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Section I: Overview

Minister’s Message

Rona AmbroseWestern Canada’s abundance of natural resources has made the region a substantial contributor to Canada’s economic success but it is the emerging business clusters, expanded enterprises and innovative acumen of the West that will keep its economy strong and sustainable over the long term.

Developing these strengths by responding to the unique needs, challenges and opportunities in the West is Western Economic Diversification Canada’s (WD) primary role. We work hard to be a relevant and effective advocate for the West. Consultations with stakeholders across the West and in Ottawa in 2006 resulted in a new Strategic Framework that returns WD to the economic core of its mandate.  The new framework supports initiatives and projects that have a significant impact on Western Canada’s long-term economic growth and competitiveness.s

Our new Vision also reflects the four key principles of the Advantage Canada policy plan. We:

  • are accountable to taxpayers, responsible in our spending, efficient in our operations, effective in our results;
  • support sustainable growth through strategic investment that contributes to a strong economy, research and development, technology commercialization and modern infrastructure;
  • help businesses grow and succeed by improving access to capital and increasing their ability to compete in the global economy; and
  • foster new opportunities and expand choices by building new sources of economic growth that create more highly paid jobs for western Canadians, and invest in training so businesses have the skilled hands to keep the wheels turning.

In 2006-2007, WD invested a total of $177.8 million in 182 projects that have leveraged an additional $201.5 million from other partners. These partnerships – with provincial and municipal governments, universities, research institutes, industry and not-for-profit organizations –form the core of our success. Our collaborative efforts ensure that WD is viewed as a strong and effective partner in the development and diversification of the western economy. Consultations participants confirmed that we play a unique and valuable role and that WD is recognized in Western Canada for the commitment and professionalism of its staff, the knowledge of western issues it brings to public policy debate and development, its strength in building effective networks and partnerships, and its strong voice on behalf of western Canadians.

We are determined to build on our successes by continuing to create tangible economic benefits that improve the economic sustainability of the West.

By delivering on the priorities of Canada’s New Government, Western Economic Diversification Canada is achieving its vision of a stronger West in a stronger Canada.


The Honourable Rona Ambrose, P.C., M.P.


Management Representation Statement

I submit for tabling in Parliament, the 2006–2007 Departmental Performance Report for Western Economic Diversification Canada.

This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2006–2007 Estimates: Reports on Plans and Priorities and Departmental Performance Reports :

  • It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;
  • It is based on the department’s approved Strategic Outcome(s) and Program Activity Architecture that were approved by the Treasury Board;
  • It presents consistent, comprehensive, balanced and reliable information;
  • It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
  • It reports finances based on approved numbers from the Estimates and the Public Accounts of Canada.

Oryssia J. Lennie
Deputy Minister
Western Economic Diversification Canada


Summary Information

Raison D’tre — Western Economic Diversification Canada (WD) was established in 1987 to lessen the West’s (British Columbia, Alberta, Saskatchewan and Manitoba) strong economic dependence on its natural resources. Under the Western Economic Diversification Act, 1988, the department is mandated to:

“promote the development and diversification of the economy of Western Canada and to advance the interests of Western Canada in national economic policy, program and project development and implementation.”

Regional development policies and programs are an important part of a comprehensive strategy to ensure that Canada’s regions benefit from the opportunities of the new global economy. WD will continue to work closely with many partners to help small- and medium-sized enterprises (SMEs) compete and prosper in the global marketplace.

WD relies upon its strong relationships with provincial governments, municipalities, universities and local business and community economic development organizations to advance its three distinct, but interrelated Strategic Outcomes – Entrepreneurship & Innovation; Community Economic Development; and Policy, Advocacy & Coordination.

Financial Resources ($ thousands)

Planned Spending Total Authorities1 Actual Spending2




Human Resources (FTEs)

Planned (FTEs) Actual Difference





Status on Performance


The following two management priorities support all of WD’s strategic outcomes


Expected Result

Performance Status



Implement a modern management agenda that focuses on improving management practices within the department including strengthening accountability to Canadians, integration of human resource planning with business planning, follow-up on the employee survey, and improving information management.

