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Minister’s Message

Canada’s economic performance remains the most stable among the G7 countries, despite ongoing volatility in global markets. Our Government’s solid economic, financial and fiscal foundations helped to underpin this position of strength, and we remain prepared to respond in a flexible, pragmatic manner should external pressures threaten our economy.

In 2011, Canadians gave our government a clear mandate to continue its successful work to create jobs and stimulate the economy. In 2012-13, Phase II of Canada’s Economic Action Plan – A Low-Tax Plan for Jobs and Growth – will follow through on this commitment by supporting initiatives that continue to drive job creation and economic activity and provide support to people and communities throughout Canada.

Atlantic Canada is on the cusp of tremendous opportunities that will be generated by the recently announced shipbuilding work to be carried out under the National Shipbuilding Procurement Strategy, which is expected to create thousands of new jobs and provide significant opportunities for businesses throughout the region.

In 2012-13, the Atlantic Canada Opportunities Agency (ACOA) will be key to delivering on our Government’s commitments in Atlantic Canada and ensuring that the region’s small and medium-sized businesses are well positioned to participate in, and benefit from, activity related to the shipbuilding work and other major projects in the region, such as the development of Atlantic Canada’s clean and renewable energy sector.

Additionally, ACOA will continue to work with Transport Canada to advance the Atlantic Gateway by promoting Atlantic Canada as a preferred business partner and the gateway to the North American market.

I am pleased to present ACOA’s 2012-13 Report on Plans and Priorities, which outlines the Agency’s objectives for continued economic growth and prosperity in this region.

Minister of State’s Message

Our Government, through ACOA, provides real, made-in-Atlantic Canada solutions that respond to the region’s needs and build on its strengths.

In the coming years, significant opportunities will unfold for Atlantic Canada as important new initiatives, such as the National Shipbuilding Procurement Strategy and the development of the region’s hydroelectric capacity, get under way.

Under our Atlantic Shipbuilding Action Plan, we will work with partners and stakeholders, including other federal departments, other levels of government, private-sector organizations and industry, to ensure that Atlantic Canada’s small and medium-sized businesses are prepared to capitalize on the enormous potential created by the shipbuilding strategy.

In 2012-13, ACOA will focus on initiatives that improve the productivity and competitiveness of the region’s small and medium-sized enterprises by promoting enhanced business skills as well as the use of new technologies and the commercialization of local research and development.

The Agency will continue to support the development of an Atlantic Energy Gateway to promote the region’s capacity for clean and renewable energy, including energy produced from wind, biofuel and tidal sources.

In the coming year, our Government will continue to work with communities and provincial governments to develop economic opportunities at a local level. The Agency will support resource-based industries, and the rural economies that depend on them, by investing in activities that improve the competitiveness of the region’s forestry industry, diversify its agricultural sector, increase the sustainability of the fishery and further advance technologies related to mining and energy.

In 2012 and beyond, ACOA will continue to identify opportunities for Atlantic Canada’s economic advancement and provide efficient, effective programs and services that are aligned with our Government’s focus on operations that deliver results to the people of Atlantic Canada.

Section I: Organizational Overview

Raison d’être

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. Regional offices are located in all four provincial capitals in Atlantic Canada, each led by a vice-president. The Agency also provides services via a range of local field offices throughout the four provinces. 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.

Although the Agency’s policies and program tools have evolved since its inception, the overall goal remains constant. ACOA remains dedicated to helping the Atlantic region realize its full economic potential in terms of productivity, competitiveness and growth. This is achieved by addressing structural changes in the economy, helping communities and businesses to overcome challenges, and finding new opportunities for growth. ACOA is committed to helping the region make the transition to a more innovative, productive and competitive economy.

Strategic Outcome and Program Activity Architecture

The diagram below illustrates ACOA’s strategic outcome – a competitive Atlantic Canadian economy (darkly shaded box) – and its Program Activity Architecture (PAA). The PAA is based on the results of policy research and analysis, the periodic assessment of program relevance and performance, ongoing dialogue with stakeholders in the region, and the priorities and directions of the Government of Canada. ACOA’s PAA for 2012-13 comprises four program activities (lightly shaded boxes) and 13 program sub-activities (white boxes).

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Organizational Priorities

All organizational priorities support the Agency’s strategic outcome: A competitive Atlantic Canadian economy. This outcome reflects the Agency’s legislative purpose to enhance the growth of earned incomes and employment opportunities in Atlantic Canada.

