ARCHIVED - Atlantic Canada Opportunities Agency - Report

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Minister's Message

The Government of Canada remains committed to strengthening our country’s national economy and laying the foundation for long-term economic prosperity for Canadians from coast to coast to coast.

Our government recognizes the success of the Atlantic Canada Opportunities Agency (ACOA) in fostering economic growth in Atlantic Canada. For nearly 25 years, the Agency has worked with its many partners to ensure that businesses and communities throughout the region receive the support they need to grow and succeed.

I am certain that ACOA will remain a key driver of Atlantic Canada’s long-term economic success.

It is my pleasure to present ACOA’s Report on Plans and Priorities, which outlines the Agency’s activities and goals for fiscal year 2011-2012.

 

Minister of State's Message

The Atlantic Canada Opportunities Agency (ACOA) has a proven track record of providing timely, targeted support that responds to the needs and concerns of businesses and communities throughout Atlantic Canada.

Looking forward, ACOA will continue to pursue its mandate to help create a prosperous, innovative and competitive Atlantic Canada by ensuring that the region’s communities and small businesses have access to programs and services that help them become more diversified, productive and sustainable.

In 2011-2012, the Agency will continue to work with provincial governments, businesses and academia to increase the volume of research and development conducted in Atlantic Canada; and it will implement initiatives to help commercialize technology developed in the region.

In line with the Global Commerce Strategy, ACOA will work with its partners in promoting Atlantic Canada as a competitive business partner and a valuable link in the global supply chain. The Agency will also provide support to Atlantic businesses as they enter and expand their presence in international markets.

ACOA will continue to advocate for the region’s needs in Ottawa to ensure that federal programs respond to the requirements of communities and businesses throughout Atlantic Canada’s economically, linguistically and culturally diverse region. The Agency will focus on new technology-based growth sectors and the competitiveness of resource industries. It will also foster collaboration on the Atlantic Energy Gateway to facilitate the development of Atlantic Canada’s clean and renewable energy sector.

In the coming fiscal year and beyond, ACOA will continue to fulfill its mandate to help Atlantic Canada realize its full economic potential, using innovative and effective approaches that evolve in step with the needs of this region.

Section 1: Agency Overview

1.1 Raison d'être and Responsibilities

Established in 1987, ACOA is the federal department responsible for the Government of Canada’s economic development efforts in the provinces of New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador.

ACOA’s head office is in Moncton, New Brunswick. Offices are located in all four provincial capitals in Atlantic Canada, each led by a regional vice-president. The Agency also provides services via a range of local field offices throughout the four provinces. In addition, through its Ottawa office, ACOA ensures that Atlantic Canada’s interests are reflected in the policies and programs developed by other departments and agencies of the federal government. The Agency provides services in both official languages, as required.

Although the Agency’s policies and program tools have changed since its inception, the overall goal remains constant. ACOA helps the Atlantic region to realize its full economic potential in terms of productivity, competitiveness and growth. Full economic potential can be achieved by identifying and addressing structural challenges in the economy, helping communities and businesses, including small and medium-sized enterprises (SMEs), to overcome barriers, and finding new opportunities for growth. ACOA is committed to helping the region make the transition to a more innovative, productive and competitive economy.

1.2 Contribution to the Federal Sustainable Development Strategy

ACOA is a participant in the Federal Sustainable Development Strategy (FSDS). The FSDS represents a major step forward for the Government of Canada by including environmental sustainability and strategic environmental assessment as an integral part of its decision-making processes. ACOA is implicated under Theme I: Addressing Climate Change and Air Quality and under Theme IV: Shrinking the Environmental Footprint – Beginning with Government. The Agency’s contributions are further explained in Sections 2, 3 and 4.

For additional details on ACOA’s activities to support sustainable development, refer to the Agency’s Statement of Contribution to the Federal Sustainable Development Strategy, and see the Section 3 supplementary table “Greening of Government Operations.”

For complete details on the Federal Sustainable Development Strategy, go to the Environment Canada website.

 

1.3 Strategic Outcome and Program Activity Architecture

The diagram below illustrates ACOA’s strategic outcome and Program Activity Architecture (PAA). The Agency’s program activities and program sub-activities are aligned with the strategic outcome of a competitive Atlantic Canadian economy. The PAA reflects the results of policy research and analysis, periodic review of program effectiveness, ongoing dialogue with stakeholders in the region, and the priorities and direction of the Government of Canada.

