Section II – Reporting on Results: Analysis of Program Activities by Strategic Outcome

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

ACOA continues to deliver programs and initiate strategies that are constantly evolving in order to adapt to the current requirements of the local business community and the demands of the global marketplace. ACOA strives to apply its limited resources to areas that offer the greatest potential impacts. Given the mandate of the Agency, ACOA focuses on Atlantic enterprises that are of a small and medium size because they have proven to have the most significant and sustained impact on job creation in Atlantic Canada[3].

This focus has resulted in employment growth and wealth creation for the benefit of Atlantic Canada residents. Employment in small and medium-sized ACOA clients is estimated to have grown by an average of 2.7% per year from 1995 to 2005, while comparable firms experienced employment growth of 2.2%. ACOA thereby attained its target (ratio of 1.2)[4]. 

Job gains for ACOA client SMEs were particularly significant in the manufacturing sector and in accommodation and food services. In fact, employment growth in the manufacturing sector averaged 4.1% per year over the 10-year period and represented over half of the job gains registered by ACOA client SMEs. Employment for comparable firms in the manufacturing sector increased at a slower pace, coming in at an average of 2.9% per year. Moreover, net job gains in ACOA client SMEs operating in the manufacturing sector were higher than those in comparable firms.

Employment in the accommodation and food services sector grew by an average of 4.9% per year from 1995 to 2005 for ACOA client SMEs. On the other hand, job growth was weaker among comparable firms operating in this sector, averaging 2.2% per year over the same time period.

Another measure of the impact of ACOA’s expenditures in direct support of businesses in Atlantic Canada is the increase in the GDP resulting from these investments. In its most recent Five-Year Report to Parliament (2003‑2008) , it is estimated that real GDP was $1.2 billion higher (in constant 1997 dollars) in 2007 than it would have been in the absence of ACOA’s expenditures in direct support of businesses[5]. Furthermore, over the five-year period covered by the report, direct ACOA support to businesses for commercial projects produced increases of over $7 in GDP gains for every dollar of ACOA expenditure.

During the past year, the Agency continued to support innovation and commercialization of research and development within the region’s SMEs, universities and other organizations. Strong emphasis was also put on the development of skills within the SMEs as well as on fostering improved international trade.

ACOA also continued to support strategic sectors, such as aquaculture, manufacturing, tourism and knowledge-based industries. These sectors remain important to the region and present opportunities for continued development. By helping individual SMEs in both rural and urban areas to improve their competitiveness, the Agency delivers on this strategic outcome.

2.1.1 Program Activity: Fostering the development of institutions and enterprises, with emphasis on those of small and medium size

For detailed information on any of these program sub-activities, please click on the link http://www.acoa-apeca
.gc.ca/e/library/reports
/dpr2008/index.shtml

Program Activity Summary: ACOA works to improve the region’s capacity for economic growth through a variety of strategically focused mechanisms, including both direct and indirect assistance to SMEs and institutions, and support to industry associations and other not-for-profit organizations. The Agency partners with universities and other institutions to increase the region’s research and development capacity, augment commercialization abilities and improve productivity, thereby promoting and enabling the region’s transition to the knowledge economy. ACOA also helps enterprises to start, expand or modernize their businesses, to establish export activities and to develop the skills needed to improve their competitiveness.

Benefits for Canadians: The Agency’s mission is to develop all regions of Atlantic Canada, through the strengthening of SMEs. The challenge to attract the required capital to start, grow and expand a business varies based on the sector of the business and its location. For example, it is easier to finance an asset-based company than a knowledge-based venture, because there are assets that can be pledged as collateral. Also, it is more difficult to finance a building in a rural area than a similar building located in an urban area, because the probability of reselling an urban property, in the event of a default on the loan, is better for the creditor. This is why ACOA pays special attention to SMEs facing these bigger challenges. By helping SMEs to become more innovative, productive and competitive, the Agency helps all regions of Atlantic Canada to become stronger, thereby facilitating their increased contributions to the national economy.

Performance Analysis:ACOA fostered the development of institutions and enterprises, with emphasis on enterprises of small and medium size, through a number of sub-activities. The Agency’s direct funding to SMEs principally targets priority areas of innovation, skills development and trade. The type of activities supported includes research and development, technology adoption, productivity and quality improvement, skills development, marketing and trade, new establishments and expansion/modernization. ACOA endeavours to deliver strategic assistance as opposed to being a broad-based financing provider. 

In the priority area of Innovation , the Agency approved the funding of 31 new research and development projects under the Atlantic Innovation Fund (AIF), committing over $80 million and leveraging an additional $83 million from other sources such as universities and other research institutions, provincial governments, the private sector and national programs.  Since the advent of the AIF in 2001, increased capacity for innovation has been built in the region, in the various universities and community colleges. The AIF has also led to an increase in the level of privately funded R&D that is being carried out in Atlantic Canada. Although still below the national average, private funding for R&D has been increasing because ACOA’s project selection process is focused on increasing the participation of commercial entities. For example, the percentage of approved AIF projects from commercial proponents was 55% in 2007-2008, and over 90% of newly approved institutional projects now have private sector partners (up from 85% in 2006-2007).

Although it is not quantifiable, another achievement realized by the AIF is in the quality of projects that are presented for consideration in recent calls for Project Proposals. The vast majority of projects are of high quality, present intriguing scientific opportunity and are led by experienced researchers. There is no shortage of interesting research proposals being presented at each round. This is good news for the region’s long-term economic prospects.

In addition to the AIF, ACOA funds research and development, technology adoption/adaptation and productivity improvement projects under the Business Development Program (BDP). During 2007-2008, a further $20 million was approved for projects related to innovation.

