is structured somewhat differently, as each sub-activity is given its own section.  (Previously, the three sub-activities under Policy, Advocacy and Coordination were positioned at the Program Activity level in WD’s PAA.)

Performance Status Legend

2.1.1 Program Activity: Business Development

This program activity works with western Canadian businesses, industry and research organizations to undertake initiatives that enhance business productivity and competitiveness; support trade and investment attraction; and increase the penetration of western Canadian technologies, services and value-added products into international markets.  Value-added production is strengthened through initiatives in priority sectors to introduce new products, technologies or innovations to existing production and processes.  Access to risk capital and business services for entrepreneurs and small business are improved through programs and services offered in conjunction with other business services organizations and associations.

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
39,157	45,859	44,205

2010-11 Human Resources (FTEs)

Planned	Actual	Difference2
65	37	28

Expected Results	Performance Indicators	Targets	Performance Status
Strong SMEs in Western Canada with improved capacity to remain competitive in the global marketplace.	SME revenue (all SME sizes, excluding non-employees)	$322 billion (Stable level of revenue)	Data not available
	SME employment, (all SME sizes, excluding non-employees)	2.5 million (Stable)	Met All (2.52 million – 2010)
	Annual international trade: value of exports excluding primary production sectors	$47 billion	Mostly Met ($37.8 billion – 2010)

Performance Summary and Analysis of Program Activity

WD tracks SME revenue and employment levels, as well as annual international trade (excluding primary production) as indicators of SMEs’ capacity to remain competitive in the global marketplace. Consistent with the steady economic recovery forecast for 2010, Western Canada’s economy met or mostly met its performance targets for SME employment and annual international trade. SME employment remained stable at 2,520,255 (based on most recent data available). The value of Western Canada’s annual international trade in non-resource based sectors reached $37.8 billion in 2010, a 10 percent increase over the previous year. This proved contrary to many predictions that the high value of the Canadian dollar relative to the US dollar might have a dampening effect on exports.

Activities

In 2010–11, WD’s funding of $15.2 million leveraged $22.9 million from other sources for 28 projects in support of Business Development. In addition, WD approved $36.8 million to continue funding the 118 members of the WCBSN, which include 90 Community Futures (CF) organizations, four CF provincial associations, four Francophone Economic Development Organizations (FEDOs) and four Women’s Enterprise Initiative organizations, as well as the Entrepreneurs with Disabilities service providers and Aboriginal Business Service Network members. This funding will ensure SMEs continue to have the knowledge, skills and capacity to compete. In addition, WD continued to jointly fund the four CBN service centres in Western Canada with the provincial governments. Collectively, organizations comprising the WCBSN provided the following services in 2010–11 (results of loan activity by the WCBSN are provided under Impact, below):

• More than 288,000 information services;
• More than 57,000 advisory services;
• More than 33,600 clients trained; and
• More than 123,000 client interactions through multiple access channels provided by the CBN service centres across Western Canada, including: e-mail (9,055 interactions), telephone (47,054 interactions), walk-in traffic (48,817 interactions) and trade show/presentation interactions (16,805).

In support of its business productivity and competitiveness priority, WD funded projects such as:

• Alberta Metal Fab Innovation Program – WD invested $1.5 million to increase productivity in Alberta's metal fabrication and machinery manufacturing sector;
• FPInnovations – WD contributed $639,000 for a knowledge transfer project for the value-added forest products sector in Alberta and $424,000 for a similar project in Saskatchewan.  WD invested a further $600,000 to support the First Nations Forestry Products Technical Program in British Columbia;
• The Northern Manitoba Sector Council Inc.  – WD invested $1.62 million to establish a Northern Mining Skills Training Program in Manitoba; and
• Motion Picture Production Industry Association of British Columbia – WD provided $510,000 for a project that will develop and implement a three-year strategy to attract investment and foreign productions, and expand global opportunities for the production and distribution of British Columbia owned and co-owned productions.

In 2010–11, WD addressed its trade and investment operational priority by helping western Canadian SMEs, industry associations and research institutes enhance and diversify their exports, create international R&D partnerships and attract investment toward non-traditional markets.  WD, for example, provided support to attract new international buyers to Regina’s Western Canada Farm Progress Show, resulting in increased export sales for western Canadian companies.  The department’s efforts have assisted western Canadian SMEs to improve their trade performance after a steep decline following the global economic crisis.

WD, working in close collaboration with the Department of Foreign Affairs and International Trade, enabled western Canadian SMEs to enhance their presence in the US/Mexico market and to access North American supply chains through NAPP.  WD supported 33 international business development projects, totalling $357,000, through NAPP.  One project involved four western Canadian businesses travelling to a high profile biomedical investor and partnership conference in Southern California, resulting in six investment leads, three potential partnerships and numerous technology transfers.