Priority	Type2	Program Activity
Respond to the unique economic development needs of both rural and urban areas of Atlantic Canada.	New	Enterprise Development Community Development Policy, Advocacy and Coordination
Why is this a priority? The diverse culture, geography and economic conditions existing throughout the Atlantic provinces necessitate unique responses to economic needs. These are especially evident in the unique differences and the existing relationships between rural and urban areas. In supporting a competitive Atlantic Canadian economy, all stakeholders must collaborate to ensure that strategies developed in response to unique needs are complementary and contribute to a stronger region. Plans for meeting the priority Continue to work closely with provincial partners to develop programming that meets the unique needs of rural areas that are especially vulnerable to the out-migration of skilled workers and an aging population. For example, ACOA continues to work with its provincial government partners to mitigate economic hardship in northern New Brunswick and to prepare for growth opportunities in Labrador. Use resources available within the Community Development Program Activity (e.g. Community Business Development Corporations, the Business Development Program, and various skills development initiatives) to assist rural SMEs in identifying and preparing for new opportunities. Undertake and support research and analysis to assess the specific needs of these diverse areas and to advocate for responses that are complementary and well-balanced. Work closely with public- and private-sector partners to assist SMEs in both rural and urban areas so that the entire region can benefit from upcoming major projects. For example, the Atlantic Shipbuilding Action Plan includes measures to help SMEs throughout Atlantic Canada prepare for new business opportunities arising directly or indirectly from new federal shipbuilding activities.
Priority	Type	Program Activity
Ensure that Atlantic Canada’s labour force has the appropriate mix of skills, experience and certification required to address emerging opportunities.	New	Enterprise Development Community Development Policy, Advocacy and Coordination
Why is this a priority? The growing shortage of skilled labour and specific skill sets is the most urgent risk to Atlantic Canada’s long-term economic growth. Strengthening the management capacity of Atlantic Canada’s SMEs is crucial for improving business productivity and survival rates. Helping Atlantic Canadian SMEs to develop management skills and address the skills gap in their workers will prepare those businesses to pursue new opportunities arising from major projects within the region. Plans for meeting the priority Work closely with provincial partners, industry, associations and stakeholders to address the retention of existing workers, the attraction of new workers and the development of a highly skilled available labour force. Capitalize on opportunities for concerted, regional approaches to economic development, where policies and initiatives benefit the entire Atlantic region. Emphasize the importance of business skills as a means of helping companies to become more productive and more successful in recruiting and managing human resources. Undertake and support skills-related research and analysis, particularly as it relates to shipbuilding, the Atlantic Gateway, and other major projects and initiatives. Continue to focus on business skills development in program activity areas.
Priority	Type	Program Activity
Contribute to the delivery of federal priorities and commitments identified through legislation, the federal budget and other authorities.	New	Enterprise Development Community Development Policy, Advocacy and Coordination Internal Services
Why is this a priority? Working closely with other federal departments, ACOA administers, manages and contributes to federal priorities that address economic challenges and opportunities. ACOA remains committed to improving operational efficiency across government and providing effective service to Canadians. Plans for meeting the priority Deliver programs and services that support the Government of Canada’s commitment to job growth and that focus on operations that deliver results to Atlantic Canadians. Work closely with partners and stakeholders throughout Atlantic Canada to facilitate the effective delivery of federal programs in both rural and urban areas. Ensure that activities are complementary to other existing programs and relevant to specific needs.
Priority	Type	Program Activity
Focus ACOA’s programs and services on initiatives that will advance the productivity of Atlantic Canadian businesses, thereby improving the competitiveness of the region’s SMEs and communities, and enabling them to capitalize on major projects and opportunities in the region.	Ongoing	Enterprise Development Community Development Policy, Advocacy and Coordination
Why is this a priority? The global economic crisis has added to an already-challenging situation in Atlantic Canada. It has created significant pressures within natural resource sectors that have traditionally driven the regional economy, including forestry, agriculture and fisheries. Strategic investments in areas such as innovation, skills development and exporter training are essential to support the productivity and competitiveness of SMEs as well as the continued vitality of the region’s communities. Such investments are critical to their efforts to identify and capitalize on emerging opportunities. Plans for meeting the priority Place greater emphasis on higher impact projects within the Enterprise Development and Community Development program activities. Provide strategic assistance to support SMEs in improving their operational efficiency and competitiveness. Such efforts may include innovation activities and the acquisition of technology and business skills. Promote entrepreneurship initiatives that foster growth and lead to sustainable SMEs in Atlantic Canada. Ensure that Atlantic Canadians in all areas of the region have access to timely, accurate business information. Enhance ACOA’s policy research agenda to provide effective research and better value for investment. Work with provincial and private-sector partners throughout Atlantic Canada to identify an effective approach to addressing the emerging skills deficit in the region. In light of major projects under way or about to begin within the region – specifically in the shipbuilding and renewable energy sectors – ACOA will collaborate with other stakeholders to help Atlantic Canadian SMEs prepare for new opportunities. This will result in these SMEs having the skill sets, operational efficiency and capacity required to seize opportunities that arise.
