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Minister’s Message

 

The Honourable Peter G. MacKaySince I was first appointed to Cabinet in 2006, I have travelled across the Atlantic region to communities large and small and have seen first-hand many incredible success stories. I have met with hundreds of local entrepreneurs and community leaders who are helping to make the region a great place in which to live and work. These men and women believe - as does our government - that Atlantic Canadian businesses and communities have what it takes to compete in today's global economy.

The Atlantic Canada Opportunities Agency (ACOA) is considered a leader in encouraging innovation and helping to further the growth of key industries in the region such as aquaculture, life sciences and aerospace and defence. It also remains a central player, with Transport Canada and Atlantic Canada's provincial governments, in advancing the trade and business growth potential of the Atlantic Gateway.

This report shows how the Agency is making a real difference in the lives of Atlantic Canadians and the communities where they live and work. More research and development is being done, particularly by the private sector; ACOA's clients are exporting to more markets; more individuals are gaining the necessary skills to improve the region's productivity and competiveness; and more communities are creating a stronger economic foundation.

I share with the Agency's staff pride in the role that ACOA is playing in Atlantic Canada.

 

 

 

 

__________________________________

The Honourable Peter G. MacKay
Minister of National Defence and
Minister for the Atlantic Gateway

 

 

 

 

 

 

Minister of State's Message

 

The Honourable Keith AshfieldAs Minister of State for the Atlantic Canada Opportunities Agency, I am pleased to share with you the Agency's 2007-2008 Departmental Performance Report. As you will see in this report, ACOA's policies and programs are helping to strengthen Atlantic Canada's economy and foster new opportunities for long-term growth and sustainability.

This report shows how the Agency is working with small and medium sized enterprises to sharpen their entrepreneurial skills, adopt new technologies, access export markets, and initiate and commercialize homegrown research and development.

Results also demonstrate how ACOA is working effectively with Atlantic Canadian communities to help them strengthen their economic base by developing and diversifying local economies, attracting new business, recruiting and retaining skilled workers, and ensuring a good quality of life for Atlantic Canadians. In championing the assets of Atlantic Canada, ACOA helps mobilize partners to ensure that our communities have the right infrastructure and the capacity to compete in a global economy.

Finally, this report highlights how ACOA's continuous work on regional policy development and its vigorous advocacy are ensuring that Atlantic Canada's interests are reflected in national policies and programs.

I am confident that the Agency's 2007 2008 Departmental Performance Report will reinforce for you that ACOA is a champion for Atlantic Canada - helping the region tackle its economic challenges and maximize its opportunities. Together, with Atlantic Canadians, ACOA is building a stronger regional economy and, ultimately, a stronger country.

 

 

 

 

__________________________________
Honourable Keith Ashfield
Minister of State (Atlantic Canada
Opportunities Agency)









 

Section I – Agency Overview

1.1 Summary Information

1.1.1 Raison d’tre


The Atlantic Canada Opportunities Agency (ACOA) works to create opportunities for economic growth in Atlantic Canada by helping businesses become more competitive, innovative and productive, by working with communities to develop and diversify local economies, and by championing the strengths of Atlantic Canada in partnership with Atlantic Canadians. It plays an important role in developing and supporting policies and program that strengthen Atlantic Canada’s economy. This work addresses the Agency’s mandate “… to increase opportunity for economic development in Atlantic Canada and, more particularly, to enhance the growth of earned incomes and employment opportunities in that region.”

(Part I of the Government Organization Act, Atlantic Canada 1987 , R.S., c G-5-7, also known as the Atlantic Canada Opportunities Agency Act )


1.1.2 Responsibilities

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

ACOA’s head office in Moncton, New Brunswick, is home to branches responsible for Policy and Programs, Finance and Corporate Services, Human Resources, Communications, and Legal Services. The Agency has 36 regional and field offices in cities and towns across the four Atlantic Provinces. These are led by regional vice-presidents located in each provincial capital, who are responsible for the delivery of ACOA programs. Through its Ottawa office, ACOA ensures that Atlantic Canada’s interests are reflected in both the policies and programs developed by other departments and agencies of the federal government.