Impact

The 34 Business Development projects that realized final results during 2010–11 collectively met 80 percent or greater of the targets set for eight out of 11 performance indicators (73 percent).  In terms of individual project results, 26 of these projects (76 percent) achieved 80 percent or better against their targets for all Business Development performance indicators.  By sub-activity, the following results were achieved:

• Access to Capital activities lead to increased investment in targeted western Canadian firms.  The two projects which realized final results exceeded the target for the performance indicator for this sub-activity, creating 63 more businesses than anticipated (97 versus 34);
• Foreign Direct Investment builds increased foreign investment in Western Canada.  The one project which realized final results somewhat met the target for the performance indicator for this sub-activity, facilitating $600,000 less in foreign direct investment than anticipated ($1.0 million versus $1.6 million);
• Improve Business Productivity aims to increase SME competitiveness and productivity.  The 18 projects which realized final results collectively exceeded the targets for one of the four performance indicators for this sub-activity, creating six more businesses than anticipated (102 versus 96), and mostly met the targets for a second performance indicator (% client satisfaction with business services provided) falling short of the target by less that 10 percent (68.5 percent versus 76.5 percent).  These projects somewhat met targets for a third indicator, creating 51 fewer jobs than anticipated (96 versus 147), and did not meet the target for the fourth and final indicator (value of increase in sales), missing the target by more than $400 million ($14.7 million versus $430.4 million).  This shortfall in sales was primarily due to an error in target-setting for one project, and partially due to a second project coinciding with the global economic downturn in 2008.  The latter project, which provided support to the British Columbia cruise ship industry, produced significant results in terms of reduced operating costs and environmental benefits;
• Industry Collaboration supports an increase in the number of successful partnerships and strategic alliances.  Together, the two projects that realized final results met the targets for the performance indicator for this sub-activity (# of partnerships/strategic alliances – 34 versus 34); and
• Market and Trade Development activities focus on increasing participation in international markets.  The 11 projects which reported final results collectively exceeded the targets for two of the four performance indicators for this sub-activity, creating eight more industry association partnerships than anticipated (18 versus 10), and organizing five more major international events promoting western Canadian capabilities than anticipated (13 versus 8).  These projects also mostly met the targets for the other two performance indicators, falling short of the anticipated number of companies participating in export and market development initiatives by 296 (4,994 versus 5,290), and missing the target for number of export-ready companies by two (23 versus 25).  (For complete results, please refer to the table on WD’s public Web site.)

The WCBSN also had a favourable impact on the western Canadian economy in 2010–11, exceeding its targets in all areas.  By sub-activity, WD’s network partners had the following impacts:

Access to Capital:

• 1,597 loans approved, totalling $78.8 million (target was $76.4 million);
• $87.8 million leveraged through lending (target was $56.8 million);
• 5,970 jobs created or maintained through lending (target was 4,684); and
• 1,438 businesses created, maintained or expanded through lending (target was 1,318).

Improve Business Productivity:

• 3,212 jobs created or maintained through business services (target was 3,105); and
• 1,517 businesses created, maintained or expanded through business services (target was 2,995).

By facilitating access to capital for entrepreneurs and small businesses, the WCBSN, as well as LIP, impacted WD’s business productivity and competitiveness priority.  Economic recovery in 2010–11 saw significant improvements in credit markets, greater availability of credit and a lower demand for capital from non-conventional lenders.  As a result, lending by WCBSN members dropped 13.5 percent from 2009–10 levels.  Through LIP, participating financial institutions approved 206 loans totalling $7.3 million.

WD also realized positive impacts during 2010–11, with respect to its trade and investment priority, as a result of staff efforts and investments of operating funding in initiatives such as NAPP.  The impacts of WD’s trade and investment effort include strengthened engagement by SMEs in global markets, better awareness of Western Canada as a competitive investment destination, and strengthened linkages between the western Canadian science and technology community and international networks.  Many of these impacts are not reflected in the performance results provided above, as those results are based upon reports from projects receiving G&C funding.

Some examples of Business Development projects which have recently reported final results that exceeded expectations include:

• Bison Feeder Co-operative of Saskatchewan – WD contributed $74,000 for a project to develop new markets for bison products in the Middle East;
• The Winnipeg Chamber of Commerce – WD invested $230,000 to support the second phase of the “Selling Winnipeg to the World” initiative, in which project stakeholders collaborated to attract new investment and create jobs;
• Vancouver Economic Development Society – WD provided $805,000 to develop and implement the 2010 Partnership Investment Program to attract and engage foreign investment decision-makers during the Winter Olympics;
• Case Study:  Building Productivity – Since 2005, WD has contributed $36.6 million to 39 Alberta business productivity projects in manufacturing, construction and management, with impacts at the micro, meso and macroeconomic level; and
• Corridor touristique francophone de l’Ouest – WD provided $796,500 to La Société de développement économique de la Colombie-Britannique to promote Western Canada as a destination of choice for French-speaking tourists through the pan-western Francophone Tourism Corridor.

Lessons Learned

An evaluation was undertaken in 2010–11 which covered both the Entrepreneurs with Disabilities Program (EDP), delivered in rural areas through CFs, and the Urban Entrepreneurs with Disabilities Initiative, delivered by various service providers in Vancouver, Victoria, Edmonton, Calgary, Saskatoon, Regina and Winnipeg.  The evaluation found that the pre- and post-care loan support services offered by EDP were viewed by key informants as a very valuable aspect of the program; 11,000 hours of business counselling services were reported over the four‑and‑three‑quarter‑year evaluation period.  Further, as a result of the pre-care service, the approval rate for loans was quite high at 91 percent.  A total of 1,614 jobs were created through 575 loans, valued at $15.3 million.  The most frequent challenges identified by key informants included the lack of clarity around expectations and performance management, and the inconsistency of program delivery from region to region.  The evaluation underlined the importance of having clear, measurable performance indicators to facilitate the impact assessment of the program.