Compliance with relevant Acts and Policies, clear accountabilities, integrated planning, and increased efficiency and effectiveness.

Progress made and ongoing.



Implement changes to WD’s Strategic Framework resulting from WD’s consultations with western stakeholders.

Revised Strategic Outcomes for WD focused on supporting economic and business activities that have clear economic benefits for Western Canada.

Progress made and ongoing –WD articulated a new Strategic Framework that provides focus within the existing Program Activity Architecture.



* Costs associated with these priorities were operating and maintenance (O&M) costs only and related primarily to time spent by departmental officials.

Management Priorities

For 2006-2007, the department established the following two management priorities, which support all of WD’s strategic outcomes:

1. Implement a Modern Management Agenda:

WD undertook the following activities to improve management practices within the department:

  • Strengthening accountability to Canadians through progress in implementing the Management Accountability Framework and the implementation of an Integrated Risk Management initiative;
  • Integration of human resources planning with business planning by expanding WD-Manitoba Region’s 2005-2006 pilot project on integrated planning to all other regions and corporate branches;
  • Follow-up on the employee survey by addressing issues raised concerning overtime, health and safety in the workplace, initiating a formal redress process, harassment and discrimination, and a perceived lack of career advancement opportunities; and
  • Improving information management through enhancements to Project Gateway, WD’s web-based project information management system. These enhancements improved the Department’s efficiency and effectiveness in program delivery, and improved its ability to report on results related to WD's Grants and Contributions investments. The Project Gateway team, comprised of officers from all regions and Headquarters, are working to create a user-friendly tool supported by policies, procedures, and adequate controls.

In addition, in 2006-2007 approximately 170 WD officers and managers participated in project officer training held in each region resulting in an improvement in the quality of analysis undertaken by the department concerning funding initiatives. Also, staff from across the department participated in training on giving and receiving feedback. In addition, 98 per cent of WD sub-delegated managers completed the Authority Delegation On-Line Assessment training. WD strengthened its Performance Management Program to include the demonstration of WD Core Competencies. Finally, WD piloted numerous project initiatives in the regions: from Values and Ethics in British Columbia to Succession Planning in Manitoba.

2. Implement WD’s Strategic Framework

During 2006-2007, WD strengthened its dialogue with the communities it serves. Sessions with over 100 western Canadian leaders from business, government, research and development, academic and community fields resulted in development and approval of a new WD Strategic Framework. This stakeholder engagement was supported by WD staff across the organization and was recognized throughout the federal public service as a model consultative process. The new Strategic Framework is reflected in the priorities outlined in WD’s 2007–2008 Report on Plans and Priorities, which include support for business competitiveness and growth; linkages between strategic infrastructure investments and economic development; commercialization and value-added production; strengthened accountability, transparency, and performance reporting; and implementation of a modern management agenda. WD employees continue to work to further define and implement the department’s new Strategic Framework.

2006-2007 Highlights

WD is delivering the expected results for the Strategic Outcomes outlined in its Report on Plans and Priorities for 2006-2007.

2006-2007 was a noteworthy year for WD, managing a broad range of activities. These activities included: implementation of the Municipal Rural Infrastructure Fund; advocating federal commitment for the expansion of the floodway in Manitoba, the Asia-Pacific Gateway and Corridor Initiative, the International Vaccine Centre (InterVac) in Saskatoon and the Mountain Pine Beetle initiative; and the approval of $177.8 million in funding for 182 projects3 including the Fraser River Port dredging ($4.0 million), TEC Edmonton ($15 million) and the Primrose Lake Air Weapons Range Economic Development initiative ($15 million). WD also met the challenge of transferring responsibility for the Urban Aboriginal Strategy to Indian and Northern Affairs Canada.

In 2006-2007 WD renewed the Loan and Investment Program for an additional five years, based on the impact it has had since it was introduced in 1995, which includes 3,100 loans approved totalling $234 million in small business financing.  This program renewal enabled the department to renew or replace several long-standing loan agreements through an investment of $12.2 million, which will support knowledge-based and growth-oriented businesses, and provide micro-loans for small and start-up enterprises.