Priority	Type	Program Activity
Increase the innovation capacity within Atlantic Canada by building on the Agency’s success at engaging stakeholders and facilitating partnerships. Focus on the commercialization of research and development (R&D) outputs.	Ongoing	Enterprise Development Policy, Advocacy and Coordination
Why is this a priority? Innovation and commercialization are critical to economic competitiveness and will facilitate long-term economic growth in the region. Plans for meeting the 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 and adaptation, and skills development within the region’s SMEs. Work closely with provincial partners to identify opportunities with significant economic potential that could benefit communities throughout Atlantic Canada. The Atlantic Shipbuilding Action Plan, for example, is an endeavour that will help Atlantic Canadian communities, both rural and urban, and the businesses based in those communities to tap into economic opportunities arising directly or indirectly from the Government of Canada’s decision to undertake major shipbuilding projects in Halifax, Nova Scotia. Advance ACOA’s approach to commercialization to maximize the benefits of the Agency’s investments in innovation and to continue to provide direction on the commercialization of R&D outputs.
Priority	Type	Program Activity
Provide leadership in helping businesses and communities in Atlantic Canada to succeed in a global marketplace.	Ongoing	Enterprise Development Community Development Policy, Advocacy and Coordination
Why is this a priority? ACOA must ensure that its programming in support of international business development aligns with the Government of Canada’s Global Commerce Strategy and the related Americas Strategy. Promotion of the Atlantic Gateway and Trade Corridor as the preferred eastern access to the North American market is critical to generating international awareness of Atlantic Canada and creating new opportunities for economic growth and earned incomes through the global marketplace. Plans for meeting the priority Place emphasis on providing assistance to SMEs seeking markets for their R&D outputs. Provide business skills development programming to the region’s SMEs, ensuring that they have the appropriate human resources and skills sets needed to compete effectively in the global market. Focus ACOA support on projects offering the greatest potential for economic impact. Identify strategies that will allow Atlantic Canadian SMEs and organizations to connect with international business opportunities, such as placing more concerted effort on attracting foreign investment. Assist communities in remaining competitive through efforts such as investigating more effective approaches to local economic development and establishing contacts to explore international business opportunities. Explore new markets, new industry sectors and innovative methods to maximize benefits stemming from international business activities. Work with SMEs and stakeholders to prepare for emerging business opportunities relating to major projects, such as shipbuilding and renewable energy developments, particularly in terms of helping SMEs to understand global supply chains.
Priority	Type	Program Activity
Continually improve the Agency’s management agenda in order to provide excellent advice to government and excellent service to Canadians.	Ongoing	Enterprise Development Community Development Policy, Advocacy and Coordination Internal Services
Why is this a priority? The Agency must analyze the interrelationships between its activities and engage employees at all levels in order to support more effective and efficient decision making. This will result in a higher quality of services and better value for investment. The Agency must continue to deliver its high standard of services to internal and external clients within the current environment of reduced resources. All employees must understand and identify with the Public Service of Canada’s values in order to behave in a respectful, ethical and legal manner. These values are Respect for Democracy, Respect for People, Integrity, Stewardship, and Excellence. Plans for meeting the priority Ensure that the Agency has management goals that are measurable and achievable. Identify and assess opportunities to streamline internal and external services and realize greater efficiencies for resources invested. Facilitate senior management decision making by leveraging the Agency’s information technology and management systems to ensure the availability of timely, accurate and organized information. This will enable management to better identify and address issues that impact the financial and program health of the organization. Continue the Agency’s multi-year effort to deliver on Public Service Renewal commitments by engaging employees in the excellence agenda, including renewal of the workforce and renewal of the workplace. Proceed with the implementation of ACOA’s Values and Ethics Strategy, which will assist management in ensuring 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.