WD recognizes the importance of supporting western Canadian SMEs in their pursuit of international business development opportunities in emerging markets, particularly in light of Export Development Canada’s recent findings in its Global Export Forecast of the benefits of continued market diversification.  Going forward, WD will continue to target trade and investment initiatives that help western SMEs access emerging markets, as a way of growing their businesses and contributing to the region’s overall prosperity, while also recognizing the continued importance of the North American market.

WD participated in the 2010 strategic review and assessed all programs to ensure they remain effective and efficient, aligned with the department’s core role, and focused on Canadian priorities.  WD found savings, representing about 5 percent or $8.9 million of the department’s review base, associated with LIP, the Community Planning program activity and improving internal operating efficiencies.

The wind-down of WD’s LIP and associated agreements will be phased in over a three-year period with all available funds ($3.7 million annually) effectively terminated as of April 1, 2013.  Existing agreements with lending institutions remain in effect; WD will work closely with the lenders to ensure a smooth wind-down of the remaining agreements.

2.1.2 Program Activity: Innovation

This program activity facilitates the West's transition to a knowledge-based economy.  Through innovation, knowledge is translated into new products and services and to new ways of designing, producing or marketing existing products or services for public and private markets.  This recognizes that innovation occurs at the firm level, through a highly complex interdependent system that includes elements such as knowledge infrastructure, basic and applied R&D, highly qualified personnel, access to adequate patient financing, technology commercialization facilities, and support systems and mechanisms to link these elements to each other.  The process of innovation is not linear or isolated but occurs within a broader context known as an "innovation system".  WD’s Innovation program activity strengthens the western innovation system to facilitate the development of clusters and enhance the potential of innovation to create value and wealth.

WD’s approach to innovation aligns with the overall federal approach, which is outlined in the 2007 Science & Technology Strategy and in recent initiatives, such as the development of the Digital Economy Strategy (DES) and the Review of Federal Support to Research and Development.  For example, WD actively supports the ICT sector, which aligns with the DES.  In addition, WD recognizes the importance of business R&D, and has actively contributed to the federal review of business R&D.

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
59,445	73,526	77,096

2010-11 Human Resources (FTEs)

Planned	Actual	Difference2
54	28	26

Expected Results	Performance Indicators	Targets	Performance Status
A stronger knowledge-based economy	Total western Canadian university income from the commercialization of IP	$28.14 million (stable growth rate)	Not Met ($16.483 million – 2008, decline in income from 2007)
	Business expenditure on R&D (BERD) as a percent of GDP	.55% (stable growth rate)	Mostly Met (0.5% – 2008, stable rate of expenditure)
	Employment in natural and applied science and related occupations as a percent of total employment	7.0% (modest increase)	To be reported again in 2011–12 based upon 2011 Census data

Performance Summary and Analysis of Program Activity

WD tracks Western Canada’s progress in innovation through high-level indicators such as western Canadian university income from the commercialization of IP, BERD, and employment in natural and applied science. Income from commercialization of IP in Western Canada remained stable from 2003 through 2006 at $27-28 million, then dropped to $22.9 million in 2007 and experienced a further decrease to $16.5 million in 2008. This decrease reflects the national trend, as average income from IP in Canada decreased by nine percent in 2008 compared to 2007. WD is monitoring this trend, as the decline may be attributable to inconsistent reporting practices at universities. BERD as a percentage of GDP has remained stable from the baseline year of 2004 through 2008 at approximately 0.5 percent, which is low compared to Canada as a whole (1.0 percent), as well as compared to Canada’s international competitors. The most recent data available regarding employment in natural and applied science is the baseline data from 2006 of 6.5 percent.

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Source: Statisics Canada
Note: Data not available for 2002. National data suppressed in 2005 to meet the confidentiality requirements of the Statistics Act.

Activities

During 2010–11, WD provided $86.8 million to 43 innovation projects with 31 separate funding recipients.  The majority of projects (57 percent) were in the technology adoption and commercialization activity, followed by knowledge infrastructure (22 percent), technology linkages (16 percent) and technology R&D (5 percent).  The projects attracted funding of $209.8 million from other sources ($2.46 for each dollar WD contributed).  The following chart demonstrates that the majority of funding went to life sciences (45 percent), with relatively even contributions to environmental technologies, ICT and the value-added sector.  The balance was allocated to other knowledge-based sectors such as micro/nanotechnologies, synchrotron and medical isotopes.

