ARCHIVED - Federal Economic Development Agency for Southern Ontario - Report

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Section II: Analysis of Program Activities by Strategic Outcome

Strategic Outcome: The Economy of Southern Ontario Is Competitive and Diversified

Southern Ontario is a cornerstone of the Canadian economic engine, accounting for almost 37 percent of national employment and nearly half of the country's manufacturing sector¹⁰. The diverse range of industries and communities in the region includes world leading companies, innovators and key clusters such as agri-food, autos, finance, life sciences, tourism and information and communication technologies. The challenges facing southern Ontario have been many in recent years and a number of communities, particularly those hard-hit by the downturn in the manufacturing sector, have been under significant pressure. Structural adjustments, in response to the emergence of new sources of competition, technological change and shifting consumer preferences, were already underway in the region. The onset of the global economic recession created new difficulties and further exacerbated the challenges the region was already facing.

Southern Ontario's economy has been recovering from the global recession. Recent economic performance across a number of key indicators has largely reflected progress toward pre-recession levels. According to Statistics Canada, real GDP advanced to 3.4 percent¹¹ in Ontario in 2010, rebounding from declines in 2009 and 2008.¹²

Employment recovery in southern Ontario has been relatively strong since the recession and is near pre-recession levels. In 2010, employment grew to 6.25 million jobs but fell short of the 2008 employment level of 6.3 million people.¹³

Relatively high unemployment rates remain a challenge and many workers and communities continue to face serious difficulties. For example, while unemployment rates have dropped since their recessionary peaks, metropolitan areas such as Windsor (10.9 percent), Peterborough (9.4 percent) and St. Catharines-Niagara (9.3 percent) continue to face some of the highest unemployment rates in the province when compared to the provincial average of 8.4 percent.¹⁴ Rural areas face a number of challenges as well, such as youth out-migration and low labour participation rates.

Over the medium- to longer-term, the region's competitiveness will increasingly depend on the success of: economic adjustment; productivity improvements; integration into global value chains; the attraction and development of a talented workforce; and, the region's performance as an innovator and global leader. Ongoing adjustments in core sectors and communities across the region are critical for improving productivity and enabling southern Ontario to compete in global markets and move up the value chain.

FedDev Ontario has made progress towards its strategic outcome through its investments in people, businesses and communities resulting in improved conditions for prosperity and new opportunities for jobs and economic growth in southern Ontario. Through the launch of a series of new initiatives in 2010–11, FedDev Ontario aims to build a Southern Ontario Advantage – its approach for returning southern Ontario to a cycle of prosperity – and will continue to make progress on its strategic outcome by helping to attract new businesses, and new national and foreign investors, while also supporting existing businesses and making sure they stay in southern Ontario.

Program Activity: Community and Business Development (CBD)

Program Activity Descriptions

The CBD program activity supports communities and businesses in southern Ontario by making the southern Ontario economy and its communities more competitive, innovative and diversified. This is achieved by increasing community and business capacity to respond to challenges, stimulating economic development, and promoting conditions that foster competitive businesses and strong, vibrant communities. Through this program activity, FedDev Ontario delivers and administers grants and contributions with not-for-profit organizations, other orders of government and businesses. The funds are used to enhance business productivity and competitiveness; provide entrepreneurs and small- and medium-sized enterprises with improved access to capital and business development information and services; and support community economic planning, development and diversification initiatives.

2010–11 Financial Resources ($ millions)

Planned Spending	Total Authorities	Actual Spending
395.0	400.8	257.9

2010–11 Human Resources (FTEs)

Planned	Actual	Difference
83	63.24	(19.76)

Performance Status against Target for Community and Business Development

Expected Results	Performance Indicators	Targets	Performance Status
Enterprises are contributing to community economic growth and viability	Percentage of SMEs assisted that maintained or increased their sales	70%	Met All (More than 3,164 businesses were supported through various programs)

Performance Summary and Analysis of Program Activity

Activity Overview

The focus of the CBD program activity in 2010–11 was to respond to the short-term pressures resulting from the economic downturn and the long-term challenges facing southern Ontario as it transitions toward a knowledge-based economy. Some of the key challenges facing the southern Ontario economy are labour and skills shortages in fields related to science, technology, engineering and mathematics (STEM); decreased access to capital to fund high-risk ventures; the need for greater collaboration between academia and business to commercialize new innovations more quickly; and increased capacity for communities to respond to local conditions while recognizing the benefits of operating in a regional economy.