Another sub-activity for the Agency is Entrepreneurship and Business Skills Development . ACOA promoted the benefits of entrepreneurship as a career choice. The success of these efforts was validated by the fact that ACOA has met its three-year target established in 2005-2006. Since then, 68% of participants in entrepreneurship awareness and promotion activities have demonstrated an increased intent to start a business.

Creating new businesses is important, but the Agency also recognizes the importance of enabling growth and continuity of the existing pool of SMEs. Accordingly, ACOA funded the development of business skills aimed at improving managerial activities within existing enterprises. Eighty-seven percent of participants in business skills development activities indicated the skills acquired were relevant to enhancing the survival and growth of their businesses, again surpassing the three-year target established in 2005-2006. Improving skills, whether they are technical, marketing, human resource or even financial, will help SMEs to improve their productivity and competitiveness.

The Agency’s efforts in the area of Trade are geared to helping SMEs to improve their export-readiness potential and to develop increased export capability. In 2007-2008, these programs produced 87 new exporters and helped 162 SMEs to develop new export markets. This is achieved mainly through direct funding to SMEs, which is aimed at allowing them to undertake marketing activities outside Canada, in markets that have the potential to become fertile for the enterprise.

More than 1,000SMEs in Atlantic Canada became one step closer to being export-ready by participating in trade awareness sessions, mentoring programs or skills development courses supported by ACOA. Through these activities, ACOA continues to create an environment where SMEs can develop the knowledge and confidence required to pursue new market opportunitiesand sell successfully in the global marketplace. This leadership role enables the Agency to help strengthen Atlantic Canadian SMEs, allowing them to grow and become more competitive.

The Agency promotes Atlantic Canada as a profitable location in which to do business. Activities undertaken under the Investment sub-activity resulted in the generation of 475 investment leads.  These leads were identified as a result of close collaboration with partners who are equally committed to making contact with key decision makers and encouraging them to do business from Atlantic Canada. The Agency’s investment-dedicated website, http://www.acoa-apeca.gc.ca/invest, experienced increased traffic; a total of over 15,000 unique visits were made to the site during 2007-2008.

Foreign Direct Investment is recognized as a significant catalyst to increasing innovation, productivity, trade and wealth creation for the region. ACOA and its partners, through the Pan Atlantic Investment Coordination Committee, are constantly adapting their strategies in order to ensure the optimal use of financial and human resources toward attracting foreign players who are willing to consider locating, or relocating, their operations to Atlantic Canada. As innovation capacity in the region is being developed through AIF funding and resulting products, this will become another enticing feature that will be used by the Investment group and its partners.

A number of financing gaps still exist in Atlantic Canada and the Agency aims to address these gaps, which are more prevalent in rural than in urban areas. Through the Financing Continuum sub-activity, ACOA provided financial support to SMEs and not-for-profit organizations allowing them to undertake 157 projects, with a total ACOA commitment of $25.3 million. Such investments supported new business establishments, expansion and modernization projects and increased marketing activities. This funding is critical for these SMEs to undertake such activities, which are necessary for their growth and survival. 

During 2007-2008, the Agency continued to foster the development of financing markets in Atlantic Canada.  ACOA aims to be a catalyst in developing the availability of capital, whether it be debt or equity, so that all SMEs have reasonable access to the money needed to finance growth throughout their life cycles. The Agency’s efforts in this area markets are best illustrated by the support provided to two recently established angel networks that provide much-needed equity financing to deserving early-stage enterprises. The First Angel Network Association and the Newfoundland and Labrador Angel Network are both active and growing, aided by the Agency support.

Through the Access to Business Information (Canada Business) , ACOA financially supported Canada Business, a focal point for entrepreneurs and businesses seeking information on government services, programs and regulations. A key indicator of its performance is client satisfaction, which is measured every two years. The survey completed in 2006‑2007 showed that 85% of those using Canada Business services in Atlantic Canada were satisfied with the quality of the information received. In fact, 87% of respondents believed that staff at the centres “went the extra mile”[7]. This service helped to make a difference both in the lives of Canadians and the Canadian economy, with 55% of respondents indicating that it helped them start a business[8].

Through these sub-activities, ACOA provides assistance to enterprises in Atlantic Canada with the objective to improve their growth and competitiveness in the marketplace. Business survival rates can be used to measure ACOA’s performance in terms of competitiveness. A company’s survival depends on many factors including the age of the business, location and size. In Atlantic Canada, 87% of firms are in the small size category (fewer than 20 workers); 80% of ACOA’s start-up clients are in this category [9]. The impact of ACOA programming is evident among these small firms.

The five-year survival rate[10] for ACOA clients in the small category is notably above the rate for comparable firms. In fact, the business survival rate for ACOA clients in this size category is 46%, while comparable firms have a business survival rate of 33% after the crucial fifth year following start up.

The increase in company payroll can be used as a measure of enterprise growth, which also translates into growth in earned income. ACOA did not meet its annual target in this area, as payroll for ACOA client SMEs expanded by one percentage point less than payroll in comparable SMEs. This resulted in a ratio of 0.8, while ACOA’s target was 1.5 to 2. More specifically, payroll expanded by an average of 4.7% per year from 1995 to 2005 for ACOA clients, while comparable firms experienced a payroll expansion of 5.7%.

Many factors, in addition to year-to-year variability due to the nature of the data, could explain the performance of ACOA clients relatively to comparable firms. As is presented in the challenges and opportunities in Section 1.2.2, the substantial rise of the Canadian dollar and the rising cost of energy have compounded the competitiveness challenge of firms in the region. Moreover, the availability of skilled workers is a challenge that negatively affects the capacity of firms to grow their workforce. In that context, it makes sense for firms to generate productivity gains in order to remain competitive and grow their sales and exports. This is why the Agency has made it a priority to foster improved productivity by focusing its programming in the areas of R&D, the acquisition of advanced technologies and business skills development[11]. Given the fact that ACOA clients accounted for more than half of the region’s exports by SMEs in 2005 (54%), it is possible that these factors had a more significant effect on the business of the exporting companies.