Aboriginal students will be better equipped for high-demand jobs in Manitoba’s aerospace, manufacturing and construction industries, as a result of WD’s investment of $320,000 towards new equipment purchases for the Neeginan Institute of Applied Technology.

In Saskatchewan, WD is a proud contributor to the success of both the RCMP Heritage Centre ($18.0 million through the Saskatchewan Centennial Initiative) and the Springboard West Innovation Centre ($2.2 million).

In addition to implementing numerous significant projects in Alberta, including TEC Edmonton, WD also approved 43 Canada Alberta Municipal Rural Infrastructure Fund (CAMRIF) projects worth $65 million in federal funding.

In British Columbia, WD implemented numerous important projects ranging from funding for the development of the Campbell River Cruise Ship Terminal ($350,000), establishing Campbell River as a port of call for international cruise ships and the only First Nations-themed marine portal in North America, to support for various World Urban Forum projects.

This is not an exhaustive list of WD’s accomplishments, but provides a sense of the breadth and depth of the department’s work and its impact on Western Canada and western Canadians. These accomplishments are possible because of WD’s commitment to sound human resources and financial management within a strong values and ethics framework.

Program Activity Architecture

A diagram summarizing WD’s Program Activity Architecture, which consists of three Strategic Outcomes linked to seven Program Activity areas, appears on the following page.

Legend : error-file:tidyout.log


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Alignment With Whole of Government Framework

WD’s Strategic Outcomes and Program Activities are aligned with the Whole of Government Framework, as follows:

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Operating Environment

WD’s day-to-day working environment is influenced by four main factors:

  1. The Western Diversification Program, WD’s main Grants and Contribution  program;
  2. The Western Canada Business Service Network , which the department relies on heavily to deliver services to both businesses and communities;
  3. The department’s capacity to deliver national programming in the West; and
  4. The expectation held by western Canadians for the department to act as their advocate.

The Western Diversification Program (WDP) is WD’s main Grants and Contributions (G&C) program, which allows the department to partner with various community and industry-based groups to implement project-based initiatives targeted at producing strategic outcomes.  These partnerships may be informal ones with universities or research organizations, or they may be formalized through written agreements such as the Western Economic Partnership Agreement (WEPAs) with each of the four western provinces, or the Urban Development Agreements (UDAs) involving several of the major metropolitan areas in Western Canada.

WD relies heavily on the Western Canada Business Service Network (WCBSN) to provide services to both communities and small- and medium-sized enterprises (SMEs) through its network of 90 Community Future Development Corporations (CFDCs), four Canada Business Service Centres (CBSCs), four Women’s Enterprise Initiative (WEI) organizations, and four Francophone Economic Development Organizations (FEDOs).  CFDCs promote community economic development throughout the rural West, whereas Canada Business has a mandate to provide information services to SMEs regardless of location.  The WEI provides services to women entrepreneurs, while the FEDOs serve francophone entrepreneurs.  WD is constantly working with the network members to build relationships and to clarify expectations in areas such as performance and reporting.

WD has the capacity to assist in the delivery of national programming in the West, as well as to partner with other federal departments in implementing new programming.  For example, WD works in partnership with Infrastructure Canada to deliver the Infrastructure Canada Program, the Municipal Rural Infrastructure Fund and the Canada Strategic Infrastructure Fund.

The department is able to achieve the Policy, Advocacy, and Coordination Strategic Outcome primarily through the efforts of staff, rather than through funding G&C projects.  WD’s Regional Assistant Deputy Ministers continue to chair the Regional Federal Councils (committees of senior federal officials in each region established to exchange information and discuss issues of common concern) in each western province, as well as play an active role in federal-provincial regional trade and rural teams, as part of its coordination and collaboration mandate.  WD is also involved on a daily basis in advocacy-related activity in order to ensure the interests of western Canadians are reflected in national policies and programs.  This involves participation at inter-departmental meetings in Ottawa, as well as liaising with provincial governments and other stakeholders in the regions on issues such as the mountain pine beetle infiltration in British Columbia or the Asia Pacific Gateway.

