ARCHIVED - Economic Development Agency of Canada for the Regions of Quebec

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Message from the Minister Responsible for the Agency

To sustain the Canadian economy during the global economic downturn, the Government of Canada tabled Canada’s Economic Action Plan on January 27, 2009. Investment provided for in this plan will boost economic growth, re-establish confidence and come to the assistance of Canadians and their families during this global recession. The plan contains measures to support enterprises and communities, and will help Canada preserve its economic advantages that will make it more competitive and foster long-term economic growth.

Regions and communities, along with small- and medium-sized enterprises—the engines of regional development—are faced with some complex economic challenges. In that context, the Agency’s mandate for economic development of Quebec’s regions is even more timely.

The Government of Canada is determined to support regions and communities in economic diversification and the creation of new opportunities. It also undertakes to support SMEs’ projects for growth, commercialization, innovation and exports by playing a leading role in the creation of conditions conducive to their development.

Through the Community Adjustment Fund, a measure announced in Canada’s Economic Action Plan, the Government will reinforce its support for projects that contribute to the diversification of communities and the growth of Quebec enterprises.

The original version was signed by

Christian Paradis
Minister of Public Works and Government Services and Minister responsible for the Economic Development Agency of Canada for the Regions of Quebec

Message from the Minister of State for the Agency

The publication of the Report on Plans and Priorities provides an opportunity to present our commitments with respect to regional economic development. This year the exercise is particularly timely, taking place as it does during a period of great economic instability.

Such factors as the U.S. economic downturn, tight credit and fluctuating financial markets, combined with structural issues, including the difficulty of hiring a skilled labour force and increased foreign competition, have hit the Quebec economy hard.

Hard economic times mean we have to take action that reflects the current reality in all regions of Quebec. To that end, the Agency will collaborate on the implementation of the Community Adjustment Fund announced in Canada’s Economic Action Plan.

In addition, three program priorities will guide the Agency over the coming years: accelerating regions’ and communities’ adjustment to the new economic context; reinforcing the performance of innovative, competitive SMEs; and implementing the Regional Development Research program.

The Agency will strengthen its support for the completion of projects whose ripple effect will be beneficial for the development of regional economies. With its local and regional partners, and in conjunction with other provincial and federal departments, it will support economic development and thus take part in increasing the vitality of our communities and the competitiveness of our enterprises.

Despite the difficult economic outlook, it is with a great deal of dynamism and confidence in the future that I am beginning my first year as Minister of State. I invite you to read this Report on Plans and Priorities 2009-2010, in which you will find all the commitments made by the Agency in order to respond to the economic challenges of today and the future.

The original version was signed by

Denis Lebel
Minister of State for the Economic Development Agency of Canada for the Regions of Quebec

1 AGENCY OVERVIEW

1.1 Summary information

1.1.1 Raison d’être

Object

Under its Act, which came into effect on October 5, 2005, the object of the Agency is to promote the long-term economic development of the regions of Quebec by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate. In carrying out its object, the Agency shall take such measures as will promote cooperation and complementarity with Quebec and communities in Quebec.

Vision

In the long term, Quebec’s regions and communities will have increased their development capabilities, dynamism and prosperity in a significant, lasting manner for the benefit of their residents.

1.1.2 The Agency in action

The Agency aims to increase communities’ vitality and reinforce the competitiveness of Quebec enterprises and regions. It covers all areas of Quebec through its 14 business offices and its advisors, and acts primarily in relation to small- and medium-sized enterprises (SMEs) and non-profit organizations (NPOs).

The Agency can also count on a network of federally funded development organizations across Quebec: 57 Community Futures Development Corporations located in designated rural regions; 10 Business Development Centres located in peri-urban areas; and 14 Community Economic Development Corporations located in disadvantaged urban areas.

Through its regular programming and programs under mandates from other departments, the Agency offers consulting, guidance and information services, as well as financial assistance.

The Agency’s advisors offer consulting services to entrepreneurs or local and regional stakeholders in economic development, particularly with respect to the Agency’s financial assistance programs; collaborators also likely to provide financial assistance; enterprise startup, productivity, innovation or exports; and potential partnership opportunities. The Agency also offers guidance services. Whether a promoter is looking to fine-tune a business plan, action plan or project, or to put together a financing package and find funding sources, the Agency’s advisors guide him from the design stage of his project through to its execution. The Agency can also provide support to communities by playing an active role in the mobilization, revitalization or development of a given sector or target area.