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In support of its technology commercialization priority, WD funded projects such as:

• GRAND (Graphics, Animation and New Media Network of Centres of Excellence) in Vancouver – WD provided $399,000 to further commercialize innovative new media technologies developed by the network members from across Canada.  (Digital/ICT sector);
• Capilano University – WD invested $969,000 for the purchase of specialized equipment to train students and upgrade skills for those currently employed in the British Columbia film industry;
• TECTERRA Inc. – WD contributed $6 million to support knowledge infrastructure and industry-driven testing programs that will reduce significant cost-barriers associated with the commercialization of geomatics technology in Alberta;
• Livestock Gentec – WD invested $3.5 million to establish Gentec Not-For-Profit, a fee-for-service genotyping and biobanking facility for the livestock genetic research program at the University of Alberta;
• University of Saskatchewan Toxicology Centre – WD provided $1.0 million to further develop a new technology to extract petroleum hydrocarbons and waste products from oil sands, tailings and process water; and
• Musculoskeletal Innovation and Product Development Centre (MIPDC) – WD contributed $2.5 million to enhance MIPDC’s capacity to develop and commercialize new prosthetics, lubricants and related products for the musculoskeletal medical devices sector in Manitoba.

Impact

Each year, WD contributes to the western Canadian innovation system through its advocacy and coordination efforts and, in 2010–11, the department participated in consultations on the development of the DES and the Canadian Innovation Commercialization program.  WD also supported innovation by providing direct and indirect funding to develop innovation sectors and clusters, increase community innovation, contribute to knowledge infrastructure, promote skills development, support R&D, and assist in the adoption and commercialization of technology.

WD’s investment portfolio includes multi-year funding arrangements, resulting in many impacts realized in 2010–11 that stem from previous years’ investments.  Fifteen innovation projects, which received $13.7 million in funding, realized and reported final results in 2010–11.  Overall, 11 of 15 (73 percent) projects mostly met, met, or exceeded performance expectations against all program activity indicators, demonstrating WD’s success in enhancing innovation potential in Western Canada.  Performance based upon a review of the 24 indicators used to measure Innovation outcomes is similar:  Collectively, the projects achieved at least 80 percent of expected performance levels against 18 of the 24 Innovation performance indicators.  (For complete results, please refer to the table on WD’s public Web site.)

Some recent examples of significant completed projects that illustrate results in the area of innovation include:

• St.  Boniface General Hospital – WD provided $800,000 for two new laboratories at the Canadian Centre for Agri-Food Research in Health and Medicine in Winnipeg to support preclinical and clinical studies related to diet and health;
• Saskatchewan Research Council – WD invested $740,000 to commercialize the processes involved in the rapid identification of Canadian wheat varieties;
• Alberta Terrestrial Imaging Centre (ATIC) – WD invested $1.8 million to establish ATIC, attract highly qualified personnel, and build partnerships with academic, government and industrial end users; and
• Northern Alberta Institute of Technology (NAIT) – WD contributed $6.7 million to procure and install specialized equipment for trades training facilities at NAIT.

Lessons Learned

Currently, WD has a relatively small but stable group of innovation clients across the West.  Investing in new sectors and stimulating new products, WD expects an increase in market-ready technologies.  This will result in a greater number of new spin-off companies, attraction and increase of venture capital to new and existing firms, additional technology demonstrations, increase in sales of new products by firms to domestic and international markets, and more advanced technology products and services in the marketplace.

These new firms, as well as existing firms, require sufficient access to information and capital in order to cross the “Valley of Death”⁹ and take products to domestic and international markets.  To capitalize on its investments and ensure longer term growth in the innovation area, WD may consider additional initiatives to address these market shortcomings.

2.1.3 Program Activity: Community Economic Development

This program activity involves economic development and diversification initiatives that enable communities to sustain their economies and adjust to changing and challenging economic circumstances. It includes projects that help communities assess their strengths, weaknesses, opportunities, and potential for new economic activity. It also includes projects that provide assistance with the development and implementation of community plans. In order to respond effectively to the needs of Western Canada’s communities, WD collaborates with local partners to ensure that unique economic, social and environmental considerations are taken into account in initiatives designed to foster economic growth and development. This program activity also includes investments in public infrastructure, coordinated with provincial and municipal governments to maximize benefits. The process involves community-based consultations to ensure federal programs, services and horizontal initiatives serve the needs of western Canadian communities.

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
58,031	58,592	46,547

2010-11 Human Resources (FTEs)

Planned	Actual	Difference2
76	41	35

Expected Results	Performance Indicators	Targets	Performance Status
Communities have increased economic opportunities and capacity to respond to challenges, as well as the necessary investments in public infrastructure.	Employment: # of new jobs created	39,000 (growth at a slower rate)	Not met (17,847 – 2010 data)
	Net migration rate – international and domestic	95,000 (stable net migration)	Mostly Met (92,804 – 2010 data)
	Percentage of key informants with the opinion that WD delivery of infrastructure programs resulted in investments that reflect western Canadian infrastructure priorities	50%	To be measured again in 2014–15

Performance Summary and Analysis of Program Activity

In order to capture the impact of its Community Economic Development (CED) activities, WD tracks job creation and the net migration rate as indicators of increased economic opportunities and communities’ capacity to respond to challenges.  In 2010, Western Canada had a net job gain of 17,847 which reflects a rebound from the global economic downturn, although not as high as targeted.  Net migration (the change in population due to migration, ignoring birth rate) also grew at a rate slightly slower than targeted for 2010.