In conclusion, WD has built its program delivery capacity through the development of a strong project review due diligence regime, supported by on-going officer training and assessment tools such as Project Gateway, an on-line project assessment, tracking and reporting tool.  WD’s policy capacity is also supported through on-going officer training and internal systems, such as the Knowledge Warehouse, a repository of policy-related documents on the department’s internal web site (WDNet).

Performance Reporting

WD continues to improve its performance reporting, as it implements the Management Resource and Results Structure (MRRS).  In Section II of this report, the department reports against the expected results outlined for each Strategic Outcome in the 2006-2007 Report on Plans and Priorities.  For the first time, WD is reporting aggregated expected outcomes from projects for which funding was approved in 2006-2007.  In the 2007-2008 Departmental Performance Report, WD will begin to report aggregated actual outcomes from projects approved for funding since April 1, 2005, when approved projects were first required to align with at least one of WD’s Program Activities.  The development of a performance-reporting module in Project Gateway will greatly assist with this reporting effort.

The work of WD’s Audit and Evaluation Branch continues to support the department’s capacity to report on its performance, as well as to improve performance through lessons learned. In 2006-2007 several significant internal audits were completed including the Infrastructure Canada Program, the administration of G&C audit and the audit of management information.  An evaluation of the Canada-Saskatchewan Northern Development Agreement was also completed.  In addition, two impact assessments were completed of Aboriginal projects as well as life sciences projects.  WD’s Audit and Evaluation Branch also contributed to the horizontal evaluation of the Softwood Industry and Community Economic Adjustment Initiative and the World Urban Forum.  The conclusions of these audits and evaluations, in so far as they reflect upon WD’s past performance or potential to improve future performance, are included in Section II.


Several internal and external factors had an affect on WD’s performance and the delivery of its programs and services.  For example, the extensive consultations that took place in 2006-2007 regarding a new Strategic Framework for WD resulted in a more clearly focussed direction on how to best support and add value to long-term growth and competitiveness in the West.

The government-wide expenditure review process, which began in 2005, also had an impact on WD in 2006-2007, as the department discontinued implementation of Social Economy initiative.  The implementation of the Human Resources Modernization Act also had an impact on departmental priorities as all managers pursued on-line delegated authority training.  The long-term impact of this training will be an overall improved capacity with a better understanding of management responsibilities related to staffing, contracting and information management.  The heated western provincial economies affected recruitment efforts, as entry-level candidates opt for careers in the private sector.  This trend will reinforce the need to be more proactive in the area of human resource planning.  The region’s strong economic performance also affected projects involving construction, both WDP and municipal infrastructure-related, due to escalating labour and material costs. Greater detail on the economy in Western Canada and each provincial economy is provided below.

Western Canada Economic Overview

Western Canada, which comprises 30.2 per cent of the overall Canadian population, continued to be a key economic engine for the country in 2006. Real gross domestic product (GDP) for the four provinces as a whole posted an impressive 4.6 per cent annual growth rate, which was much higher than the national average of 2.7 per cent. The West, now accounting for 35 per cent of Canada’s total GDP as compared to 31 per cent in 2002, is reshaping the nation’s economic geography.

Figure 1: GDP from Resources as % of Total GDPDriven by rapid industrial expansion, increased demand for energy from the emerging markets (notably China) and constrained supply and political tensions, world energy prices have more than doubled in the last five years. Traditionally a resource-based economy that now generates more than two-thirds of Canada’s agriculture, forestry and mining output, Western Canada has benefited strongly from booming commodity prices and higher global demand. In 2006, the resource sector contributed to 12.3 per cent of the West’s real GDP, as opposed to 5.8 per cent of Canada’s, demonstrating the heavy reliance of the region on the resource economy. However, this percentage has declined gradually over the last decade (Figure 1), showing the progress of the West towards a more diversified economy. The robust economic performance in the West is also portrayed by many of the key economic indicators, as presented in Chart 1. Ranging from 3.4 per cent for Alberta to 4.8 per cent for British Columbia, unemployment rates for the four western provinces were substantially lower than the rest of Canada in 2006. Labour participation, on the other hand, reached a historic high. Low population growth and labour shortages, particularly skilled labour, are two of the major challenges facing the western Canadian economy. In 2006, population growth in Alberta and British Columbia exceeded the national average due to both inter-provincial migration and international immigration. Alberta and British Columbia’s net gain from inter-provincial migration occurred at the loss of other provinces, including Manitoba and Saskatchewan. The long-term solution to labour shortage lies in the sustainable growth of productivity.