Strategic Outcome: A Competitive Atlantic Canadian Economy

	Program Activities 1	Program Sub-activities
	Enterprise Development	Innovation Entrepreneurship and Business Skills Development International Business Development 2 Financing Continuum
	Community Development	Community Mobilization Community-based Business Development Community Investment Infrastructure Programming
	Policy, Advocacy and Coordination	Policy Advocacy Coordination
	Internal Services	Governance and Management Support Resource Management Services Asset Management Services

The following icons are used throughout the RPP to indicate ACOA activities that contribute to these FSDS themes:

	Theme I: Addressing Climate Change and Air Quality
	Theme IV: Shrinking the Environmental Footprint – Beginning with Government

1.4 Planning Summary

Financial Resources ($ millions)

2011–12	2012–13	2013–14
317.9	315.9	314.4

Human Resources (Full-time Equivalents, or FTEs)

2011–12	2012–13	2013–14
711	711	711

Strategic Outcome : A competitive Atlantic Canadian economy.

Performance indicator	Five-year target (2008-2009 through 2012-2013)
Increase in Atlantic GDP for every dollar of ACOA expenditure in direct support of business	$4.50

Program Activity 3	($ millions)				Alignment with Government of Canada Outcomes
	Forecast Spending 2010–2011	Planned Spending4
		2011–2012	2012–2013	2013–2014
Enterprise Development	192.0	170.2	178.4	179.0	Strong Economic Growth
Community Development	164.5	100.4	90.2	88.1
Policy, Advocacy and Coordination	15.0	11.4	11.4	11.4
Total	371.5	282.0	280.0	278.5

As demonstrated in the above table, the majority of Canada Economic Action Plan (CEAP) initiatives end March 31, 2011. For fiscal year 2011-2012 and onward, planned spending returns to pre-CEAP levels.

Program Activity	($ millions)
	Forecast Spending 2010–11	Planned Spending
		2011–2012	2012–2013	2013–2014
Internal Services	43.4	35.9	35.9	35.9

1.4.1 Contribution of Priorities to Strategic Outcome

Operational Priority	Type5	Link to Strategic Outcome	Description
Focus programs and services on initiatives that advance the levels of productivity and competitiveness among entrepreneurs, SMEs and communities across the region. Increased emphasis will be placed on enhancing the productivity of Atlantic Canadian businesses.	Ongoing	A competitive Atlantic Canadian economy (Program activities: Enterprise Development; Community Development; Policy, Advocacy and Coordination)	Why this is a priority: As Atlantic Canada continues to feel the impact of the global economic crisis, strategic investment supporting the productivity and competitiveness of the region’s SMEs and communities will be critical to their continued viability and growth.  Some approaches to this priority: Provide strategic assistance to SMEs through support for lean manufacturing initiatives, technology acquisitions, and activities to develop the business skills needed to grow the business.  Promote entrepreneurship initiatives that foster growth and lead to sustainable SMEs in Atlantic Canada. Ensure that Atlantic Canadians have continued access to timely and accurate business information that supports growth. Place greater emphasis on higher impact projects within the Enterprise Development and Community Development program activities. Enhance ACOA’s policy research agenda to ensure more effective and targeted research, and better value for investment.
Provide leadership in helping businesses and communities in Atlantic Canada to succeed in a global marketplace. Special emphasis will be placed on assistance to businesses seeking markets for their R&D outputs and focusing ACOA support on projects offering the greatest potential economic impact.	Ongoing	A competitive Atlantic Canadian economy (Program activities: Enterprise Development; Community Development; Policy, Advocacy and Coordination)	Why this is a priority: To ensure alignment with the Government of Canada’s Global Commerce Strategy and the related Americas Strategy, and to promote the Atlantic Gateway as the preferred access to the North American market. Some approaches to this priority: Identify strategies that will allow Atlantic Canadian businesses and organizations to connect with international business opportunities, and that allow communities to remain competitive through efforts such as investigating more effective approaches to local economic development. Explore new markets, new industry sectors and innovative methods to maximize benefits stemming from international business activities.
Build on the Agency’s success in engaging stakeholders and facilitating partnerships to increase innovation capacity within Atlantic Canada. Focus on the commercialization of R&D outputs through the Agency’s Innovation and International Business Development sub-activities.	Ongoing	A competitive Atlantic Canadian economy (Program activities: Enterprise Development; Policy, Advocacy and Coordination)	Why this is a priority: Innovation and commercialization are critical to economic competitiveness and growth and will facilitate long-term growth in the region. Some approaches to this priority: Continue to encourage greater collaboration between business and academia to increase the innovation capacity within Atlantic Canada. Increase activity in, and build capacity for, R&D, technology adoption/adaptation and skills development within the region’s SMEs through new funding under AIF and progress with ongoing AIF projects. Advance the Agency’s Commercialization Strategy to maximize the benefits of the Agency’s investments in innovation and to provide direction on the commercialization of R&D outputs.
Contribute to the delivery of federal priorities and commitments identified through the federal budget, initiatives arising from the Strategic Review and other strategies.	New	A competitive Atlantic Canadian economy (Program activities: Enterprise Development; Community Development; Policy, Advocacy and Coordination; Internal Services)	Why this is a priority: As the lead federal department in Atlantic Canada managing economic development programming, ACOA administers, manages and supports federal priorities designed to address economic challenges and opportunities. Some approaches to this priority: Identify responsibilities and initiatives presented within Budget 2011 to pursue opportunities that deliver results to Atlantic Canadians. Implement required adjustments identified in the federal budget that respond to the Agency’s Strategic Review process.