WD participates in an evaluation every five years to determine the impact of its investments in public infrastructure.  The results for 2009–10 were mixed, with several key informants suggesting these investments should be more predictable, in support of municipal long-term capital plans.  WD will conduct this survey again in 2014–15 to identify trends and issues.

Activities

In 2010–11, WD approved six community economic development projects for new funding of $3.1 million through the Western Diversification Program (WDP).  WD’s funding leveraged $6.5 million from other sources.

The following is an example of a community economic development project approved in 2010–11:

• Ladysmith Maritime Society – WD invested $807,000 to construct tourist visitor facilities at the Ladysmith Community Marina in British Columbia.

In addition, a significant proportion of WD's CED funding stems from the department's role as the western delivery agent of national programs, such as municipal infrastructure programs and CF, and from the support provided to FEDOs.

During 2010–11, WD was involved in the delivery of five infrastructure programs across the West:  ICP, MRIF, CSIF, BCF-CC and BCF – Major Infrastructure Component.  G&C funding for the latter four programs is provided through INFC’s appropriation and details on the results may be found in INFC’s Departmental Performance Report.

Four hundred and thirty-two projects were approved under BCF-CC across the West, which includes additional funding provided through the EAP.

Finally, WD is responsible for delivering a number of EAP initiatives in Western Canada.  While these programs are being delivered under the CED program activity, a detailed explanation of these initiatives and WD's planned EAP activities can be found in section 2.1.5.

Impact

WD’s overall strategy for CED includes a multi-year approach to investments in order to increase economic opportunities and capacity to respond to challenges.  As a result, many impacts realized in 2010–11 stem from previous years’ investments.  Fifty-eight CED projects, which received $30.2 million in WD funding, realized and reported final results during 2010–11.  Collectively, these projects met 80 percent or greater of the targets set for five out of eight performance indicators (63 percent).  Also, almost 90 percent of the projects (52 projects) met or exceeded their individual CED targets.  The few shortfalls in project performance were mainly due to unforeseen provincial budget cuts, unanticipated projected costs or delays in approval processes that affected the results of the project.  Overall, the 58 CED projects impacted numerous communities by developing comprehensive sets of programs and resources that provided entrepreneurial support; strengthened tourism; attracted businesses; enhanced development within urban, rural and First Nation communities; built stronger communities through technological advancements; and supported community development through growth in local businesses.

By sub-activity, the following results were achieved:

• Community Planning activities assist communities in strategic planning and management.  Together, the two projects that realized final results under this sub-activity mostly met the targets for the two performance indicators (# partnerships developed or maintained and # activities providing planning and leadership and expertise).
  
  
• Community Development activities strengthen the viability of the local economy, enhancing community capacity and increasing the participation of community members by encouraging and supporting them to take responsibility for their own economic development.  Collectively, the 56 projects that realized final results under this sub-activity exceeded the targets for four of the six performance indicators (# businesses created or maintained or expanded, # instances of increased community stability, # instances of increased capacity in community organizations and # jobs created or maintained).  This suggests that, collectively, the projects performed moderately well.  (For complete results, please refer to the table on WD’s public Web site.)

A majority of the 58 CED projects (40) were funded through the Community Economic Diversification Initiative (CEDI), a component of the MPB program.  This sub-program proved to be moderately successful, with an 85 percent success rating for projects meeting their individual targets.  These projects resulted in economic diversification, community capacity building, economic infrastructure and value-added production in the forestry industry.
The WCBSN also had a favourable impact on CED in western Canadian communities in
2010–11, in addition to their impact on Business Development, as detailed in the previous section.  By sub-activity, results achieved by CFs and FEDOs in the CED program activity area included:

Community Planning:

• 6,602 projects improving leadership and/or expertise (target was 2,312)
• 11,421 community planning exercises (target was 247);
•  21,238 partnerships developed or maintained (target was 3,157); and
• 1, 074 instances of facilitating community involvement (target was 843).

Community Development:

• 670 instances of increased community stability (target was 427);
• 1,106 instances of increased capacity in community organizations (target was 904); and
• 524 enhanced community services or facilities (target was 395).

Among the 58 projects that realized final results in 2010–11 are several examples of those that exceeded expected results:

• Women Building Futures – WD invested $267,000 to increase women’s access to pre-apprentice training in Alberta;
• Saskatoon Ideas Inc. – WD provided $34,000 to develop an economic incubation model for the Whitecap-Dakota First Nation Reserve and the Saskatoon/Outlook region in Saskatchewan;
• Le Conseil de développement économique des municipalités bilingues du Manitoba (CDEM) – WD provided $3.27 million in operating funding to CDEM as a member of the WCBSN to support community economic development and business services in Manitoba's bilingual communities.  Services provided include information, training, mentoring, counselling, and entrepreneurship promotion;
• UNBC Mobile Terahertz Imaging System – WD invested $520,000 to develop a mobile terahertz imaging system and demonstrate its application in the forest products industry in British Columbia;
• Tsilhqot'in National Government – WD invested $244,000 to provide training for First Nations in British Columbia in the field of silviculture, and identify and develop silviculture business opportunities; and
• Britannia Beach Historical Society – WD invested $5 million towards an $8 million project to establish a mining industry visitor/interpretive centre involving the transformation of an abandoned mine in British Columbia.