The booming energy sector has also created vast growth opportunities for other goods and services industries in Western Canada. In 2006, the region’s real growth rates for the manufacturing, construction, retail trade, wholesales trade and services sectors all outperformed the rest of Canada. In addition, the economy in the region can also be characterized by strong performance in personal income, domestic spending, merchandise exports, business investment and housing starts. Nevertheless, the West continues to be hindered by sluggish productivity growth, demographic shifts, soaring cost of production and cost of living, the challenge of environmental sustainability and wide exposure to the volatility of the commodity markets, among other challenges.

Chart 1: Key Economic Indicators, 2006
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Economic Performance of the Western Provinces in 2006


In 2006, Manitoba experienced relatively strong economic growth.  Real GDP expanded 3.3 per cent, exceeding the national rate of 2.7 per cent. A strong performance in the goods sector, particularly agriculture, mining and construction, led Manitoba’s expansion. 

In 2006, Manitoba’s agriculture sector rebounded from a significant decline the previous year, after its farmers suffered from heavy rains and the closure of the US border to cattle shipments in 2005.  Improved growing conditions in 2006 helped cereal and oil crop production rise by over 30 per cent.  Hog production reached record levels while cattle producers benefited from the lifting of the ban on shipments to the US.

Record-high metal and crude oil prices resulted in strong growth in Manitoba’s mining and petroleum industries.  The value of mineral and oil production reached more than $2.5 billion in 2006, an increase of 60 per cent over 2005. The outlook for this industry is extremely positive as 2006 saw new mines being developed and a record number of wells drilled.

Housing starts rose 6.3 per cent in 2006. The value of non-residential permits increased by 26.8 per cent, boosted by large projects such as the expansion of the Red River Floodway, the construction of Manitoba Hydro’s new headquarters building and the Winnipeg airport terminal. 

Growth in Manitoba’s service sector was a modest 1.8 per cent in 2006. Retail sales in Manitoba rose 5.9 per cent, below the national average of 6.4 per cent.

Manitoba experienced moderate employment growth of 1.2 per cent in 2006, significantly less than the national rate of 1.9 per cent.  Its unemployment rate was 4.3 per cent in 2006, well below the national rate of 6.3 per cent.  The province’s relatively low unemployment rate is assisted by the trend of Manitobans moving to Alberta, British Columbia and Ontario, where new jobs are created at a much faster pace.


After three consecutive years of strong performance, Saskatchewan’s real GDP gained only 0.4 per cent in 2006. This was largely due to low crop production, challenges in forestry and the wood and paper products industries and lower potash sales due to stalled contract negotiations with China. However, the performance remained robust in manufacturing (3.9 per cent), services (2.9 per cent), construction (5.4 per cent), retail trade (5.6 per cent), and value of exports (11.1 per cent).  Real GDP growth is forecast to increase by 2.6 per cent in 2007 as potash sales rebound and crop production improves.  Although agriculture contributes less than 7.0 per cent to the total provincial economy directly, its secondary impact is much larger in the manufacturing and service sectors.  In 2006, Saskatchewan farmers harvested 16.5 per cent less than in 2005. Despite the decreased crop yield, crop quality was excellent in 2006.

Housing starts increased by 8.1 per cent, the second highest in Canada. While investment growth was below the national average in 2006, it increased 8.7 per cent to $9.7 billion, which is the highest level recorded in Saskatchewan and double that of 1991.

Saskatchewan’s average annual growth in labour productivity was the second highest in the country and above the national average through the period 1997 to 2005.  The province’s labour productivity in 2005 was $38.60 (real GDP per hour worked, in 1997 dollars), which is still below the national average.  Employment increased to the highest level ever and the third highest in Canada, with unemployment at the lowest level since 1981 at 4.7 per cent.