Although the Agency’s policies and program tools have changed since its inception, the overall goal of ACOA has always been to help the Atlantic region realize its full potential in terms of productivity, competitiveness and economic growth. Modifications have been made to its financial support programs for SMEs[1] but, essentially, its vision for Atlantic Canada (i.e. increasing opportunity for economic development in Atlantic Canada) is still at the heart of the Agency’s operations.

ACOA capitalizes on regional strengths by using a balanced approach to tackle economic development challenges facing Atlantic Canada. This is achieved by identifying and addressing structural weaknesses in the economy, helping communities and businesses to overcome barriers, and finding new opportunities for growth. It is also within this context that ACOA is committed to helping the region make the transition to a more innovative, productive and competitive economy.

1.1.3 Strategic Outcomes

In order to effectively pursue its mandate, the Agency aims to achieve the following strategic outcomes.

1.    Competitive and sustainable Atlantic enterprises, with emphasis on those of small and medium size (Enterprise Development).
2.    Dynamic and sustainable communities for Atlantic Canada (Community Development).
3.    Policies and programs that strengthen the Atlantic economy (Policy, Advocacy and Coordination).

1.1.4 Program Activity Architecture

The chart below illustrates ACOA’s complete framework of program activities and program sub-activities, which contribute to the Agency’s three Strategic Outcomes. It reflects the results of policy research and analysis; periodic review of program effectiveness; ongoing dialogue with other stakeholders in the region; and the priorities and directions of the Government of Canada.

FlowChart:ACOA's complete framework of program activities and program sub-activities


1.2 Summary of Performance

1.2.1 Summary of Performance and Achievements in 2007-2008



Strategic Outcome 1: Competitive and sustainable Atlantic enterprises, with emphasis on those of small and medium size



Performance Indicators

 


Targets

 


Performance Summary

Employment growth ratio of ACOA clients versus comparable firms[2]

 

Ratio of 1 to 2

On track (1.2)

Increase in GDP per 1$ of ACOA expenditure

$4 to $5 in GDP gains for every $1 of ACOA expenditure

Exceeded – GDP increased $7.20 for every $1 of ACOA expenditure

Summary of Achievements against 2007-2008 Priorities

  • Over 2003-2008, direct ACOA support to businesses for commercial projects produced increases of over $7 in GDP gains for every dollar of ACOA expenditure.
  • Fostered improved productivity and competitiveness of innovative technologies in Atlantic Canadian companies through enhanced efforts to assure the realization of their commercial opportunities. The Agency approved the funding of 31 new research and development projects under the Atlantic Innovation Fund, committing over $80 million, while continuing to focus on commercialization of technologies resulting from successful projects funded previously.
  • Improved the climate for business growth for small and medium-sized enterprises to help them start, expand and modernize their businesses. A significant majority of participants in skills development activities reported that the skills acquired were relevant to enhancing their business start-up, survival or growth.
  • Supported the efforts of two recently established angel networks that provide much needed equity financing to deserving early-stage enterprises.

Program Activity

Expected Results

Planned Spending
($ millions)

Total Authorities
($ millions)

Actual Spending
($ millions)

To obtain further information, click on the Government of Canada Outcomes or visit http://www.tbs-sct.gc.ca/pubs_pol/dcgpubs/mrrsp-psgrr/wgf-cp_e.asp.

Alignment with Government of Canada Outcomes

2007-2008

2007-2008

2007-2008

Fostering the development of institutions and enterprises, with emphasis on those of small and medium size

Improved growth and competitiveness of Atlantic Canadian SMEs

208.6

216.3

213.6

Mouse Strong Economic Growth




Strategic Outcome 2: Dynamic and sustainable communities for Atlantic Canada



Performance Indicators



Targets


Performance Summary

Increased capacity in community decision making, planning and delivery

Economic development plans in place and community economic development underway

Program evaluations currently underway; results will be available in 2009-2010 Performance Report

 

Survival rate of rural businesses (ACOA clients versus comparable firms)

Stabilize or increase survival rate of rural businesses

On track.