Further research and analysis have confirmed that while the Agency’s clients have reduced their payroll growth relative to non-clients, the clients outperformed others in terms of labour productivity increases, sales and exports growth for the period 2001 to 2005.

According to Statistics Canada latest data, labour productivity in SMEs, which is estimated using the inflation-adjusted sales per worker, increased by 6.4% per year from 2001 to 2005 for ACOA clients, while comparable firms experienced a decline of 0.5%. Over the same period, sales by small and medium-sized ACOA clients have increased by an average of 4.7% per year, while comparable firms averaged only 2.1% sales growth. Finally, exports by small and medium-sized ACOA clients have increased on average by 12.3% per year. Exports by comparable SMEs have declined by an average of 5.9% annually.

 2.2 Strategic Outcome 2 – Dynamic and sustainable communities for Atlantic Canada

ACOA is committed to improving community economic infrastructure and strengthening strategic planning capacity as part of its goal to improve employment opportunities and stimulate economic growth in the Atlantic region. The Program Activities that pertain to this Strategic Outcome are:

• Fostering the economic development of Atlantic communities;
• Special Adjustment Measures; and
• Infrastructure Programming.

Sustainable and viable communities are essential to the economic growth of the regional economy. ACOA works closely with community stakeholders to participate in their efforts to take responsibility and accountability for their own development. To fill gaps in the community development model, ACOA supports other key community economic development organizations located throughout the region and directed by the communities themselves. This network of organizations works in a collaborative, co-operative way to address the many challenges of community development. ACOA plays a leadership role in bringing the partners together and ensuring that the communities themselves are leading the way.

ACOA and its funded organizations are based in virtually all Atlantic Canadian communities, from urban Halifax to rural Labrador and northern New Brunswick. In order to build communities, one must be present in those communities, working with people at the grassroots level. ACOA has 36 points of contact, including regional offices and district offices located throughout the region.

ACOA aims to maintain or improve the business survival rate of rural businesses in order to help create a strong economic climate at the community level.  This is achieved through the work of the Community Business Development Corporations (CBDCs) and the Regional Economic Development Offices (REDOs), for which ACOA provides annual operating support, as well as by ACOA’s direct investments for commercial and non-commercial project in rural communities. This collaborative effort, combined with ACOA investments in rural SMEs, demonstrates positive results. Data obtained from Statistic Canada demonstrates that the survival rate over the first five years of operation for ACOA clients in rural communities is higher than the rate for comparable firms. In fact, the business survival rate in this size category for ACOA clients is 46%, while comparable firms have a business survival rate of 39% after the crucial fifth year following start up.

2.2.1 Program Activity: Fostering the economic development of Atlantic communities

Program Activity Summary: The Atlantic Canadian economy is built on the region’s many geographic, linguistic and cultural communities. From small remote villages to larger urban centres, the opportunities and challenges vary significantly. Communities are the fundamental building blocks on which economies are built. Given their importance in an economic development framework, ACOA focuses targeted efforts and strategies on community development as one of the key pillars of its overall strategy for the region. ACOA supports Atlantic Canadian communities in their efforts to develop the resources they need to take full responsibility for their own economic development. ACOA works in co-operation with other levels of government, other federal government departments, non-government organizations, and community groups to lever support and coordinate economic development. This requires a flexible, holistic approach, based on the realities of a given community’s capacities, strengths and challenges.

Benefits for Canadians:   Atlantic Canada remains one of the most rural regions in Canada, with more than 40% of its population located in rural communities. In June 2007, ACOA initiated a process to identify new policy priorities for the Agency; the urban-rural issue was identified through this process. It is now widely recognized that urban and rural areas are interdependent − economically, socially and environmentally − and that they are important to each other’s development. In addition, urban-adjacent communities are better positioned to take advantage of urban economic opportunities for investment, markets and employment.

A recent study entitled ACOA Awareness and Perception Study [14] indicates that economic development stakeholders have noted that support for community economic development should be the Agency’s most critical concern.

Performance Analysis: In 2007-2008, ACOA continued to work in co-operation with communities by making strategic investments to capitalize on opportunities for sustainable economic growth and to build community development capacity as identified in community economic development plans and strategies. In doing so, ACOA invests in the development of strategic economic development infrastructure.

 ACOA’s main tool for community investment is the Innovative Communities Fund (ICF), which has two components: Strategic Community Capacity and Pro-active Investments.

In fiscal 2007-2008, ACOA committed over $52 million toward 150 projects across Atlantic Canada.

Of those projects, 140 were approved for the Strategic Community Capacity component, with a total ACOA contribution of $43.8 million leveraging another $72 million. This component is designed to support strategic initiatives identified by communities, community groups or networks of groups and/or industry sector associations. These initiatives tend to be smaller investments in the development of specific economic infrastructure. They help communities to strengthen their community capacity and economic base, aid in the development of strategic sectors and stimulate economic development.

For example, ACOA invested $209,000 in 2007-2008 in a multi-year project of the Newfoundland and Labrador Federation of Agriculture. Growth of the provincial cranberry industry could generate significant direct and indirect economic impacts, particularly in rural areas. This project will result in the development of an additional 52 acres, which will enable the farms involved to grow toward a sustainable, commercial level. It will also encourage further expansion of the industry. The project is an example of an industry association working together with the private sector and government to advance the agricultural sector.

The ICF’s Pro-active Investments component is intended to stimulate change through pro-active identification and implementation of strategic opportunities with local partners (e.g. Regional Economic Development Organizations, Community Business Development Corporations and local/municipal leaders). ACOA capitalized on the capacity, strengths and opportunities present in communities. There were 10 proactive investment projects approved in 2007-2008, for a total ICF contribution of $8.5 million; it leveraged more than $34 million from other funding partners.