Alberta’s considerable economic growth in 2006 resulted in a 6.8 per cent increase in real GDP, the highest of any Canadian province. The increase was primarily driven by the energy sector, as the price of oil rose by 17.0 per cent compared to a year earlier. Crude oil production increased by 6.5 per cent and investment in the energy industry also rose by 14.4 per cent compared to the previous year. The manufacturing sector saw strong growth of 7.6 per cent in 2006. The activity in the petrochemical, machinery and heavy equipment industries that support the oil sector accounted for most of these gains.

In 2006, the province’s unemployment levels continued to drop, reaching 3.4 per cent (a 30-year low) as nearly 85,000 new jobs were created. Overall population grew by 3.0 per cent, raising Alberta’s population to almost 3.4 million. As a result, housing starts expanded 8.1 per cent as both demand and housing prices increased sharply in urban centres.  Combined with the construction of major projects triggered by energy sector investments, Alberta contributed half of the gains in total construction activity nationwide.

Disposable incomes grew by 11.8 per cent due to wage pressures, pushing retail sales up by 16.7 per cent and increasing consumer spending for the third consecutive year (7.9 per cent over last year). Concerns have been raised, as the provincial inflation level is nearly twice the national average.
One of the few weaknesses in the 2006 Alberta economy occurred in the agriculture sector, which posted a 10.0 per cent decline in major field crops. Severe weather from heat and hailstorms is considered the main factor for the first regression of the industry in four years. The forestry sector also continues to struggle: timber demand and prices are low due to a depressed US housing market; costs and labour pressures are high due to the burgeoning oil and gas sector; and the rapid increase in mountain pine beetle population poses an increasing threat.

British Columbia

Fuelled largely by upbeat consumer spending, in 2006 British Columbia posted a respectable 3.6 per cent growth in real GDP. Consumer spending has been buoyed by low inflation, escalating property values and lower import prices due to the rising value of the Canadian dollar. As well, increasing net in-migration, high employment levels and a 6.2 per cent income jump contributed to the higher spending.

Led by the strength of the mining sector, British Columbia's monthly unemployment rates dropped to 4.3 per cent in January 2007, the lowest rate in 30 years.  With labour shortages looming, British Columbia is making better use of existing programs to attract foreign workers, and recently announced changes to mandatory retirement laws. As part of an overall commitment to open up markets and adopt a global market perspective, the Provinces of Alberta and British Columbia have signed an agreement to remove barriers to labour mobility and intra-provincial trade.

British Columbia is experiencing a residential and non-residential construction boom in communities across the province. Major transportation infrastructure projects include the expansion of Vancouver’s rapid transit system and numerous projects related to the Asia-Pacific Gateway.  Other major infrastructure projects include the expansion of the Vancouver Trade and Convention Centre and the development of venues for the 2010 Winter Olympic and Paralympic Games.

Generating approximately $9.8 billion in revenue in 2006, British Columbia's tourism industry was one of the largest industries in the province, accounting for more than 117,900 direct jobs. Noteworthy is the work of rural communities to develop and capitalize on the growth of the cruise sector. With 520 ships bringing 1.3 million passengers to ports on British Columbia’s coast, the total economic impact of this sector is estimated at $1.25 billion and almost $90 million in direct and indirect taxes. The tourism sector is facing increasing labour shortages and, between 2007 and 2015, will need to fill a minimum of 54,000 new jobs. In addition, the continued decline of American cross-border tourists due to high gas prices, the strength of the Canadian dollar and newly implemented security initiatives has required that the industry adapt to increased domestic tourism.

Although the British Columbia economy is performing very well, there are a number of areas of concern. Exports dropped in 2006, mainly due to declining housing starts in the US and the strong Canadian dollar. Furthermore, the rapid spread of the mountain pine beetle has had a deepening impact on some 180 British Columbia interior communities whose economies depend on the forest resource.  With the decline of US demand coinciding with the higher allowable cut, British Columbia mills have excess inventory and diminishing returns.  The affected communities and regions are being challenged to identify and stimulate new sources of growth through emerging opportunities in local economic diversification.