With respect to Community Infrastructure, WD has fully expended its federal commitment of $546 million under ICP, funding 1,622 infrastructure projects across the West and leveraging $1.623 billion in funding from other orders of government.  (For complete ICP results, please refer to the table on WD’s public Web site.)

The following is an example of a Community Infrastructure project completed in 2010–11, which exceeded expected results:

• City of Edmonton – With $3 million in funding from the Canada-Alberta Municipal Rural Infrastructure Fund, the City built the Kennedale Constructed Wetland, an artificial wetland to reduce the level of pollutants and bacteria flowing into the North Saskatchewan River from city storm water.  The Federation of Canadian Municipalities recognized the Kennedale Constructed Wetland project with the 2010 Sustainable Community Award for Water.

Lessons Learned

An evaluation of the MPB program was undertaken in 2010–11 which covered both program elements, CEDI and the Airport Improvement Initiative.  The evaluation found that there was a major need for this type of programming, as many of the affected communities were small, rural, forest-dependent and lacking sufficient resources to cope with the economic, social and environmental effects of the mountain pine beetle infestation.  It also concluded that most projects would not have proceeded in the absence of CEDI funding.

The MPB program evaluation also noted that approximately 100 (56 percent) of the 180 affected communities were First Nations, and identified the development of a joint Aboriginal Engagement Strategy by WD and the Central Interior First Nations CF as a best practice which enhanced the representation of First Nation communities in terms of the total number (32 percent) and total value (29 percent) of CEDI projects approved.

To meet their commitment to work together to improve the delivery of national infrastructure programs, in August 2010 WD and INFC signed a Service Level Agreement outlining the roles and responsibilities of each department in the delivery of BCF-CC.  In addition, in 2010–11 the Regional Development Agencies and INFC formed a number of committees to discuss service delivery issues and facilitate the sharing of best practices.

As a result of strategic review in 2010, WD will also realize approximately $4.6 million in savings from the Community Planning program activity under WDP.  This will leave approximately $1.8 million to fund community planning projects.  The department is confident that through this sub-activity it will continue to meet the needs of communities and community development organizations.

2.1.4 Program Activity: Policy, Advocacy and Coordination

This program activity arises from the Western Economic Diversification Act, which empowers the Minister to advance the interests of Western Canada in national economic policy, program and project development and implementation, through the establishment of cooperative relationships with the western provinces and other stakeholders, and through the initiation of policy research.  Through this program activity, WD provides a strong voice for Western Canada in national policy discussions, resulting in effective strategies, policies and programs to address the economic development needs and aspirations of Western Canada.  This program activity also includes leading federal and intergovernmental collaboration to pursue key opportunities for long-term growth and diversification in areas of federal or shared federal-provincial jurisdiction.  Finally, this program activity includes undertaking research and analysis required to inform policy and program decisions.

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
8,873	9,465	8,583

2010-11 Human Resources (FTEs)

Planned	Actual	Difference
60	60	0

Expected Results	Performance Indicators	Targets	Performance Status
Policies and programs that strengthen the western Canadian economy	Percentage of key informants with the opinion that WD activities provide policies and programs that support the economic development of Western Canada	90%	To be measured again in 2013–14
	Percentage of projects completed this fiscal year that successfully met or exceeded performance targets	85%	Exceeded (91% – 2010–11)

Performance Summary and Analysis of Program Activity

In order to assess this program activity, WD conducts an evaluation every five years, which includes a survey of key informants.  The 2008–09 survey results established benchmarks of 94 percent of informants with the opinion that WD activities provide policies that support the economic development of Western Canada and 95 percent with the opinion that WD activities provide programs that support economic development of Western Canada.  WD will conduct this survey again in 2013–14 to identify trends and issues.

WD also tracks the percentage of projects, across all program areas, completed in a year that successfully meet or exceed performance targets, as an indication of how effective the department’s overall policy and program efforts have been.  As part of their analysis of a client’s final progress report, WD project officers are required to assign a final outcome value against each performance target and assess the extent to which the project, as a whole, met expectations.  The rationale for using an overall project success rating as a Policy, Advocacy and Coordination indicator is that the greater the percentage of projects which are judged to have been successful, the more likely it is that WD’s advocacy, coordination and policy efforts in support of project development and implementation have been, and the more likely that WD investments are having a positive impact on the western Canadian economy.  In 2010–11, 611 projects realized final results, of which 560 (92 percent) met or exceeded expectations.

Collaboration and Coordination

Specific results attributable to this program activity include collaboration and coordination efforts in uniting key players in areas that contribute to economic development, such as organization and participation in the Senior Officials Forum on Innovation, leading and participating on regional federal councils, and supporting active regional trade networks in Alberta, Saskatchewan and Manitoba.