The Agency funds Info entrepreneurs in Montréal and Ressources Entreprises in Québec – two Canada Business Service Centres located in Quebec– which provide business information services and referrals to specialized resources to entrepreneurs or local and regional stakeholders in economic development.

1.2 Strategic outcomes and Program Activity Architecture (PAA)

To fulfil its mandate, the Agency pursues three strategic outcomes. The following table shows the comprehensive framework of program activities and sub-activities, along with their contribution to these three strategic outcomes. This report presents the plans and priorities in relation to these components. Further information on the Agency’s three strategic outcomes is presented in section 2.

1.3 Planning summary

This section provides an overview of planned human resources (expressed as full-time equivalents) and financial resources (grants and contributions, and operations), along with a summary chart portraying Agency planning for the next three fiscal years. Further information is presented in section 2.

In Canada’s Economic Action Plan, tabled on January 27, 2009, additional funding was announced for support for regions and communities, and for community recreational infrastructure. In this RPP, financial tables and established results targets do not reflect measures announced in the Action Plan.

For each strategic outcome, and each of its program activities, the Agency has established results targets. The scope and duration of the anticipated economic downturn will have an impact on the Agency’s ability to attain those results targets. Indeed, regional economic development depends on local and regional enterprises and economic stakeholders who design and execute projects it supports. The Agency does not have absolute control over the results attained. The economic situation over the coming year and the business opportunities arising from it will influence the quantity, scale, timetable and success rate of projects it supports.

Strategic outcome #1: Dynamic and revitalized communities that have a better socio-economic outlook and are developing their economic activity base

Strategic outcome #2: Presence of conditions conducive to sustainable growth and the competitive positioning of SMEs and regions

Strategic outcome #3: Policies, programs and cooperative actions that strengthen the economy of Quebec regions

1.4 Contribution of priorities to strategic outcomes

The global economic instability which Canada has to address and the challenges associated with it affect all Quebec regions. In this context, the Agency has to help SMEs and communities face the economic downturn.

To that end, the Agency has selected five priorities for Fiscal Year 2009-2010: three program priorities, and two management priorities. These are in line with those presented in the Agency’s Report on Plans and Priorities in 2008-2009.

Program priorities:

• Accelerate regions’ and communities’ adjustment to the new economic context
• Reinforce the performance of innovative, competitive SMEs
• Implement the Regional Development Research program.

Management priorities:

• Continue implementing the Departmental plan for enhancing program effectiveness
• Reinforce performance- and risk-based monitoring, analysis and decision-making.

Priorities represent the most important areas on which the Agency has decided to focus. It plans its priorities and allocates part of its resources to them on the basis of the regions’ new socio-economic challenges, departmental results, and in response to new government priorities. The Agency’s overall intervention is covered in section 2, which presents total planned spending by program activity.

Overview of contribution of priorities to strategic outcome

Notes :
¹ Priority previously committed to – committed to in the first or second fiscal year prior to the subject year of the report; new priority – newly committed to in the reporting year of the RPP.

² Other measures could be drawn up and implemented during the year in support of this priority.

1.4.1 Program priorities

Priority #1: Accelerate regions’ and communities’ adjustment to the new economic context

Since the economic context is particularly difficult, the Agency plans to support and foster the completion of projects likely to respond to the issues specific to Quebec’s regions and communities, in order to mitigate socio-economic adjustment difficulties, renew the entrepreneurial base and facilitate economic diversification by building on their specific assets and potential on the industrial, tourism, cultural or knowledge fronts.

Furthermore, the demographic reality of an aging population also affects entrepreneurs, many of whom are thinking of retiring. In that context, there is a likelihood of enterprises closing down, especially in the regions, if the business succession does not exist or has not yet developed the skills to run these enterprises.