ACOA clients: 46%

Comparable firms: 39%

Summary of Achievements against 2007-2008 Priorities

  • Data obtained from Statistics Canada demonstrated that the survival rate over the first five years of operation for ACOA clients in rural communities is more stable than the rate for comparable firms.
  • ACOA continued to help communities build their capacity to identify and coordinate the implementation of priorities for economic development in their region.
  • In 2007-2008, through ACOA’s main tool for community investment, the Innovative Communities Fund, the Agency contributed over $52 million toward 152 projects across Atlantic Canada, leveraging another $106 million.
  • A summative evaluation of the Community Development investment program in March 2008 concluded that the program addressed the needs of communities and enhanced their capacity for economic development initiatives.

Program Activity

Expected Results

Planned Spending
($ millions)

Total Authorities
($ millions)

Actual Spending
($ millions)

 

Alignment to Government of Canada Outcomes

2007-2008

2007-2008

2007-2008

Fostering the economic development of Atlantic communities

Enhanced business and economic opportunities for Atlantic Canada communities;

Enhanced community collaborations

100.9

106.3

104.8

Mouse Strong Economic Growth

Special Adjustment Measures

Reduced impact of economic crisis

40.5

29.8

29.6

Mouse Strong Economic Growth

Infrastructure Programming

Enhanced infrastructure in urban, rural communities, and public infrastructure

5.1

11.7

11.7

Mouse Strong Economic Growth




Strategic Outcome 3: Policies and programs that strengthen the Atlantic economy


Performance Indicators

Targets

Performance Summary

Atlantic regional programs/initiatives implemented or adjusted as a result of ACOA policy, advocacy and coordination work

Continued government support of Agency priorities, collaboration with other federal departments, and engagement with other partners in Atlantic Canada in areas that will contribute to increasing the competitiveness of Atlantic Canada’s economy

Successful collaborative efforts with other government departments, as well as with the four provincial governments of the region, on key issues pertaining to ACOA’s priorities

Summary of Achievements against 2007-2008 Priorities

  • ACOA carried out policy analysis and research in areas such as: renewable resources, demographic issues, labour force trends and productivity.
  • Explored issues relating to productivity and competitiveness in the renewable resource sectors, resulting in an in-depth analysis of the Atlantic Canadian forest industry as well as participation in a resource processing industries scenario planning exercise with Industry Canada and other government partners.
  • Conducted studies and other activities targeting the Atlantic Gateway, which resulted in the finalizing and launching of the Atlantic Gateway Business Case and the signing of a Memorandum of Understanding between the Government of Canada and the four Atlantic Provinces.
  • ACOA continued to advocate the interests of Atlantic Canada to make new government initiatives more responsive to the needs of Atlantic Canada through Advocacy Champion files.

Program Activity

Expected Results

Planned Spending
($ millions)

Total Authorities
($ millions)

Actual Spending
($ millions)

 

Alignment to Government of Canada Outcomes

2007-2008

2007-2008

2007-2008

Policy

Strategic, researched policy decisions reflecting the opportunities and challenges in the Atlantic region’s economy, while considering enterprise and community development potential

7.7

6.2

6.4

Mouse Strong Economic Growth

Advocacy

Federal policies and programs that reflect Atlantic Canadian enterprise and community development needs and interests

4.1

4.3

3.4

Mouse Strong Economic Growth

Coordination

Coordination of other federal departments’ and other stakeholders’ policies and programs within the region to form integrated approaches to development

2.3

2.3

2.1

Mouse Strong Economic Growth


 

1.2.2 Risk Analysis

ACOA’s Response to the Changing Economic Landscape

ACOA operates within the changing economic landscape of Atlantic Canada. The Agency’s broad-based approach to economic development addresses the underlying structural challenges in the regional economy. Being proactive in identifying opportunities requires the Agency to assess external economic factors that can affect the delivery of its programs and services. The following provides an outline of ACOA’s response to the changing economic landscape in 2007-2008.  A statistical data analysis for Atlantic Canada’s economy for 2007-2008 is detailed in Section 3 of this report, as are provincial economic challenges.