Management Priority	Type 6	Link to Strategic Outcome	Description
Continually improve the Agency’s ability to provide excellent advice to government and excellent service to Canadians through Public Service Renewal.	Ongoing	A competitive Atlantic Canadian economy (Program activities: Internal Services; Enterprise Development; Community Development; Policy, Advocacy and Coordination)	Why this is a priority: To support and focus on the priorities identified in the Seventeenth Annual Report to the Prime Minister on the Public Service of Canada. ACOA’s approach to this priority: Led by its deputy minister, ACOA will continue its engagement in its multi-year effort to deliver on public sector renewal commitments by focusing on integrated planning, recruitment, employee development and renewing the workplace.
Support more effective and efficient decision making by creating and maintaining efficiencies in the delivery of services to internal and external clients.	New	A competitive Atlantic Canadian economy (Program activities: Internal Services; Enterprise Development; Community Development; Policy, Advocacy and Coordination)	Why this is a priority: The Agency must continue to deliver its high standard of services to internal and external clients within the current environment of reduced resources – both human and financial. The Agency needs to analyze the interrelationships between its activities and create efficiencies across these activities and across the various units and regions, for better and more efficient decision making. ACOA’s approach to this priority: Identify and assess opportunities to streamline internal and external services and realize greater efficiencies for resources invested.  Ensure management goals are measurable and achievable.
Facilitate senior management decision making by managing information in such a way as to ensure the availability of timely, accurate and organized information.	New	A competitive Atlantic Canadian economy (Program activity: Internal Services)	Why this is a priority: Management Information has been identified as a key risk for ACOA. Risk analysis has pointed out a critical need for senior management to have access to timely, accurate and well-organized information in order to provide strategic direction and make critical business decisions regarding Agency operations. ACOA’s approach to this priority: Ensure that senior management has readily accessible, comprehensive, targeted data to understand the financial and program health of the organization and to support decision making.
Cultivate a culture that upholds the principles of values and ethics within the Public Service of Canada in order to provide service with integrity and maintain the confidence and trust of the public.	Previously committed	A competitive Atlantic Canadian economy (Program activities: Internal Services; Enterprise Development; Community Development; Policy, Advocacy and Coordination)	Why this is a priority: The Agency’s senior management acknowledges that it is fundamentally important for all employees to understand and identify with the Public Service of Canada’s values, which are Respect for Democracy, Respect for People, Integrity, Stewardship, and Excellence. Some approaches to this priority: ACOA will continue to carry out its implementation of the Values and Ethics Strategy. Through this strategy, management will ensure that values are embedded in the Agency’s culture and that the necessary infrastructure is in place to strengthen and build on the sound practices already established. The Agency will initiate several activities supporting its own Values and Ethics Code.

 

1.5 Risks and Challenges

1.5.1 ACOA’s Operating Environment

ACOA operates within a constantly changing regional, national and global economic landscape. As the economy changes, the Agency faces risks in providing appropriate economic development programming and initiatives responding to current and emerging influences. Being proactive in identifying risks and opportunities requires the Agency to anticipate and assess external economic factors that could affect the design and delivery of its programs and services and the achievement of strategic outcomes. Additionally, ACOA must identify factors and risks which could adversely affect its ability to effectively manage internal operations. As strategic risks are identified, the Agency designs and implements mitigating measures to reduce the impact and likelihood of these risks.