The Agency acts tangibly by drawing up and implementing regional business plans for each of its 14 business offices. These plans take into account the needs, issues and opportunities associated with the socio-economic contexts of the different regions of Quebec, and reflect departmental priorities. The Agency intends to focus its action particularly on the following two fields:

Support for entrepreneurship and for creation or maintenance of viable enterprises

The Agency will help communities through support for entrepreneurship and for the creation, development or maintenance of viable enterprises of local or regional scope. In this way, it will contribute to enriching the entrepreneurial fabric and increasing the number and quality of enterprises and entrepreneurs. On the business succession front, the Agency will look at how it can support entrepreneurs so that business transfers occur successfully.

Increasing communities’ attraction capability through their tourist and
industrial attractions

The Agency plans to increase communities’ attraction capability through tourism outreach and the presence of assets, conditions and community facilities. This will help attract and retain tourists and skilled individuals, and contribute to increased dynamism and prosperity. In particular, the Agency intends to support projects to develop International cruise industry ports of call.

Other measures could be drawn up and implemented during the year in support of this priority.

Through this first priority, the Agency is stepping up its efforts to achieve the outcomes of the Development of communities  program activity.

Priority #2: Reinforce the performance of innovative, competitive SMEs

Through this priority, the Agency is intensifying its efforts to achieve the outcomes of the
Competitiveness of enterprises  program activity, thus aiming for the enhanced competitiveness, on a global scale, of innovative and competitive SMEs.

The Agency will take account of the difficult economic context in analysing projects and may back projects deemed higher-risk. It will act tangibly through regional business plans and it intends to focus its action particularly on the following two areas.

Development of enterprises’ strategic capabilities

Declining export demand, tighter credit and lower projected revenues will affect SMEs’ investment projects. To help SMEs and the regions of Quebec negotiate this period of turbulence, the Agency will continue to support intervention that enables enterprises to enhance their capabilities in terms of management, innovation, adoption of new technology and integration with value chains.

Support for startup of innovative SMEs

The Agency intends to support the startup of innovative enterprises in economic activities deemed strategic for a region’s development in order to consolidate the regions’ economic base.

Other measures could be drawn up and implemented during the year in support of this priority.

Priority #3: Implement the Regional Development Research program

Through this priority, the Agency is stepping up its efforts to achieve the outcomes of the Policies, programs and initiatives program activity.

In a knowledge economy, knowledge is a key factor in competitiveness for regions, communities and enterprises. Development issues are complex, and development stakeholders require a shared understanding of these issues facing them in order to be able to work in a concerted manner and generate tangible, sustainable results.

The goal of the Regional Development Research program is to generate and disseminate knowledge on issues, problems and best practices in regional development. In the current economic context, this program could reinforce capabilities for preparing the future. Its implementation will lead to the sharing of knowledge and collaboration by decision-makers, experts and economic development organizations.

1.4.2 Management priorities

In early 2008, the Agency established a management plan that contributes to fine-tuning certain business practices to ensure sound management of public funds and report its results more effectively. The management priorities for 2009-2010 stem from this management agenda. They are also in line with those mentioned in the Agency’s Report on Plans and Priorities 2008-2009, since their implementation plans were spread over more than one year.

Priority #4: Continue implementing the Departmental plan for enhancing program effectiveness

The Agency intends to continue implementing its Departmental plan for enhancing the delivery of grants and contributions. This plan follows up on the recommendations of the Blue Ribbon Panel report on increasing transparency in administrative processes, reducing application processing times, reducing the administrative burden on clientele, standardizing procedures across departments and improving inter-departmental coordination and collaboration. The Agency was designated as one of the vanguard departments invited to determine the measures the Government of Canada should take in response to the report. To implement these measures, following the report’s recommendations, the Agency dedicated resources which come from all of its sectors.

In line with the sustained effort it made in 2008-2009, the Agency reiterates its commitment to alleviating the administrative burden on project promoters and itself by integrating risk management in the delivery of grants and contributions.

Priority #5: Reinforce performance- and risk-based monitoring, analysis and decision-making

The Agency intends to continue its commitment to the progressive, integrated implementation of several government-wide initiatives associated with enhancement of expenditure and results management, such as the Management Accountability Framework and the Management, Resources and Results Structure policy. Implementation began in 2007-2008 with Phase 1, aimed at reinforcing management mechanisms by establishing, for instance, a performance management framework and corporate risk profile.