Challenges and Opportunities

During the past year, challenges such as the substantial rise of the Canadian dollar, the slowdown of the American economy and high and rising prices for energy, have combined to affect the competitiveness of firms in the Atlantic region. Along with the difficulties faced by the region’s resource-extraction and processing industries, these challenges have tested Atlantic Canada’s economy.

Atlantic Canada remains one of Canada’s most rural regions. In recent years, it has been characterized by declining population levels brought upon by a high level of out-migration, together with low levels of international immigration. Along with the dependence of many Atlantic Canadian communities on resource industries, concerns are emerging regarding the future supply of skilled labour and the need to increase productivity levels.

Opportunities for Atlantic Canada lie in the region’s strengths. One area of potential is in the repositioning of the region’s traditional resource-based industries to create higher value-added products that could penetrate new markets. This includes Atlantic Canada’s mineral and oil extraction and processing sectors, which are experiencing a rebound in activity. Other opportunities lie in the growth of new sectors such as aquaculture, bioscience, aerospace, information and communications technology (ICT) and alternative energies, such as wind and tidal.

The successful realization of opportunities in these areas will depend a great deal on close collaboration between the private sector and a number of partners including post-secondary institutions to support initiatives in human capital development and innovation. The high concentration of higher education institutions (HEIs) in Atlantic Canada represents an advantage for the growth of many sectors within the region, considering the variety of interactions HEIs have with businesses and communities.

In 2007-2008, ACOA continued to work directly with communities in all four Atlantic provinces to strengthen their decision-making capacity and aid in the diversification of local economies, through the promotion of:

  • competitive and sustainable Atlantic enterprises, especially small and medium-sized enterprises (SMEs);
  • dynamic and sustainable communities; and
  • policies and programs that strengthen the Atlantic economy.

ACOA continues to be the region’s primary instrument for delivering federal economic development programs. In responding to the challenges and opportunities faced by the region, the Agency ensures that its economic development approach reflects the federal government’s comprehensive long-term economic plan, Advantage Canada . Advantage Canada focuses on creating Canadian advantages that will help the nation improve its quality of life and succeed on the world stage. The Agency directly supports three of the stated elements of Advantage Canada : the Entrepreneurial Advantage , the Knowledge Advantage , and the Infrastructure Advantage . While some challenges are a result of global forces, such as the rising Canadian dollar or the failing American economy, the Agency still has a role to play, for example, in helping firms diversify their export base. Other challenges, such as the downturn faced by resource-dependent communities, skilled-labour shortages befalling the region, and low-productivity levels are being actively tackled by Agency initiatives.

In order to ensure that firms based in Atlantic Canada remain competitive in global markets, the Agency supported a range of productivity improvements in SMEs through technology adoption, private sector R&D and the commercialization of new technologies by means of program tools such as the Business Development Program (BDP) and the Atlantic Innovation Fund (AIF).

As a means of dealing with lower productivity levels in the region and targeted skills shortages, ACOA contributes to the creation of a Knowledge Advantage in the region, primarily by supporting measures that enhance levels of business skills in Atlantic Canada. These initiatives are an investment in the quality of human capital that is a crucial component of business competitiveness in the region. Agency programs encouraged SMEs to improve their competitiveness by investing in the development of technical, trade, commercialization and management skills. The Agency reached out to various groups in the region − in both urban and rural communities − and supported them in developing their entrepreneurial skills by focusing initiatives on women in business and young entrepreneurs.

As entrepreneurs throughout the region are finding it difficult to fill vacancies within their organizations, the Agency continues to tackle issues of labour shortages. Through co-operation with provincial governments and Citizenship and Immigration Canada, the Agency has pursued the development of an Atlantic Population Strategy, the goal of which is to increase immigration and improve the proportion of international immigrants who decide to settle and remain in the region. A skilled immigrant workforce will have a direct and positive impact on Atlantic Canada’s success in the global economy.

In order to boost the region’s competitiveness and to build new opportunities in emerging industries, ACOA supports Atlantic Canada’s Infrastructure Advantage by investing inworld-class infrastructure to improve the flow of people, goods and services, including research facilities and sustainable initiatives at the local level. Throughout the last fiscal period, the Agency continued, along with the four Atlantic Provinces and other federal departments,to be a key player in the coordination and development of the Atlantic Gateway. The Atlantic Gateway will facilitate trade flows leading to increased economic opportunities in Atlantic Canada and North America's east coast.