For example, in 2007-2008, ACOA approved a $109,000 project with the Nova Scotia Community College (NSCC) to develop a business incubation centre. This three-year pilot project represents an investment to diversify and enhance the rural economy of Annapolis County. It is an opportunity to capitalize on existing assets and strengths that exist at the NSCC Annapolis Valley Campus, namely its world-renowned geomatics programs and its highly sought after graduates.

ACOA also continued to support 41 Community Business Development Corporations (CBDCs)in rural Atlantic Canada, through the Community Futures Program. The CBDCs provide assistance under the Seed Capital Program for loans to start, expand or improve a small business, as well as to acquire business skills training.

ACOA’s contributions permit the CBDCs to provide an essential source of investment capital for rural small business, as well as businesses counselling and skills development.

In fiscal 2007-2008, the CBDCs invested $57.7 million through 1,904 loans supporting small and medium-sized enterprises (SMEs). Of these loans, 884 were categorized as start-ups and the remaining 948 were for expansion and/or modernization of SMEs. CBDC investments leveraged $58.8 million from other existing sources such as the owner’s contribution, other federal/ provincial/municipal governments, councils, agencies and programs as well as private and non‑governmental sources (e.g. banks and other financial institutions). The CBDCs provided business counselling to more than 8,000 clients in 2007-2008 as part of their ongoing support to rural SMEs. During the same period, the CBDCs provided training to over 500 clients under the Seed Capital Program.

ACOA also continued to work in co-operation with other levels of government by supporting the 52 Regional Economic Development Organizations (REDOs) located in Atlantic Canada. ACOA invested a total of $9.1 million in operational funding to the REDOs for fiscal 2007‑2008. This investment leveraged an additional $9 million from provincial and municipal governments.  As a result of this investment, strategic plans were developed in rural communities to assist the communities in assessing their strengths and weaknesses in order to implement strategic initiatives that contribute to economic growth. Such initiatives ranged from mobilizing communities toward common goals to investing in strategic projects.

ACOA provided its continuous support to the Aboriginal communities and the Official Language minority priorities during 2007-2008.

Seventeen First Nation communities in Atlantic Canada were engaged in different phases of a Comprehensive Community Planning Process. Through this process, these communities − which are small, remote and characterized by an extremely high unemployment rate and a young, rapidly growing population − will develop a strategic plan to map out their future directions and economic development priorities. ACOA supported a variety of projects in such diverse fields as accessibility to business information, business support, Aboriginal procurement, tourism, business and workplace skills, economic diversification, and business and strategic planning. Through the Atlantic Policy Congress and work with Aboriginal Economic Development organizations, ACOA contributed to five economic development coordination mechanisms, including the Joint Economic Development Initiative, in order to encourage Aboriginal economic development in the region.

Recognizing the important role of official language minority communities in Atlantic Canada, ACOA continued to collaborate with Acadian and Francophone organizations to enable them to engage in activities that foster the sustainable community infrastructure necessary for economic development. In an effort to enhance the vitality of communities and support their development, the Agency supported internship and tele-learning initiatives such as the Community Entrepreneurial Leadership Development Program for Francophone Community Leaders in Atlantic Canada. ACOA also formed a committee with the region’s Réseau de développement économique et d'employabilité (RDÉE) with a view to better identify the economic development needs on the region.

2.2.2 Program Activity: Special Adjustment Measures

Program Activity Summary: There are circumstances in which federal government decisions, or impacts in an area of its mandate, have resulted in the need for a major adjustment in a community or region. From time to time, there is also a need for targeted government interventions as a result of natural disasters. These measures are based on the appropriation of new funds that are delivered through ACOA as the federal economic development agency for Atlantic Canada. Each special adjustment measure will have specific objectives, clients and performance measures.

Benefits for Canadians:While Canada’s strong economic fundamentals set the stage for long-term growth and prosperity, economic adjustments pose significant challenges for some workers and communities. Certain communities are vulnerable because of their dependence on a single employer or on a sector facing difficulties due to such factors as exchange rate fluctuations, increased competition and declining demand in key markets. Funding under special adjustment measures or under territorial and provincial agreements will assist communities in lessening the impact of economic downturn within their respective areas.

Performance Analysis:In 2007-2008, ACOA continued to deliver the Saint John Shipyard Adjustment Initiative (SJSAI) in response to the closure of the shipyard in Saint John, New Brunswick. This initiative was designed to ensure the transition from the closure of shipyard operations to redevelopment of the site for other economic development use, through $55 million in total available funding.

In the past year, this initiative has seen the conclusion of the former shipyard’s refurbishment into a green industrial park that is now poised to accept tenants.  In this regard, it is one of the few North American examples of the successful transformation of a former shipyard site. 

The first project approved under the Shipyard Redevelopment Program (SRP) included a feasibility study to identify the best use for the former shipyard site as well as site improvements, in order to remove impediments for future development. The total provisionally repayable contribution for this project was $9.95 million and was fully disbursed by the end of fiscal 2007-2008.

The SRP led to an initial application under the SJSAI’s Industrial Diversification Program (IDP) to assist in the establishment of a gypsum wallboard manufacturing facility on the former shipyard site. This project was allocated $35 million in provisionally repayable funding and was completed during fiscal 2007-2008.This plant employs 56 people with a monthly forecasted volume of 12-18 million square feet. The site’s owner, The Irving Group, is currently evaluating several proposals to utilize the balance of the SJSAI; these include additional manufacturing facilities that will create synergies with the wallboard plant.