The Agency carried out Phase II in 2008-2009 by improving the reliability of information and establishing experimental result targets. The introduction of new tools to facilitate collection and monitoring indeed led to an improvement in the quality of performance information. This is a commitment that will continue to require some effort over the next few years.

In 2009-2010, the Agency will initiate Phase III by devoting more effort to monitoring and analysis of results, expenditures and risk. By planning regular, more systematic reviews of costs associated with the results obtained, managers will be able to make more enlightened decisions and contribute to enhancing the Agency’s overall performance.

1.5 Analysis of risks and challenges

Economic cycles affect the Agency’s ability to fulfil its object of economic and regional development. Over the past decade, the Quebec economy posted sustained growth. This created an environment conducive to the development of enterprises, regions and communities, thereby facilitating the achievement of results by public regional development organizations. In that economic context where external factors were favourable, the Agency was able to guide Quebec’s regions and communities to increase their contribution to that economic growth.

Like most of the world’s economies, however, growth prospects for the Quebec economy are deteriorating. The U.S. recession, disturbances on global financial markets and declining consumer confidence are rapidly changing the Quebec economic context. In the short term, Quebec has to address some significant challenges: decreased export demand; tighter credit; and slower growth in consumer spending. This change in outlook has translated into strong downward movement in the growth rate, which should stand at 0.8% in 2008 and 0.6% in 2009, and a deteriorating labour market.

First of all, the manufacturing sector, which had been experiencing difficulties since the middle of the decade, will be affected. Quebec has one of North America’s largest manufacturing industries, accounting for 19.2% of gross domestic product (GDP). As this industry is highly dependent on the U.S. market (averaging 81% of international exports between 2004 and 2008), it is particularly exposed and vulnerable to the U.S. recession. But the impact will be felt to varying degrees depending on the subsector. Those already experiencing competitiveness problems associated with competition from emerging nations will be especially hard hit. Overall, the economic downturn will make it harder to implement the changes needed in the manufacturing industry, particularly with respect to labour productivity growth.

Second, access to funding by enterprises and consumers will be negatively affected by the turbulence in global financial markets that leads to tighter credit conditions from Canadian banks. This factor, along with the market downturn, will lead to the cancellation or reversal of several investment decisions. The Agency can already see a repositioning associated with this difficulty, as experienced by the enterprises it deals with.

Finally, Quebec domestic demand will also be hit by the slowdown in consumer spending (60% of Quebec’s GDP). In fact, the economic context is prompting households to adjust their consumption of durable goods downward. This deceleration will be all the more marked, the deeper the contraction in the labour market is.

In the context of a significant economic downturn, such medium-term economic and regional development goals as enhancing SMEs’ productivity, transitioning to a high value-added manufacturing sector, innovation, and reinforcing the resilience of economically vulnerable communities pose even more demanding challenges.

Faced with rapid changes in all these external economic factors, affecting to varying degrees the economy of the regions of Quebec, the Agency’s challenge will be to meet effectively the needs that emerge from Quebec enterprises, regions and communities. Overall, this significant downturn will force economic stakeholders to revise their strategies. In 2009-2010, the Agency will therefore be especially proactive in its interpretation of challenges and opportunities to be grasped, and in how it can help the communities and SMEs it serves.

1.6 Expenditure profile

Spending Trend
(in thousands of dollars)

The Agency plans a gradual reduction in its spending over the next few years. Expenditures will total $247.5 million in 2011-2012, including $204.3 millions in grants and contributions. This decrease is primarily attributable to the termination of temporary funding for specific projects, such as the 400th anniversary of Québec and the Chantier de l’économie sociale Trust, and the expiry of programs under mandates for which the Agency received dedicated funding (Infrastructure Canada Program [ICP]and Canadian Apparel and Textile Industry Program [CATIP] – CANtex component). But planned grant and contribution spending associated with permanent funding of the Agency’s regular programs remains quite steady (down 5% between 2005-2006 and 2011-2012).

1.7 Voted and statutory items

The Main Estimates 2009-2010 amount of $287.4 million is $41,000 higher than the 2008-2009 figure.

The table does not reflect measures announced in the 2009 Budget, Canada’s Economic Action Plan.

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