Agency efforts in innovation, including involvement in initiatives such as Springboard Atlantic , have encouraged partnerships between businesses and the research community, including higher education institutions. In 2007-2008, Round V funding of the AIF program provided opportunities for Atlantic Canada’s universities, colleges and businesses to further build on the region’s research strengths. In early 2008, 29 projects from the region were approved for over $63 million in AIF funding in areas such as software development, biodegradable materials, human genetics, bio-medical engineering and aquaculture-related research.

Sustainable opportunities at the local level are also supported through the Innovative Communities Fund (ICF), which funds strategic projects that build the economies of Atlantic Canada’s communities. The ICF focuses on the strengths of communities and provides the tools needed to identify opportunities available for their sustainable economic growth. For example, during the 2007-2008 period, ICF funding was made available throughout the region in order to facilitate accessibility to technologies and training programs, which leads to long-term employment and economic capacity building in rural communities.

ACOA’s Key Risks and Risk Management

ACOA's Five Key Risks

Strategic Risk
The risk that Agency strategies are not aligned with government economic objectives/policies, nor reflective of emerging economic development concepts, thereby leading to opinions that the Agency is redundant.

Cost of Doing Business Risk
Risk that the cost of doing business escalates and represents an increasing portion of the Agency's budget, adversely affecting operational efficiency and leading to budgetary pressures for programming.

People Management Risk
The risk that ACOA's talent agenda (i.e. leadership, recruitment, training, promotion, work/life balance, competencies) does not adequately sustain the necessary workforce required to carry out the Agency's mandate in the future and that the Agency experiences a significant loss of corporate memory.

Information Management Risk
The risk that data being collected is inaccurate, incomplete, excessive or inaccessible, so that decision making and efficient use of resources is adversely affected.

Reputational Risk
Reputation risk materializes when the proactive flow of positive information wanes and/or when the negative publicity triggered by certain internal or external events, whether accurate or not, compromises the Agency's reputation and results in a loss of credibility.

One of the priorities of 2007-2008 was the integration of a robust risk management function into the Agency’s programming and internal services. In this regard, the Agency made considerable advancement in the development and implementation of the risk management function, both in terms of adherence to Treasury Board requirements, as well as in consideration of expectations promulgated by companies and organizations in both the private and public sectors.

More specifically, ACOA addressed the following tasks.

Integration of risk management into Agency activities

Risk management was integrated in the Agency’s project evaluation process, corporate planning process, internal audit planning, evaluation planning, human resource management, business continuity planning, and internal audit engagement scope and objectives identification. Further work focused on continuing risk integration in programming is scheduled for fiscal year 2008-2009.

Assurances on the level of risk mitigation

Risk mitigation measures were developed for the Agency’s Key Risks and articulated in the Corporate Risk Profile, approved by the Executive Committee. The Agency also completed several other key reports and activities, which were highlighted by Treasury Board as being necessary for a strong and sustainable risk management function. These include a Corporate Risk Profile; Risk Register; Integrated Risk Management Framework; Risk Continuous Learning Strategy; and Integrated Risk Management Process. Comprehensive risk mitigation strategies were developed for each of the key risks. Implementation of the mitigation measures is monitored during the fiscal year and reported to the Executive Committee semi-annually.

1.2.3 Expenditure Profile

Overview

ACOA’s actual spending for 2007-2008 was $371.6 million and represents a change in spending of 11% or $47 million from $418.7 million in 2005-2006. Changes in the spending profile are primarily due to the following factors:

  • Expenditures in 2005-2006 were higher due to the reprofile of funds from 2004-2005. This was offset by a growth in expenditures for 2006-2007 and 2007-2008 under the Special Adjustment Measures activity as projects under the Saint John Shipyard Adjustment Initiative were approved and completed.
  • Expenditures under Infrastructure Programming show a decline starting in 2005-2006 as the projects under the Infrastructure Canada Program were nearing completion and the program started winding down, while expenditures from new activities occurring under infrastructure are now reported by Infrastructure Canada.
  • Changes in spending under other activities are showing the impact of reallocation and Expenditure Review decisions made in 2004-2005 and 2005-2006.