2.2.3 Program Activity: Infrastructure Programming

Program Activity Summary:The provision and maintenance of quality public infrastructure provides the foundation for economic development and is critical for economic prosperity. Providing and effectively managing potable water, waste treatment facilities, highways, municipal roads and bridges and transit systems, will impact economic growth. Many of these infrastructure projects also have strong environmental implications. This reality requires programming designed to renew and build infrastructure in rural and urban municipalities in Atlantic Canada, through investments that protect the environment and support long-term economic growth. ACOA, working with Infrastructure Canada and the provincial governments, oversees/ensures the flow of federal funds allocated to each region through the various infrastructure funding streams. The priorities for Infrastructure Canada programs are green municipal infrastructure and local transportation infrastructure.

Benefits for Canadians: Community-based infrastructure programs are implemented by ACOA in Atlantic Canada on behalf of the Government of Canada. The majority of infrastructure projects in fiscal 2007-2008 were funded by Infrastructure Canada through the Municipal Rural Infrastructure Fund (MRIF). The MRIF is directed to improve and increase public infrastructure in areas such as water, wastewater, culture, recreation, and those very things that make communities vibrant and productive places in which to live, work and raise families.

Performance Analysis:The overall infrastructure targets were not attained in 2007-2008, mainly due to fewer proposals having been received and average project costs having been overestimated. Infrastructure projects are submitted through a call letter process and are subsequently evaluated and prioritized by a joint provincial-federal committee. The number of projects submitted is dependent upon the applicants and their respective budget planning for infrastructure projects. The timing of the intake process, combined with an over-estimation of original figures, explains the difference between the original targets and actual number of projects approved in 2007-2008.

Despite this fact, the Infrastructure Canada Program (ICP) is 100% committed in Atlantic Canada, with 697 approved projects. This program began in 2000 and was scheduled to terminate March 31, 2006. During the implementation of the ICP, some jurisdictions experienced delays in project approvals and as a result were unable to complete projects by the scheduled program termination date; therefore, the terms and conditions of the ICP were extended, and projects were completed by March 31, 2008.

2.3 Strategic Outcome 3 – Policies and programs that strengthen the Atlantic economy

ACOA is committed to developing and supporting policies and programs that strengthen Atlantic Canada’s economy. ACOA’s legislated mandate situates the Agency’s policy, advocacy and coordination (PAC) roles as being central to the identification of opportunities and challenges facing the regional economy. These three activities exist to inform and support decision making by the Agency and the Minister, providing intelligence, analysis and rigorous advice on a broad range of issues and topics.

The Agency’s policy work provides a well-grounded base of understanding for the development of ACOA’s strategic priorities and initiatives, for program design, and as input to major resource allocation decisions. The coordination of policies and programs of the Government of Canada, in relation to opportunities for economic development in Atlantic Canada, was also emphasized during the last year. The advocacy function served to influence national decision-making processes to improve the position of Atlantic Canadian industries and to pursue regional industrial benefits from public sector procurement.

ACOA is the Government of Canada’s main instrument for dealing with economic opportunities and challenges in Atlantic Canada. In doing so, ACOA is attuned to federal economic priorities as expressed in Advantage Canada , Canada’s strategic economic plan. Some of the overarching realities that are driving the federal government’s economic priorities (e.g. entrepreneurship, knowledge and infrastructure) are also issues that Atlantic Canada and ACOA are currently addressing.

ACOA’s activities have assisted in addressing a variety of challenges and opportunities for Atlantic Canada, and have continued to ensure that the region maximizes its contribution in tackling federal priorities as well. For example, the region continues to experience labour force supply and productivity issues due in large part to demographic decline, an aging population and out-migration. The Agency’s efforts with respect to human capital issues (i.e. its quality and quantity), through such initiatives as the Atlantic Population Strategy, are consistent with the Government of Canada’s Knowledge Advantage . Through continued co-operation with the four provincial governments and Citizenship and Immigration Canada, the Agency pursued initiatives to counter the inevitable labour shortages that are forecast to occur in the region. The Agency also pursued its involvement with the Atlantic Metropolis Centre by focusing on the impacts of population shifts in the region.

ACOA sought to build on the Government of Canada’s Knowledge and Entrepreneurial Advantages by prioritizing innovation and commercialization for the region, supporting regional partnership initiatives, improving community innovation capacity, and modernizing Atlantic Canadian SMEs. The resource sectors continued to face challenges related to market constraints and continued competitive pressures. ACOA helped to respond to these challenges by supporting regional and national research and engagement activities in forestry, agriculture and resource processing industries that suggested ways by which these industries could diversify, innovate and shift to higher value-added activities, thereby helping them to compete globally.

The Agency’s work on the Atlantic Gateway demonstrated that ACOA is well-positioned to play a central role in helping the region to advance national strategies and frameworks as outlined in the federal government’s Infrastructure Advantage . ACOA was actively involved in producing in-depth analysis, coordinating efforts with the region’s four provincial governments, and engaging the private sector to pursue opportunities related to the Atlantic Gateway.

In 2007-2008, ACOA continued to engage other policy stakeholders and work in partnership with public and private sector stakeholders while advocating Atlantic Canada’s interests at the national level. The continued activities of the Agency’s Advocacy Champions on files such as aquaculture, biosciences, energy, environment, science and technology, and commercialization − along with a closer examination of issues such as productivity and competitiveness, labour market and skills, and urban and rural issues − reflect the Agency’s key role in responding to regional economic opportunities through the prism of national priorities.

2.3.1 Program Activity: Policy

Program Activity Summary:ACOA’s policy work provided a well-grounded base of understanding for the development of ACOA’s strategic priorities and initiatives, for program design, and as input to national policy development and federal-provincial relations during 2007‑2008. This included the development of policies, frameworks and advice.

The Agency’s policy activities include policy analysis and advice, economic analysis, internal and external research and analysis of issues and trends, and the engagement of federal, provincial, and other public and private stakeholders on issues affecting the development of Atlantic Canada’s economy. Such activities provide policy leadership and strategic direction for the Agency’s broad mandate for economic development in Atlantic Canada to increase the number of jobs and the earned income of Atlantic Canadians.