The agency worked collaboratively with key economic stakeholders [e.g., businesses, start-ups, not-for-profits, post-secondary institutions, CFDCs and other orders of government] to create the conditions necessary to make the southern Ontario economy more competitive, innovative, and diversified. This was achieved by providing repayable and non-repayable contributions for projects that helped businesses improve productivity and commercialize new innovations, stimulate economic development in regional communities, provide increased access to capital, and support STEM graduates with financing for start-ups and internship opportunities in southern Ontario businesses. Investments were made through Program Sub-Activities such as SODP, CF, EODP, CAF and the Official Language Minority Communities (OLMC) Development Program.

Results Achieved

Southern Ontario Development Program

The SODP is the vehicle for delivering FedDev Ontario's core grants and contributions budget, committed through Budget 2009¹⁵. In 2010–11, the SODP sub-activity was enhanced with the development and launch of a suite of seven new strategic initiatives aimed at creating a Southern Ontario Advantage by assisting southern Ontario businesses and communities to transition from the region's traditional manufacturing base to a knowledge-based economy. These initiatives reflect stakeholder feedback achieved through outreach and consultation as part of Organization Priority 5 and are built on four pillars: People, Knowledge, Entrepreneurship and Prosperity. An important consideration in the design of these initiatives was the need to complement existing federal programming to ensure effective and efficient targeting of areas of need. This consideration led to close alignment of the initiatives with other Government of Canada initiatives such as the Science and Technology Strategy and complemented other programs and services delivered by FedDev Ontario.

Objectives of programs under the Southern Ontario Advantage initiative

Southern Ontario Advantage	Objectives
People Advantage
Youth STEM	Encourage youth to pursue education and careers in STEM. Improve youth's understanding of the business of science.
Graduate Enterprise Internship	Develop business and management skills in graduate students/ recent graduates of STEM programs to complement their technical skills.
Scientists and Engineers in Business	Develop improved business and management skills of STEM entrepreneurs in southern Ontario. Improve access to financing and/or business support services needed to successfully launch and manage start-up SMEs in southern Ontario.
Knowledge Advantage
Applied Research and Commercialization Initiative	Encourage greater collaboration between SMEs and post-secondary institutions. Accelerate innovation; improve productivity and competitiveness of SMEs.
Technology Development Program	Increased investment to bridge the gap between research and development and the commercialization of market-driven and "game-changing" technologies.
Entrepreneurial Advantage
Investing in Business Innovation	Accelerate the commercialization of new products, processes, and practices. Increase, stimulate and leverage private sector investment. Encourage growth of angel investment funds.
Prosperity Advantage
Prosperity Initiative	Increased economic diversification, improved productivity and enhanced competitiveness of southern Ontario regions and businesses.

The first of the SOA initiatives, the ARC initiative, was launched in April 2010 with the remaining six initiatives launched in the fall of 2010. In 2010–11, 273 SOA applications were received with 45 applications approved. A performance measurement strategy has been put in place to track the performance of projects funded under the SOA initiatives, including indicators such as the total value of funds leveraged, the number of person months of employment created, projected and actual sales, and the extent to which innovations were advanced (e.g., invention disclosures, intellectual property) as a result of FedDev Ontario contributions.

Largely as a result of the creation of the SOA initiatives, SODP helped create, expand or maintain 878 businesses and organization, exceeding its target of 700. SODP was also able to raise 80 cents from other sources for every dollar contributed by the program, which somewhat met its target ratio of 1:1. When five large projects funded under the earlier SODP General Intake and the Food and Beverage Initiative are removed, the ratio becomes 1.02:1, slightly exceeding the target.

During this reporting period SODP continued to deliver on multi-year projects and close out various initiatives from 2009–10. When analyzing the expenditures of the program, SODP distributed $72.2  million¹⁶ in contributions out of an allocated $159.2 million in total authorities. A number of factors impacted this lapse including the fact that funding for SODP was initially allocated evenly over the agency's five-year mandate and did not adequately reflect the need to staff the agency, develop programs and build capacity. In addition, given the effort required to create seven new initiatives under SODP (the Southern Ontario Advantage initiatives), these initiatives were not ready to be announced and rolled out until the fall of 2010. This resulted in a reduced number of 1) applications received; and 2) agreements put in place before the end of the 2010–11 fiscal year.