Risk Analysis

ACOA’s Operating Environment

The regional, national and global economic landscape is constantly evolving. ACOA must operate within these changes and respond to current and emerging influences that may affect its economic-development programming and initiatives. To be proactive in identifying risks and opportunities, ACOA anticipates and assesses external economic factors that could impact the design and delivery of its programs and services and the achievement of its strategic outcome. The Agency also identifies factors and risks that could adversely affect its ability to manage internal operations in an effective manner. In response to the identified strategic risks, the Agency has designed and implemented mitigating measures to reduce their impact and likelihood of happening.

The following is an overview of Atlantic Canada’s economy, an assessment of external and internal factors that have an effect on the Agency, and a summary of ACOA’s key risks.

Economic Outlook

In 2011, Atlantic Canada experienced moderate economic growth after emerging from the recession in 2010. The provincial governments’ fiscal position and waning consumer spending limited the economic expansion. A survey of private-sector forecasters³ revealed that real gross domestic product (GDP) is estimated to have increased by 2.0% in 2011. Soft economic activity resulted in modest employment gains, with the unemployment rate hovering just above the 10% mark for most of the year.

It is expected that economic growth will remain moderate in Atlantic Canada during 2012, as the economic expansion will continue to be limited by soft international economic conditions, especially those in the United States, weak construction activity and the fiscal position of the provincial governments. According to a survey of private-sector forecasters, real GDP is projected to increase by only 1.7% in 2012.

More specifically, growth in the U.S. economy is expected to expand by only 1.8%⁴ in 2012, according to the International Monetary Fund. There are still concerns that the U.S. economy could end up in a period of very modest growth over the short term. The inability of the U.S. economy to create jobs at a stronger pace represents a significant risk to the economic outlook. Consumers will curb spending if labour market conditions do not improve.

All Atlantic Provinces are expected to face deficits in 2012-13 and the provincial fiscal situations remain a concern going forward. Their focus on efforts to reduce fiscal deficits will influence the Provinces’ ability to encourage increased economic performance over the short and medium terms.

Construction activity in the Atlantic provinces is expected to weaken in 2012. Public infrastructure program spending is declining, and activity on energy projects such as the Deep Panuke natural gas project is either completed or winding down.

External Factors

The major risks for Atlantic Canada’s economic outlook are mostly external. Prominent among these risks is the fact that the U.S. economic recovery remains fragile. Weak job creation, high debt loads and lower net worth may continue to constrain household spending south of the border. Lower-than-expected economic growth in the U.S. will translate into weaker exports since most exports from Atlantic Canada are destined for the American market.

Internal Factors

ACOA will transform its internal business processes in order to become more effective and efficient. It will manage change while remaining focused on service delivery.

In order to continue to develop highly skilled employees to effectively and efficiently deliver on the priorities of the federal government, the Agency will continue to foster renewal and learning at every level of the organization.

The following key risks were determined through internal reviews by senior management and interviews with middle management and staff, along with an analysis of relevant documents. These risks were validated with management and the implementation of risk responses will continue to be monitored regularly.

Key Risk	Risk Response	Linkage to PAA
Management Information Risk There is a risk that existing tools may not provide timely access to sufficient and appropriate information needed to support effective decision making.	Management will mitigate this risk with the continued use and improvement of the executive dashboards and the governance around results interpretation and action required. Further developments in the Data Collection Strategy and the Performance Measurement Framework will also play a key role in mitigating the management information risk.	Enterprise Development Community Development Policy, Advocacy and Coordination Internal Services
Technology Risk There is a risk that the Agency’s IT function may have limited capacity to provide development and support for an up-to-date suite of modern and compatible tools, which may affect the effectiveness of portfolio management and timely decision making.	Management will mitigate this risk through its ACOA Committee on Information Management and Technology (ACIMT). ACIMT is the primary governance committee for ACOA’s IT function and will be addressing the alignment of ACOA IT investments with its program delivery and making recommendations to the executive committee.	Enterprise Development Community Development Policy, Advocacy and Coordination Internal Services
People Management Risk There is a risk that significant organizational changes may result in low morale, lack of motivation and loss of corporate knowledge, all of which could affect productivity.	Management will mitigate this risk through its People Management Program and Respectful Workplace Initiative, and by encouraging a supportive management culture at ACOA.	Enterprise Development Community Development Policy, Advocacy and Coordination Internal Services

Planning Summary

Financial Resources ($ millions)

2012-13	2013-14	2014-15
307.5	298.6	296.6

Human Resources (FTEs)

2012-13	2013-14	2014-15
624	614	614

Strategic Outcome: A competitive Atlantic Canadian economy

Performance Indicator	Target
Impact on Atlantic Canada's GDP for every $1 of ACOA expenditure in direct support of business	Increase of $4.50 in GDP for every dollar of ACOA expenditure5
Labour productivity growth of ACOA-assisted firms	An annual variation in labour productivity three percentage points higher than that of comparable firms

Planning Summary Table
($ millions)