Benefits for Canadians:The Policy activity has assisted the Agency in aligning itself with federal government priorities as stated in the Speech from the Throne, the federal budgets as well as in the federal government’s comprehensive long-term economic plan, i.e. Advantage Canada . Policy efforts in areas relating to the Atlantic Gateway, to human capital development, to urban and rural issues, to the competitiveness of businesses, and to the overall economic expansion of the region have benefited Atlantic Canadians, as well as the country as a whole.  Through its policy program activity, ACOA continues its collaborative efforts with other government partners to maximize Atlantic Canada’s presence in national policy initiatives.

Performance Analysis: In measuring the level of success in meeting the priorities set out by the Agency, a number of successful milestones were reached. Initiatives were conducted in areas such as the Atlantic Gateway, regional competitiveness and renewable resource industries. Other ongoing priorities were addressed through the Agency’s policy research and economic analysis activities.  These policy initiatives provided a fertile exchange on ACOA’s role in areas such as enterprise development and community development.

Policy Support for the Atlantic Gateway

A number of policy activities throughout 2007-2008 were related to the Atlantic Gateway, such as the finalizing and launching of the Atlantic Gateway Business Case. This business case underlines the benefits of the Atlantic Gateway for the entire country, through the development of an efficient and competitive national supply chain that would improve the competitiveness and productivity of the Canadian economy. Through the Atlantic Gateway, Atlantic Canada would be a North American point of entry and exit for international trade.

Policy Support for the Region’s Competitiveness

Throughout the past year, the Agency collaborated on a number of policy discussion papers delving into priority areas such as productivity and competitiveness; labour market and skills; science and technology; natural resources and the knowledge economy; and, urban and rural issues. While these papers looked at the Agency’s priorities in light of other federal government priorities, they focused on improving the region’s level of competitiveness. These policy issues were discussed with senior officials throughout the Agency and form part of the basis for strategic discussions on the Agency’s future orientation.

The Agency was also directly involved in a study by the Organisation for Economic Co-operation and Development(OECD) looking at the role of higher education institutions (HEIs) in regional development[16]. The 12-country report identified Atlantic Canada as a region demonstrating successful co-operation between its HEIs and regional development organizations, principally ACOA. The report singled out ACOA-supported initiatives, such as Springboard Atlantic , as promoting research and its commercialization, thus impacting positively on the region’s competitiveness.

Policy Support to Renewable Resource Industries

With regard to exploring the feasibility and options for improved productivity and competitiveness in the renewable resource sectors, ACOA spearheaded and/or actively participated in initiatives in areas such as forestry, agriculture and fisheries in the four Atlantic provinces. New initiatives for identifying opportunities that support resource sectors have been seen in areas such as potato farming (New Brunswick), aquaculture (New Brunswick), and bioscience projects (Prince Edward Island). 

Through its resource sector champion file, ACOA undertook a series of initiatives, such as direct involvement in an Industry Canada-led scenario planning exercise for resource processing industries. Regarding non-renewable resources, the Agency initiated and managed a Joint Industry Project related to natural gas development in Labrador, resulting in the establishment of the Labrador Gas Research Group.

Policy Research and Economic Analysis

ACOA’s policy function is supported by the Atlantic Policy Research Initiative (APRI), which funds region-wide research projects and helps to build a critical mass of public policy research in Atlantic Canada.  APRI activities in 2007-2008 included conferences and roundtables throughout the region. These included, but were not limited to: the forum, Re-Imagining the Atlantic Canadian Economy; the 2^nd Atlantic Research Money Conference; the Association of Certified Engineering Technicians and Technologists of Prince Edward Island roundtable on addressing skills issues in Atlantic Canada; and the 2007 BioEnergy Conference. APRI also supported the publication of reports including the following:

• Socioeconomic and Demographic Profiles of Immigrants to Atlantic Canada . This project brought together researchers from universities in each of the four provinces to prepare a series of profiles of immigrants in each province and the region as a whole. The research was coordinated by the Atlantic Metropolis Centre.
• Atlantic Canada’s Forest Industry . This report offered an overview and policy options for the region’s forest industry. This was a collaborative effort between ACOA, the four provincial departments of natural resources, as well as Natural Resources Canada.

ACOA’s expertisein the field of regional development in Atlantic Canada requires a thorough understanding of the region’s economy. Through the preparation and distribution of regular reports on the region’s economic situation, such as Economic Overview of Atlantic Canada, Labour Market Conditions in Atlantic Canada, and Export Performance in Atlantic Canada , ACOA continued its contribution to enhancing the understanding of a variety of issues facing the region. Economic research and analysis related to productivity, resource industries, small business dynamics, demographics and labour force trends were also undertaken; these were used to support the development of policy strategies, issues and positions taken by ACOA.

2.3.2 Program Activity: Advocacy

Program Activity Summary: ACOA’s advocacy function aims to advance the region’s interests in national policy and program development to ensure that government initiatives are responsive to the challenges and opportunities of the Atlantic economy. It also aims to ensure that regional stakeholders are kept informed of government actions and opportunities that are relevant to the economic interests of the region.

Under the federal Industrial Regional Benefits (IRB) policy, ACOA’s advocacy function is mandated to pursue industrial regional benefits opportunities for Atlantic Canadian industry in federal procurement projects. In this role, ACOA is a key player in advocating for and developing IRB strategies for major acquisition projects. These strategies enable ACOA to promote the capacities and capabilities of Atlantic Canadian aerospace and defence companies to national and international prime contractors seeking Canadian partners with which to satisfy their real and potential IRB commitments. In addition, ACOA monitors the development of federal procurement policies with a view to representing the interests of Atlantic Canadian companies.