WD supports economic development initiatives with each of the four provinces through Western Economic Partnership Agreements (WEPAs).  The overall results of the WEPAs are presented in this section of WD’s DPR because development, management and implementation of the agreements involve continuous collaboration and coordination activities.  Highlights of results achieved include the approval of 27 projects, totalling $25.7 million in WD funding, and continued strong intergovernmental relationships between WD and the western provinces, which support mutual priorities across Western Canada.

Examples of projects supporting collaboration efforts include:

• Collaboration with Yes! Winnipeg to identify specific business attraction, retention and expansion opportunities, and promote information and knowledge exchange;
• Engagement with the federal Pacific Gateway Coordination group, responsible for the overall coordination of the Asia Pacific Gateway and Corridor Initiative, to identify new areas for collaboration and support; and
• Promotion of investment and partnership opportunities available in Western Canada at the Annual General Meeting of the Inter-American Development Bank.

Advocacy

In 2010–11, WD undertook a number of IRB initiatives to improve access by western Canadians firms to major Crown projects, including:

• Hosting a number of information sessions to assist western Canadian firms pursuing IRB contracts;
• Arranging business-to-business matchmaking sessions and supplier development missions for prime contractors and western SMEs;
• Organizing a ministerial-led delegation to the Farnborough International Air Show in England to secure commitments from senior executives of multinationals with IRB obligations in Canada to work in partnership with WD on IRB opportunities;
• Representing the West in Senior Project Advisory Committee meetings for IRB projects over $100 million, IRB bid evaluations, the development of enhancements to Industry Canada’s IRB policy, and federal initiatives such as the National Shipbuilding Procurement Strategy and the Joint Strike Fighter program; and
• Chairing the Federal and Western Provincial Officials Procurement and IRB Working Group.

Research and Analysis

In 2010–11, WD released six research studies which were funded to increase the understanding of opportunities, issues or challenges that affect Western Canada, including:

• Through the Gateway:  Unlocking Western Canada's Potential for Economic Diversification by Expanding Trade with Asia-Pacific, a study that assesses the extent to which trade with the Asia-Pacific region has resulted in trade diversification in Western Canada, and identifies opportunities and future policy issues; and
• The Green Grail:  Economic Diversification and the Green Economy in Western Canada, a paper that examines the current and potential impact between the green economy (defined as economic activity that is directly related to improving environmental sustainability) and the diversification of the western Canadian economy.  It suggests that green products, services and processes have the potential to both grow and diversify the economy.

Lessons Learned

WD’s engagement in federal government and industry initiatives ensured western regional economic needs and priorities were considered in national decision-making and any potential negative impacts were addressed.  WD needs to continue building connections with key players to increase the awareness of western Canadian interests and perspectives on issues of importance to Western Canada.  In addition, WD needs to be a leader in identifying western Canadian economic priorities, and engage partners to address these priorities.  To this end, WD is developing a Strategic Policy Framework which identifies these priorities and outlines plans to address them.  This formalized framework was identified as a tool that would lead to a more targeted approach to Policy, Advocacy and Coordination activities within and across regions.  It will support targeted research activities, which will enable WD to better assess emerging issues to ensure policies and programs remain relevant for western interests, and improve coordination in managing national and regional economic development priorities to enhance WD’s advocacy efforts.

2.1.5 Program Activity: Canada's Economic Action Plan

Announced in Budget 2009, CAF and RInC are part of Canada’s Economic Action Plan (EAP).  The EAP addressed the short-term economic needs of Canadian communities impacted by the global recession.  CAF provided $1 billion nationally over two years to support projects that created jobs and maintained employment in and around communities that experienced significant job losses and lacked alternative employment opportunities.  RInC invested $500 million in recreational facilities across Canada, creating jobs while renewing, upgrading and expanding recreational infrastructure in Canadian communities.  WD is responsible for the delivery of these programs in Western Canada.

WD also delivered two other EAP initiatives announced in Budget 2009:  BCF-CC ¹⁰ Top-Up and the CBN renewal.

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
245,022	283,122	262,454

2010-11 Human Resources (FTEs)

Planned	Actual	Difference
88	91	-3

Expected Results	Performance Indicators	Targets	Performance Status
Successful community adjustment to mitigate economic crises	Number of jobs created or maintained (CAF)	3,048	Mostly Met (3,244)
	Number of public-private partnerships (CAF)	28	Exceeded (144)
	Number of businesses created, maintained or expanded (CAF)	250	Exceeded (544)
	Number of participants trained (CAF)	846	Mostly Met (815)
	Number of new and improved local infrastructure elements (RInC)	922	Somewhat Met (706)
	Number of jobs created or maintained (RInC)	2,024	Mostly Met (1,933)
	Total infrastructure funding expended (federal, provincial, municipal and private – as a proxy for local economic stimulus) (RInC)	$258.6 million	Exceeded ($293.4 million)

Performance Summary and Analysis of Program Activity

In order to capture the impact of its EAP activities, WD tracks the number of jobs created by both CAF and RInC, the number of business created and the number of participants trained through CAF, as well as the number of local infrastructure elements and the total infrastructure funding expended by all parties through RInC.  It is anticipated that the overall CAF targets of 5,238 jobs created and 1,812 participants trained will be met once all projects have reported final results.  CAF exceeded its targets for 2010–11 for number of public-private partnerships, number of businesses created and number of participants trained. Similarily, because this program has been extended until October 31, 2011, it is anticipated that the overall RInC targets of 3,029 jobs created and 1,384 infrastructure elements will be met.  RInC exceeded its target for total infrastructure funding expended by all parties, which is used as a proxy for local economic stimulus.