Eastern Ontario Development Program

The EODP was renewed under Budget 2009 as part of the EAP. The EODP supports the economic development and diversification of rural eastern Ontario communities. Working with the 15 CFDCs in eastern Ontario, the program exceeded its 2010–11 target of 50 Eastern Ontario businesses and organizations created, expanded or maintained as a result of support through EODP. Although the program did not meet its ambitious target of raising $4.50 in funds from other sources for every dollar contributed through EODP, (a ratio of 4.5:1), the actual ratio (2.7:1) exceeded the target set for the previous five years (2.5:1). EODP was successful in distributing its total authorities of $9.6 million.

In 2010–11, an evaluation of the program was conducted. It concluded the program is meeting its objectives, is aligned with Government of Canada and agency objectives, and is effectively managed. Throughout the reporting period, the agency also focused on the renewal of the EODP, as the program was scheduled to sunset on March 31, 2011. With its renewal announced in Budget 2011,¹⁷ the agency continues to work on improving the program's efficiency and effectiveness and aligning it with the agency's mandate and objectives.

Community Futures Program

The CF Program supports economic development and builds capacity in non-metropolitan communities in southern Ontario by providing funding to 37 CFDCs in the region. In 2010–11, the Program created, expanded or maintained 2,233 businesses and organizations in rural southern Ontario – mostly meeting its target of 2,250. It also met its target of raising $1.70 in funds from other sources for every dollar invested through the CF program (a ratio of 1.7:1). To achieve these results CF distributed its total authority of $12.5 million in contributions.

In 2010–11, the agency also conducted a review of the CF Program. This led to changes to improve the efficiency and effectiveness of the program and better align it with the agency's mandate and strategic direction moving forward.

Official Language Minority Communities Development Program

The OLMC Development Program is delivered through the agency's Economic Development Initiative (EDI) of the Government of Canada's Roadmap for Linguistic Duality 2008-2013: Acting for the Future. In 2010–11, the agency continued to support 22 projects funded in 2009–10 under the EDI, somewhat meeting its target number (35) of projects and activities in support of regional OLMCs. At the same time, it conducted a review of the initiative and implemented changes to improve effectiveness in future years. A continuous intake for proposals under the revised program took place in December 2010. A significant portion of the difference between the actual $500,000 distributed in contributions and the total authority of $2.9 million for the program is due to a temporary suspension of program delivery as program elements went through a redesign process.

Brantford Greenwich Mohawk Remediation Project

2010–11 saw no money actually spent in support of the project. Although negotiations were completed during the 2010–11 fiscal year, as of March 31, 2011, the recipient was still in the process or organizing the implementation of the project. The total authorities amount of $10.4 million for 2010–11 has been re-profiled to 2011–12.

Ontario Potable Water Program (OPWP)

The OPWP supported municipal investments in drinking water projects through the provision of grants in order to meet Ontario drinking water regulations. In 2010–11 the total authorities for this program were $22.5 million and were based on projected costs for all projects. The actual spending in 2010–11 was $12.2  million and reflected the final costs of the completed water projects. In this reporting period FedDev Ontario's focus was to close out the program by March 31, 2011.

Development Projects for Communities and Businesses Program

This program delivers short-term, targeted community and business development projects, primarily through the delivery and administration of contribution agreements to communities, not-for-profit organizations and small- and medium-sized businesses from the private sector. CAF provides contributions to projects within this program to enhance and accelerate community development as well as fund small- and medium-sized businesses, social enterprises, communities, post-secondary institutions and aboriginal organizations.

In 2010–11, $139.3 million was distributed in contributions out of a total authority for CAF of $167.4 million. The variance can be largely explained by two separate re-profile amounts of $42.5 million for 2009–10 commitments and a projected $7.5 million for 2011–12 for 18 projects that received extensions until October 31, 2011. The variance also reflects uncommitted funds and lapsed funds as a result of projects completing under budget.

Overall, the agency's performance for this Program Activity met expectations. The agency provided $246.5  million in grants and contributions toward CBD programs that will make the southern Ontario economy more competitive and diversified. Through contributions from the SODP, EODP and CF program, the agency helped create, maintain, or expand 3,164 businesses in southern Ontario and leveraged $157.5 million in funding from other sources. In addition, the agency provided grants to enable the successful close–out of OPWP.

Lessons Learned

One of the key lessons learned under this program activity is that continuous stakeholder feedback and collaboration is very beneficial when creating programs that respond to Canadians' needs and effectively and efficiently maximize the impact of Government of Canada funding.

The challenges of delivering a full suite of programs while the agency was still building capacity and developing new initiatives limited the agency's ability to fully allocate all of its funding. With a greater complement of staff and program delivery processes in place, the agency will be in a better position to fully expend its future allocations.