Benefits for Canadians:During the past year, ACOA has worked to ensure that government initiatives are responsive to the challenges and opportunities of the Atlantic Canadian economy. Over the past five years, ACOA’s advocacy efforts have helped secure over $1 billion in industrial and regional benefit commitments for Atlantic Canadian firms and have helped contribute to a strong and thriving aerospace and defense industry in Atlantic Canada. ACOA has also advocated for the interests of Atlantic Canada in other key horizontal or sectoral files to make government initiatives more responsive to the needs of Atlantic Canadians.

The impact of the Agency’s overall advocacy function has been enhanced by the “champion” model, which engages ACOA’s senior officials as champions for key priorities, supported by cross-agency working groups. This approach has proven to be flexible and responsive to aligning regional priorities with the directions of the federal government. 

Performance Analysis:

Science and Technology / Commercialization

ACOA collaborated with Industry Canada and other federal departments and agencies in the development and launch of the government’s science and technology strategy to ensure that Atlantic Canada’s interests were well reflected.  ACOA’s advocacy efforts have helped to increase science and technology capacity in Atlantic Canada. This enhanced capacity has resulted in increased industrial R&D and commercialization activities and has attracted additional federal investments in the region, such as the $8-million renewal in federal funding for the National Research Council’s Nutriscience and Health (Bioscience) Cluster Initiative based in Charlottetown, Prince Edward Island. 

Bioscience

The bioscience sector in Atlantic Canada is an emerging industry that presents strategic opportunities for attracting talent, conducting research and development, and linking to global supply chains.  In 2007-2008, ACOA commissioned a consultant to gather baseline data and to develop a SWOT (strengths, weaknesses, opportunities and threats) analysis on the bioscience sector in Atlantic Canada. ACOA also worked closely with key industry associations and other federal departments to identify next steps and opportunities to support the growth of this key sector.

Energy / Environment

In keeping with the government’s priority to make Canada a leader in energy and related environmental technologies, ACOA worked closely with other federal departments to help strengthen these key industries in Atlantic Canada. In collaboration with Foreign Affairs and Industry Canada, ACOA conducted an evaluation of domestic and international trade opportunities for regional oil and gas suppliers, and ensured the promotion of Atlantic Canada’s oil and gas industry at prominent international events, such as the Offshore Technology Conference in Houston, Texas, and Offshore Europe in Aberdeen, Scotland. The Agency also continued to bring the Atlantic Canadian perspective to the development and implementation of federal energy-related policies and programs, particularly those regarding renewable and alternative energy sources and climate change.

Resource Industries

Many communities in Atlantic Canada rely on the viability of natural resource industries that are facing the challenges of a changing global business environment. Over the past year, ACOA worked closely with other federal departments to identify how their programs could assist the forestry, fishery and agriculture sectors in Atlantic Canada – through initiatives such as the Fisheries and Oceans Canada’s Ocean-to-Plate approach to fisheries renewal, Natural Resources Canada’s Long-term Forest Industry Competitiveness Strategy, Agriculture and Agri-Food Canada’s Agriculture Opportunities Fund, and Industry Canada’s Resource Processing Industries’ Scenario Planning project.

Aquaculture

Over the past year, ACOA collaborated with Fisheries and Oceans Canada to secure federal funding to help address industry challenges and create conditions for growth in an economic and environmentally sustainable manner. These federal investments are targeted at improving regulatory certainty, environmental standards, certification measures, and research and innovation activities.

Population and Immigration

ACOA was actively engaged in the Metropolis project – a federal initiative designed to research issues related to immigration, migration and diversity. ACOA led a coalition that included the Rural Secretariat and regional development agencies from Quebec and northern Ontario to bring a regional perspective to national initiatives and discussions on immigration. Through the federal-provincial Atlantic Population Table, ACOA advocated for the development of a regional strategy to provide youth with more diverse opportunities to stay and work in Atlantic Canada, to attract more immigrants, and to ensure the region has sufficient skilled workers to sustain economic growth. 

Atlantic Gateway

ACOA was fully engaged with its federal partners, specifically Transport Canada and Foreign Affairs and International Trade Canada, to advance work on the Atlantic Gateway strategy and ensure that national policies and initiatives, such as the National Policy Framework for Strategic Gateways and Trade Corridors, were responsive to the challenges and opportunities of the Atlantic economy. 

Aerospace and Defense

Atlantic Canadian aerospace and defence firms produce some of the world’s most innovative products and services. ACOA plays an important advocacy role in supporting the efforts of these firms to successfully compete for business within the federal procurement process. 

In 2007-08, ACOA’s advocacy efforts to secure industrial regional benefits for Atlantic Canada were focused on a number of significant “Canada First” procurements, including the Strategic Airlift, Tactical Airlift, Joint Support Ship, Medium Support Vehicle System, and Medium-Heavy Lift helicopter projects. The Agency also supported Atlantic Canadian firms pursuing opportunities related to the Department of National Defense’s current aircraft fleets, including the modernization of both the CF-18 and the CP-140 aircraft.

The Tactical Airlift contract, which was awarded to Lockheed Martin Aeronautics in January 2008, included a commitment of $242 million over 10 years to Atlantic Canadian companies.  The Agency also worked with potential bidders for the Joint Support Ship and the Halifax-Class Modernization Project, providing introductions to Atlantic Canadian companies interested in partnering on these projects. Further, ACOA actively promoted the participation of Atlantic Canadian companies in anticipated projects, such as the Arctic/Offshore Patrol Ships and Fixed Wing Search and Rescue.

ACOA supported Atlantic Canadian business in accessing non-defence procurement opportunities, notably those related to the Canadian Coast Guard and the Canadian Space Agency. In addition, the Agency worked closely with provincial and regional industry associations to promote the Atlantic Canadian aerospace and defense industry internationally through trade missions to the Paris Air Show and the Defence Systems and Equipment International exhibition in London, UK.