Activities

As of March 31, 2011, WD had approved funding of $291.9 million for 314 CAF projects, of which $3.9 million (26 projects) was approved in 2010–11.  WD has also approved funding of $149 million for 718 RInC projects in Western Canada, all of which were approved previously in 2009–10.  WD has committed 100 percent of federal funding allocated for CAF and RInC in Western Canada.

With all program funds fully committed under CAF and RInC, the priority for 2010–11 was to work with clients to ensure projects were being implemented as scheduled, gather the results of completed projects and implement extensions for those projects which required an additional construction season to complete successfully.

CAF projects were required to be materially complete by March 31, 2011, meaning that the project or a substantial part of it had to be ready for use or being used for the purpose intended.  Throughout the last year, WD worked closely with project proponents to help them meet their completion date targets.  As a result, 263 CAF projects (88.6 percent) were materially or administratively complete as of March 31, 2011.  Of the remaining projects, 31 projects will complete by December 31, 2011 using other sources of funding.  (These projects had fully expended WD’s contribution as of March 31, 2011.) The remaining three projects, representing approximately one percent of all CAF projects, are not expected to complete.  (Please refer to the CAF chart, below.)

[text version]

During 2010–11, the Government of Canada extended four key infrastructure programs, including RInC, to October 31, 2011. As of March 31, 2011, 396 RInC projects (64.1 percent) were materially or administratively complete; 199 RInC projects have been extended in Western Canada and will complete on or before October 31, 2011. (Please refer to the RInC chart, below.)

[text version]

In 2010–11, WD delivered BCF in partnership with INFC and the four western provincial governments.  165 BCF-CC Top-Up projects have been approved across the West.  Budget 2009 also provided $15 million annually for the renewal of the national CBN, which provides small businesses with information on government services, programs and compliance requirements.  WD received $4 million annually to deliver this program in Western Canada.

Impact

Cumulatively, CAF has exceeded expected results against four of its five performance targets (business creation, public-private partnerships, training courses developed, and participants trained).  In addition, it is anticipated that CAF will meet its job creation target, as noted above.  Cumulatively, it is anticipated that RInC will meet all three of its performance targets (infrastructure elements, job creation, and total infrastructure expenditure by all parties).  (For complete results, please refer to the table on WD’s public Web site.)

CAF project successes over the past year include job creation across the West in various sectors such as forestry, mining, agriculture and tourism.  Specific examples of CAF success stories are included in WD’s “Success in the West” newsletters.

Under RInC, WD has assisted in the construction of recreational infrastructure in communities across Western Canada, including arenas, swimming pools, gymnasiums, multi-purpose facilities, sports fields and trails.  Specific project examples can also be found in the “Success in the West” newsletters.

Lessons Learned

WD employed a number of different delivery models for CAF and RInC, including the use of a Request for Proposals to quickly identify potential projects, and agreements with other levels of government and non-government third parties.  Given the time pressure and scrutiny the department was under, these alternate delivery mechanisms along with continuous monitoring of project progress, cash flow and program results were critical to ensuring the success of CAF and RInC.  An analysis of the EAP delivery models and lessons learned is currently underway in order for the successful approaches to be applied to other programs.

WD’s ability to effectively deliver major short-term programs was recognized in the 2010 Fall Report by the Auditor General of Canada, which stated that “the government has adequately managed these selected programs by putting in place appropriate management practices and providing programs to eligible recipients in a timely manner.” WD’s assessment of CAF and RInC delivery will inform the delivery of future initiatives.

2.1.6 Program Activity: Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal Services include only those activities and resources that apply across WD and not to those provided specifically to another program activity. This program activity supports all of WD's strategic outcomes. Internal Services includes governance and management support (such as audit services), resource management services (such as human resources and financial management) and asset management services (such as acquisitions).

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
18,420	19,709	27,606

2010-11 Human Resources (FTEs)

Planned	Actual	Difference2
131	198	-67

Commencing in the 2009–10 Estimates cycle, the resources for the Internal Services program activity are displayed separately, rather than being distributed among the other program activities, as was the case in the previous Main Estimates.  This has impacted the comparability of financial and human resources information by program activity between fiscal years.

The increase in actual FTEs is tied to two events that occurred during the fiscal year:

• Increased governance and oversight, financial and human resource management, and technology services, including changes to the departmental project management system for the delivery of EAP initiatives; and
• A revised direct coding policy for operational resources that was implemented April 1, 2009 to improve the accuracy of reporting.

Lessons Learned

As a result of strategic review 2010, the department has also identified improvements to internal services that will also lead to an estimated $675,000 in savings.  Overall, WD’s reallocation proposals may affect up to 11 positions over the next three years.  The department is confident that this can be met through file reassignment or attrition.

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