Finally, time is critically important. Despite outreach and engagement with various stakeholders, proposals submitted to the agency often require significant effort to bring together all of the necessary resources required to generate the greatest results.

Program Activity: Infrastructure

Program Activity Descriptions

FedDev Ontario delivers infrastructure programming in Ontario to ensure that communities have good quality and dependable infrastructure in place in the areas of water, sewage, and transportation infrastructures, and that residents benefit from access to this infrastructure. Through this program, FedDev Ontario delivers and administers contribution agreements with municipalities or contractors, which use these funds to create, renew, or enhance Ontario communities' infrastructure. This program benefits residents of Ontario by contributing to the development and maintenance of infrastructure in Ontario, thereby helping Ontario residents have access to quality infrastructure, meaning for example, access to water that is safe to drink, and roads that are safe to drive on.

2010–11 Financial Resources ($ millions)

Planned Spending	Total Authorities	Actual Spending
98.4	172.4	130.6

2010–11 Human Resources (FTEs)

Planned	Actual	Difference
32	29.17	(2.83)

Performance Status against Targets for Infrastructure

Expected Results	Performance Indicators	Targets	Performance Status
Ontario has the infrastructure required to sustain its development	Number of infrastructure projects administered	50	Exceeded (2,619)
	Ratio of funds raised from other sources for every dollar of Ontario infrastructure improvement	1:1	Exceeded (3.6:1)

Performance Summary and Analysis of Program Activity

Activity Overview

Strong, safe and modern communities are essential building blocks for Canada's competitiveness and long-term prosperity. Strategic infrastructure investments can be a catalyst for economic growth and quality of life. To that end, the programming that FedDev delivers ensures that throughout Ontario, infrastructure is built and renewed in partnership with local communities in a variety of investment categories such as: water, waste water, sewage, transportation, and recreation.

In 2010–11, FedDev Ontario continued to partner with Infrastructure Canada, the province of Ontario, and funding recipients, to support infrastructure investments throughout Ontario. FedDev Ontario, on behalf of Infrastructure Canada, delivers the Canada Strategic Infrastructure Fund, the Canada Ontario Municipal Rural Infrastructure Fund Program, the Municipal Rural Infrastructure Fund Top-up, and BCF-CC Regular and Top–Up Intakes. Grants and Contributions funding for the Municipal Rural Infrastructure Fund, BCF-CC, and the Canada Strategic Infrastructure Fund is provided through Infrastructure Canada's appropriation and is held in a suspense account while operating funds for the delivery of these programs is included in FedDev Ontario's estimates. Details on infrastructure program results for these programs may be found in Infrastructure Canada's DPR.

FedDev Ontario delivers the BCF-CC to Ontario communities with fewer that 100,000 residents in partnership with the Government of Ontario. The program supports public infrastructure owned by provincial, territorial and municipal governments and entities, as well as private industry. These jointly-funded projects ensure that Ontarians will benefit from increased employment opportunities, enhanced protection and management of drinking water sources, improved transportation safety and efficiency, as well as new and renewed cultural institutions and sport facilities.

Results Achieved

As detailed in Operational Priorities 7 and 8 above, during this reporting period, FedDev Ontario administered 2,619 projects across all the infrastructure programs that it delivers. This represented a total investment of $7.2 billion in infrastructure projects across all of Ontario, which included a federal investment of $2 billion (approx. 3.6:1). As well, over 4,600 claims were processed in this reporting period, representing payments of over $400 million to recipients.

Additionally in this reporting period, FedDev Ontario continued to deliver the RInC Program in parallel with the Province of Ontario's Recreation Program and administered the close-out of the Canada-Ontario Infrastructure Program.

With respect to RInC, FedDev Ontario is administering the delivery of 761 projects that have been allocated up to $188 million in investments across multiple years in key community recreational assets and facilities. During fiscal year 2010–11, RInC distributed $121.6 million in contributions out of a total authority of $161.1 million. This variance of $39.4 million accounts for nearly all of the difference between Total Authorities and Actual Spending shown in the table above for this Program Activity. The variance is largely due to the fact that projects were not able to immediately begin in fiscal year 2009–10 and, as a result, $66.5 million was re-profiled until 2010–11, causing higher than planned total authorities. With the inability to spend the total $161.1 million in 2010–11 and with the program receiving an extension to October 31, 2011, as part of the EAP extension, $35 million was re-profiled to 2011–12.