2.3.3 Program Activity: Coordination

Program Activity Summary:The Agency is mandated by its legislation to “ coordinate policies and programs of the Government of Canada in relation to opportunities for economic development of Atlantic Canada. ” ACOA’s coordination role aims at ensuring that all groups and parties with a responsibility for, or an interest in, economic development work together to minimize duplication of effort and maximize collaboration. Although the legislative mandate covers only the development activities of other federal departments and agencies active in Atlantic Canada, ACOA’s coordination role also involves important federal-provincial activities, working with regional and national private sector stakeholders, as well as joint initiatives with the federal development agencies in other parts of Canada. Groups engaged from outside government include post-secondary institutions, the private sector and its organizations, and non-governmental bodies.

Benefits to Canadians:In 2007-2008, ACOA’s Coordination program activity assisted the region in facing challenges affecting Atlantic Canada’s overall economic vitality. Demographic trends and an aging population drove ACOA and its partners to move forward on initiatives related to promoting Atlantic Canada as a business destination, the attraction of new businesses and the undertaking of new research.  ACOA continued to explore joint approaches to various issues with the Atlantic provincial governments, via organizational mechanisms such as the federal-provincial Senior Officials Committee (SOC), regarding productivity and competitiveness, innovation, access to capital and population, as well as the Atlantic Gateway Federal-Provincial Officials Committee. Collaborative efforts with the provinces have continued in a number of areas of importance to Atlantic Canada. ACOA chaired the Atlantic Regional Federal Councils, which operate within each of the provinces and provide federal departments with a presence in the region with a forum to share information and collaborate on ongoing initiatives.

The coordination activity continued to provide the Agency with a mechanism to ensure alignment with government priorities. ACOA’s relationship with other federal bodies has taken on increased importance in recent years. Frequent consultations with central agencies well as discussions with other regional development agencies will ensure a coordinated approach to issues that affect all regions of Canada.

Performance Analysis:As the lead federal agency in the region, ACOA uses its coordination role to bring together all key stakeholders (from inside and outside of the region) who are directly or indirectly involved in the economic progress of Atlantic Canada. These stakeholders include provincial government officials, federal department colleagues, academics and researchers, entrepreneurs from the private sector, as well as representatives of non-governmental organizations. As an initiative such as the Atlantic Gateway moves ahead, the relevance of ACOA as a regional coordinator is enhanced by the possibilities this and future initiatives could bring to the region.

Federal-provincial Initiatives

During 2007-2008, ACOA and the Atlantic Provinces continued to explore joint approaches to development issues through the federal-provincial Senior Officials Committee (SOC). The SOC developed a renewed forward agenda and continued to work on issues and challenges in areas focused on access to capital, population concerns and policy development. ACOA also worked closely with the four Atlantic provincial governments, both bilaterally with individual provinces and multi‑laterally (region-wide), to identify common goals and priorities, facilitate joint research, and coordinate the delivery of economic development programs and services. For example, in New Brunswick, ACOA participated in a number of informal initiatives with various provincial government departments on issues relating to energy, the environment, forestry, post-secondary education, transportation, and health and wellness. The previously mentioned forestry study was led by ACOA and benefited from the direct involvement ofthe four provincial departments of natural resources and Natural Resources Canada.

The Atlantic Gateway

The Atlantic Gateway initiative, built upon the Agency’s collaboration with Transport Canada (TC) and the four Atlantic provincial governments, resulted in a formal Memorandum of Understanding (MOU) signed by all parties. In 2007, ACOA initiated an Atlantic Gateway Federal-Provincial Officials Committee at a pan-Atlantic federal-provincial level, with terms of reference that outline the committee’s role to develop an Atlantic Gateway strategy. Minister-led and sector-led missions to India were also organized in relation to the Atlantic Gateway. These formal approaches ensure that the initiative is aligned with the national policy and the availability of a structured forum for public and private stakeholders to collaborate and coordinate efforts.

Other Initiatives

ACOA worked collaboratively with other federal departments to strengthen integrated federal approaches to regional development, to increase federal capacity and delivery in the regions, and to better align regional development priorities with the federal national agenda. The Agency renewed, for an additional five-year period, its support to the Atlantic Metropolis Centre (AMC) through a transfer of funds to the national Metropolis agreement. The agreement is also supported by Citizenship and Immigration Canada and the Social Sciences and Humanities Research Council. The AMC’sconsortium of mostly university-based researchers studies demographic shifts and their effectsin Atlantic Canada. In Prince-Edward Island, ACOA continued to participate in the labour market development agreements devolution discussions with the Province and Human Resources and Social Development Canada, while in Newfoundland and Labrador, the Agency participated on an ACOA-Canadian Heritage Cultural Policy MOU Implementation Committee Work Plan, which led toward the development of a Federal Cultural Tourism Table.

To help maintain effective linkages and partnerships that coordinate departments’ action in the regions, ACOA worked with key federal departments through the Regional Federal Councils, whose mandate includes the integration of improved service delivery, two-way communication with central agencies on regional perspectives and federal initiatives, and co‑operation with other jurisdictions, including provincial governments. In 2007-2008, these councils addressed an array of topics relevant to the region and to ACOA, including official languages and service delivery. Public service renewal was another topic raised by the Federal Councils in Nova Scotia and New Brunswick. In Nova Scotia, the Federal Council’s policy activity centred on the Public Service Renewal Agenda, which resulted in a Public Service Renewal Strategic Action Plan. In New Brunswick, the Federal Council organized consultations related to public service renewal including workshops where young public servants were introduced to and toured various federal departments in the region such as ACOA, Service Canada, and Fisheries and Oceans.