Program Activity	Forecast Spending 2011-12	Planned Spending			Alignment to Government of Canada Outcomes
		2012-13	2013-14	2014-15
Enterprise Development	168.3	175.6	175.1	175.2	Strong Economic Growth
Community Development	105.1	89.9	82.6	80.5
Policy, Advocacy and Coordination	14.3	11.3	11.3	11.3
Total Planned Spending	287.7	276.8	269.0	267.0

Planning Summary Table
($ millions)

Program Activity	Forecast Spending 2011-12	Planned Spending
		2012-13	2013-14	2014-15
Internal Services	40.9	30.7	29.6	29.6
Total Planned Spending	328.6	307.5	298.6	296.6

Contribution to the Federal Sustainable Development Strategy

The Federal Sustainable Development Strategy (FSDS) outlines the Government of Canada’s commitment to improving the transparency of environmental decision making by articulating its key strategic environmental goals and targets. ACOA ensures that consideration of these outcomes is an integral part of its decision-making processes. In particular, through the federal Strategic Environmental Assessment (SEA) process, any new policy, plan or program initiative includes an analysis of its impact on attaining the FSDS goals and targets. The results of SEAs are made public when an initiative is announced, demonstrating the department’s commitment to achieving the FSDS goals and targets.

ACOA contributes to Theme I (Addressing Climate Change and Air Quality) and Theme IV (Shrinking the Environmental Footprint – Beginning with Government) as denoted by the visual identifiers below.

Theme I:
Addressing Climate Change
and Air Quality

 

Theme IV:
Shrinking the Environmental Footprint -
Beginning with Government

 

These contributions are components of the following program activities and are further explained in Section II:

• Policy, Advocacy and Coordination
• Internal Services

Additional details on ACOA’s activities to support sustainable development can be found on the Agency’s website.

Complete details on the FSDS can be found on Environment Canada’s website.

Expenditure Profile

For fiscal year 2012-13, the Agency’s available funding in the Main Estimates is $307.5 million. This represents a decrease of $21.1 million (6%) from the 2011-12 forecast spending and is attributable to a number of normal business practices and procedures, including:

• a $7.0-million decrease in funding from repayable collections, since the Agency received funding in 2011-12 from repayable contributions that were greater than expected;
• a $5.4-million decrease resulting from operational savings identified during the Agency’s Strategic Review process and implemented for fiscal 2012-13;
• a $3.4 million decrease equal to the final instalment of funding under the Recreational Infrastructure Canada Program, which was provided to the Agency in 2011-12;
• a $3.3-million decrease attributable to the carry forward into 2011-12 of remaining operating budget from a previous year;
• a $3.2-million decrease equalling funds transferred to Shared Services Canada in support of the consolidation and transformation of information technology infrastructure;
• a $1.9-million decrease offsetting the transfer of funds from National Defence to ACOA in 2011-12 for assistance in organizing and delivering the Halifax International Security Forum;
• a $1.9-million decrease in planned funding provided for the Economic Development Initiative of the 2008-13 Federal Strategy for Official Languages; and
• a $5.0-million increase through the first instalment of special funding provided to the Agency in 2012-13 to support community economic development priorities in New Brunswick relating to community projects, such as the establishment of multifunctional facilities and new recreational infrastructures (total funding over two fiscal years will equal $7 million).

Planned spending for the following year, 2013-14, will decrease by $8.9 million (3%) compared with that of 2012-13 due to:

• an additional $4.4-million savings in operational costs identified through the Agency’s Strategic Review process in 2010 and subsequent measures announced in Budget 2011;
• a $3.0-million decrease in funding reflecting the second, and smaller, of two payments over two fiscal years to support community economic development priorities in New Brunswick;
• a $2.2-million decrease resulting from the planned sunsetting of the Economic Development Initiative of the 2008-13 Federal Strategy for Official Languages;
• a $0.7-million increase following the final year of the Agency’s contribution to support for the North American Platform Program partnership, as per the 2008 Governance Framework Agreement.

Forecast spending for 2014-15 indicates a decrease of $2.0 million (1%) compared with that of 2013-14 and is attributable to the second instalment of funding for community economic development priorities in New Brunswick, which was included in the previous year’s spending.

Trend Analysis

The figure below illustrates the Agency’s actual and planned spending trend from 2009-10 to 2014-15.

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Excluding initiatives under Canada’s Economic Action Plan, which represent actual spending of $64.0 million in 2009-10, $81.3 million in 2010-11, and forecast spending of $3.3 million in 2011-12, the Agency’s spending levels remain relatively constant from fiscal year 2009-10 to fiscal year 2014-15.

Estimates by Vote

For information on the Agency’s appropriations, see the publication 2012-13 Main Estimates.

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