The table below highlights the changes in spending for each Program Activity and highlights the variances between the Main Estimates, Planned Spending, Authorized Spending, and Actual Spending for each Program Activity in 2007-2008.


Program Activity

2005-2006 ($ millions)

2006-2007 ($ millions)

2007-2008
($ millions)

Actual Spending

Actual Spending

Mouse Main
Estimates

Planned Spending

Total Authorities

Actual Spending

Fostering the development of institutions and enterprises

259.2

223.6

205.8

208.6

216.3

213.6

Fostering the economic development of Atlantic communities

114.3

115.3

100.8

100.9

106.3

104.8

Special Adjustment Measures

1.9

13.1

40.5

40.5

29.8

29.6

Infrastructure Programming

30.9

21.9

5.1

5.1

11.7

11.7

Policy

5.8

5.9

7.7

7.7

6.2

6.4

Advocacy

3.1

3.3

4.1

4.1

4.3

3.4

Coordination

3.5

2.2

2.3

2.3

2.3

2.1

Total Agency Spending

418.7

385.3

366.3

369.2

376.9

371.6


Analysis of 2007-2008

Planned spending in 2007-2008 of $369.2 million was augmented by a further $7.7 million provided through new authorities and transfers including compensation adjustments, severance pay, parental leave benefits and leave payout, operating budget carry forward, increased costs of employee benefit plans and other minor funding adjustments.

Actual spending of $371.6 million represents a surplus of $5.3 million from total authorities of $376.9 million. The Agency has access to a portion of this surplus and plans to carry forward $3.6 million to meet planned requirements in 2008-2009.

Analysis by Activity

2007-2008 Actual Spending by Strategic Outcome, Expressed as a PercentageFor the most part, spending was according to plan with a reallocation of $10.7 million from the special adjustment measures activity. Due to changes in timelines for the Saint John Shipyard Adjustment Initiative, $6.5 million was allocated to the infrastructure programming activity to meet commitments on projects reprofiled from previous years, and $4.2 million was allocated to the activity, Fostering the economic development of Atlantic communities, in order to meet the higher level of commitment experienced under the Innovative Communities Fund.

Voted and Statutory Items

This table displays the way Parliament approved resources and shows the changes in resources derived from supplementary estimates and other authorities, as well as how funds were spent.


Vote # or
Statutory Item (S)

Truncated Vote or
Statutory Wording

 

2007-2008 ($ millions)

 

Main Estimates

Planned Spending

Total Authorities

Actuals

1

Operating expenditures(1)

 

79.1

82.0

88.4

83.1

5

Grants and Contributions

 

279.2

279.2

279.1

279.1

S

Contributions to employee benefit plans

 

8.0

8.0

9.4

9.4

 

 

Total

366.3

369.2

376.9

371.6


(1) Planned spending includes funding to provide information serviceson government regulations, programs and business support to small businesses and entrepreneurs;funding in support of the Federal Accountability Act to evaluate all ongoing grant and contribution programs every five years; and incremental funding in support of new requirements of the policy on Internal Audit.

Total authorities include the carry forward of unused funds from the previous fiscal year; funding to meet legal requirements of the employer such as parental leave, entitlements upon cessation of service or employment and adjustments made to terms and conditions of service or employment in the public service; funding as a result of adjustments made to terms and conditions of service or employment of the federal public administration; funding for activities that are essential to the continued implementation of the Public Service Modernization Act; and funding for the Canada Strategic Infrastructure Fund relating to investments in public infrastructure projects designed to improve the quality of life in both urban and rural communities.

Actual spending is less than total authorities and reflects the carry forward of funds for initiatives planned in 2008-2009.

1.2.4 Human Resources




Planned

Actual

Difference

Human Resources (FTEs)

757

726

31


Actual utilization of human resources increased to 726 Full-time Equivalents (FTEs) or about 4% over the previous year. Although planned utilization was 757 FTEs, changes in staffing plans and other adjustments to operational requirements resulted in lower utilization and variances were experienced in most activities.