The following provides an overview of Atlantic Canada’s economic outlook and risk analysis.

1.5.2 Economic Outlook

Atlantic Canada’s economy is emerging from the recession. The economic expansion in 2010 is due in some measure to public stimulus packages rolled out by the federal and provincial governments and by strong domestic demand. The construction sector will be a key driver of economic growth this year as spending on public infrastructure continues in all four Atlantic provinces. With improving labour market conditions, consumers are feeling more confident and have increased spending, with retail sales increasing by 5.5%⁷ in the first eight months of 2010 over the same period in 2009.

For the nine months ending September 2010, employment in Atlantic Canada increased by 0.9%⁸ over the same period in 2009, representing a gain of 9,700 jobs. The unemployment rate averaged 10.6% for the first nine months of 2010, down from 10.8% for the same period in the previous year.

In the first eight months of 2010, exports from Atlantic Canada were 9%⁹ higher than in 2009, an increase mainly due to shipments of refined petroleum products. The value of refined petroleum exports surged as energy prices increased significantly compared to 2009.

According to the International Monetary Fund¹⁰, the global economic recovery is expected to moderate somewhat in 2011. Emerging and developing countries are experiencing strong economic growth, but the recovery in advanced economies is expected to be more modest as they face the challenge of rectifying their fiscal imbalances without sending their economies back into recession. In the United States, the same outlook prevails. While the U.S. economy regained some of the momentum in the third quarter of 2010 that it had lost in the second quarter, gross domestic product (GDP) growth is expected to slow in 2011.¹¹ The pace of growth in industrial production is expected to moderate given that inventory levels are more aligned with sales, consumer confidence remains low because of high unemployment, the housing sector remains troubled, and fiscal stimulus has begun to wane.

According to most private-sector forecasters’ assessments,¹² economic growth in Atlantic Canada is also expected to moderate in 2011. The economic expansion will be hampered by the slow pace of the global recovery, waning construction activity and the fiscal position of governments in the region.

The pace of the economic recovery will be constrained by the fiscal positions of all four provinces. Newfoundland and Labrador is, relatively, in the strongest position; its actual deficit in 2009-2010 came in below the budget estimate, despite a hefty drop in gross domestic product (GDP). By comparison, the New Brunswick government faced a shortfall in 2010-2011 of almost $750 million.

Investment activity in the Atlantic provinces is expected to decline in 2011, with the exception of Newfoundland and Labrador. Public infrastructure program spending is fading, and activity on energy projects such as the Deep Panuke natural gas project is either completed or winding down. Residential activity, which helped lift economic growth in 2010, is also expected to fall. With no large new investment projects on the horizon and residential activity cooling down, construction activity is expected to decline in 2011.

1.5.3 Risks

Risk analysis recognizes that ACOA must operate in an environment where both external and internal risks and opportunities impact the Agency’s policies and programs.

External Factors

The major risks for Atlantic Canada’s economic outlook are mostly external. While the global economy continues to recover, the strength of the recovery remains highly uncertain because private domestic demand has been weak. In most advanced economies, the current recovery has been based on policy stimulus packages and the rebuilding of inventories. In the short term, advanced economies face the challenge of reducing stimulus packages to rectify their fiscal imbalances without sending their economies back into recession, especially if private domestic demand does not strengthen.

While the fear of a double-dip recession in the United States has waned, there are still concerns that the U.S. economy could end up in a period of weak growth over the short term. After real GDP expanded by 3.7%¹³ at annual rates in the first quarter of 2010, the U.S. economy lost a lot of momentum as real GDP growth slowed to 1.7% at annual rates in the second quarter. Slower economic growth in the United States would translate into weaker exports since most Atlantic exports are destined for American markets. Furthermore, there is also a risk of the U.S. dollar depreciating further against the Canadian dollar. The Federal Reserve has instituted monetary policies that could push the value of the U.S. dollar lower and pose additional challenges to the Atlantic region’s exporters.

Internal Factors

In the case of internal factors, the risks and mitigations associated with a key activity of the Agency – the funding of projects – are identified and evaluated through the application of a robust, comprehensive client-project risk rating system before funding is approved.

There are, however, issues that have the potential, should satisfactory mitigation not be achieved, to adversely affect the ability of the Agency to fulfill its objectives. These are identified as key risks and are included in the Corporate Risk Profile – the primary component of the ACOA Framework for the Management of Risk.

By providing an independent analysis, the Agency’s Departmental Audit Committee offers guidance to ACOA’s senior management by reviewing key risks and the Agency’s risk arrangements.