Furthermore, as part of Canada's EAP, a national top-up to the BCF-CC was launched, with a federal investment of $196 million, to accelerate 187 projects in Ontario communities. On December 2, 2010, an extension of EAP initiatives to October 31, 2011, was granted, which included 72 BCF-CC projects.

Lessons Learned

Each program that FedDev Ontario delivers, benefits from the lessons learned and evaluations and audits of previous infrastructure programming. No program audits or evaluations were required in this reporting period. Continual improvements in data management and client-service were evident in this reporting period.

Program Activity: Internal Services

Description: 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. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2010–11 Financial Resources ($ millions)

Planned Spending	Total Authorities	Actual Spending
13.6	20.0	17.1

2010–11 Human Resources (FTEs)

Planned	Actual	Difference
65	81.74	16.74

Performance Summary and Analysis of Program Activity

Internal services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of our organization. These groups include only those activities and resources that apply across an organization and not those specific to a program.

With one of FedDev Ontario's primary operational priorities for 2010–11 being to establish the agency's internal services in the first year of operation, the spending and staffing variances noted in the tables above occurred as the agency was successfully able to build its internal service structure quicker than anticipated.

The Internal Service area also focused on continuing to develop its organizational structure in response to Operational Priority 1. The agency continued to increase and stabilize its staffing levels throughout the reporting period to improve its self-sufficiency and reduce the risk posed by reliance on external service providers. FedDev Ontario also worked to improve procedures and processes for Parliamentary relations, ATIP, and Ministerial correspondence to address Operational Priority 2.

Continued renewal and improvement of the agency's mandate and programs was also a priority as the agency established its first PAA and accompanying PMF for 2010–11 and continues to engage in PAA and PMF renewal exercises to further define its objectives and performance and improve reporting and accountability to Canadians.

As a new agency, FedDev Ontario was completing staffing processes in 2010–11 and created a new Framework for Action to help guide its activities in future years, better integrate service delivery, and track performance moving forward.

Canada's Economic Action Plan

The EAP is the Government of Canada's plan to help ensure a quick recovery from the economic downturn by focusing on the creation of short-term employment to support communities and the sectors that contribute to their viability. The national plan included such initiatives as the $1 billion CAF and the $500 million RInC program. Under the EAP, FedDev Ontario was responsible for the delivery of CAF in southern Ontario, RInC for all of Ontario, and EODP. It should be noted that in 2009–10 and 2010–11, the agency's core funding program, SODP, was also considered an EAP initiative. FedDev Ontario is also delivering BCF-CC top-up, for all of Ontario, on behalf of Infrastructure Canada.

Through these initiatives, FedDev Ontario contributed to the stabilization of the southern Ontario economy while establishing the foundation for a more prosperous future.

CAF

CAF is a national economic stimulus initiative that supports projects that create jobs and maintain employment in and around communities that have experienced significant job losses and lack alternative employment opportunities. As noted in Organizational Priority 7 in Section I, CAF initially committed $123 million in 2010–11 to fund 130 projects. Funding was provided to small- and medium-sized businesses, not-for-profit organizations, and municipalities in southern Ontario. Funding was used for a variety of purposes, including: increasing production capacity, commercializing products, increasing access to capital, developing business incubators, strategic planning, as well as revitalization projects. The 130 projects were located in 79 communities across southern Ontario. On average, every federal dollar invested leverage and average of fifty-seven cents from recipients. Eighteen projects have received an extension to October 31, 2011.

RInC

RInC is designed to provide timely, targeted stimulus to communities through investments that will create jobs and spur construction activity related to existing recreational infrastructure. It is also expected to encourage higher levels of participation in physical activity and community building. In Ontario, FedDev Ontario is delivering the program in parallel with the Province of Ontario's Recreation Program. Also mentioned in Organizational Priority 7 (Section I of Report), FedDev Ontario continued to work with the Ontario government in 2010–11 to administer and deliver the Ontario portion of RInC. In total, $188 million in federal funds was invested in 761 projects. On December 2, 2010, Canada announced an extension to the construction completion deadline from March 31, 2011 to October 31, 2011 for a number of EAP programs, including RInC. Extensions were approved for 230 projects.

SODP, EODP and BCF-Top-up

Further information on these EAP initiatives can be found in sections 2.1.1 and 2.1.2

Of note, through the EAP audit, conducted by the Office of the Auditor General, RInC and BCF exceeded auditors' expectations with respect to due diligence.

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