Key Risks

The Agency’s key risks are determined through an internal review with senior management, interviews with program and policy staff, and an analysis of related documentation and information. Key risks are approved by ACOA’s Executive Committee and are monitored constantly to ensure implementation of appropriate mitigation measures.

Key Risk	Risk Mitigation Measures	Linkage to PAA 14
Management Information Risk The risk that senior management does not have readily accessible, comprehensive, targeted data to understand the financial and program health of the organization and to support decision making.	The Agency has undertaken significant steps in mitigation. Progress has been made in identifying key performance indicators and in strengthening the planning process for the identifying targets and associated results. The most pronounced mitigation measure is the development and application of the executive dashboards, which contain relevant information and data for monitoring the Agency’s health and for decision making by senior management. Additionally, specific risk tolerances were identified and applied.	Enterprise Development; Community Development; Policy, Advocacy and Coordination
People Management Risk The risk that ACOA’s talent agenda (leadership, recruitment, training, promotion, work-life balance, competencies) does not adequately sustain the workforce required to carry out the Agency’s mandate in the future, and that the Agency experiences a significant loss of corporate memory and has difficulty implementing change management.	The Agency has completed mitigation measures such as a resource utilization review, integration of HR and business plans, mandatory values and ethics training, targeted learning plans for all employees and leadership initiatives. The Agency continues to monitor the results from these measures to determine whether expectations were met and the level of risk mitigated satisfactorily.	Enterprise Development; Community Development; Policy, Advocacy and Coordination
Technology Risk The risk that information technology (IT) in the medium term (two to four years) will not have the capacity to provide development and support for a suite of modern, compatible tools for clients and Agency personnel, thereby leading to potential inefficiencies. There is also financial exposure for a large capital funding burden in one fiscal year due to tools and systems needing replacement at the same time.	The Agency has created a senior management committee to identify and prioritize current and long-term products and services associated with information technology that are necessary for Agency operations. Financial and human resource funding to support these requirements will be identified and decided upon.	Enterprise Development; Community Development; Policy, Advocacy and Coordination; Internal Services

1.6 Expenditure Profile

Forecast and planned spending amounts by program activity for the period 2010-2011 through 2013-2014 are provided in section 1.4.

For fiscal year 2011-2012, the Agency’s available funding in the Main Estimates is $317.9 million. This represents a decrease of $97.0 million from forecast spending in 2010-2011. This decrease is the result of a number of normal business practices and procedures, including the sunsetting of funding of initiatives under Canada’s Economic Action Plan:

• $55.1 million – Community Adjustment Fund
• $24.3 million – Recreational Infrastructure Canada (RInC)

Other key adjustments include:

• an $11.5 million decrease that was available in 2010-2011 due to excess collections of repayable contributions, of which $9.1 million was reprofiled from 2008-2009;
  
• a $4.6 million decrease from what was available in 2010-2011, which includes operating budget carry forward of $4.0 million, personnel costs, and ministerial office budget reductions of $0.6 million;
  
• a $0.7 million reduction in operating funding for the delivery of large-scale and community-based infrastructure projects under the Building Canada Fund – Communities Component;
  
• a $0.6 million reduction in operating funding for the Economic Development Initiative under the Roadmap for Canada’s Linguistic Duality 2008-2013: Acting for the Future; and
  
• a $0.2 million reduction due to cost efficiencies.

For 2011-2012 through 2013-2014, planned spending is approximately the same:

• From 2011-2012 to 2012-2013, funding decreases by $2.0 million, mainly due to reduced funding in the administration of the Economic Development Initiative under the Roadmap for Canada’s Linguistic Duality 2008-2013: Acting for the Future, and partly due to the sunsetting of funding under the Canada Strategic Infrastructure Fund.
• From 2012-2013 to 2013-2014, funding decreases by $1.5 million, due to the sunsetting of the Economic Development Initiative under the Roadmap for Canada’s Linguistic Duality 2008-2013: Acting for the Future ($2.2 million), offset by the ending of a $0.7 million transfer to the Department of Foreign Affairs and International Trade in support of the North American Platform Program Partnership initiative.

1.6.1 Planned Spending by Program Activity 2011-2012

[D]

1.7 Estimates by Vote

For information on the Agency’s organizational votes and/or statutory expenditures, see the 2011-2012 Main Estimates publication. An electronic version of the document is available on the website of the Treasury Board of Canada Secretariat.

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