ARCHIVED - Economic Development Agency of Canada for the Regions of Quebec - Report

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Message from the Minister responsible for the Agency

Following a year marked by hard economic times in all regions of Canada, I am pleased to sign this Departmental Performance Report, which presents the achievements of the Economic Development Agency of Canada for the Regions of Quebec.

The Government of Canada has adopted a proactive approach to combating the recession. The outcome of this is that Canada has been the least affected of any of the industrialized countries, while targeting and executing promising initiatives that will benefit future generations. It has invested additional effort in coming to the assistance of the hardest hit sectors, paying special attention to communities depending on a single industry. It has also continued to promote employment and growth with a view to supporting Canadian families.

Recognizing the importance of economic development agencies in helping communities and SMEs across the country, the Government of Canada set up two new agencies in 2009. The goal of this federal presence is to ensure that all regions of Canada can participate in the nation’s growth.

The Economic Development Agency of Canada for the Regions of Quebec, like the other economic development agencies, has sent a clear signal to business circles that it intends to continue supporting SMEs’ efforts. It has supported growth generating projects focussing on entrepreneurship, development and innovation— activities which are at the core of community and regional vitality, outreach and prosperity.

Despite the economic downturn, the government has stayed the course with regard to its original commitments, as stated in its Advantage Canada economic plan. Investing in research, innovation and market development is our core priority, and will enable Canadian enterprises to grasp new business opportunities.

The original version is signed by

Christian Paradis
Minister of Natural Resources and Minister responsible for the Economic Development Agency of Canada for the Regions of Quebec

Message from the Minister of State for the Agency

I am proud to submit to Parliament the Departmental Performance Report of the Economic Development Agency of Canada for the Regions of Quebec for the period ending March 31, 2010.

As you read this Report, you will observe once again the timeliness and efficiency with which the Agency has implemented measures and programs that have helped communities and SMEs come to grips with the recent global economic crisis.

I am pleased to point out that as of March 31, 2010, in addition to the projects in line with Canada’s Economic Action Plan (CEAP), the Agency has supported the startup and continuation of 1,170 development projects. On average, each dollar invested by the Agency has led to $2.59 in investment by promoters and other funding sources.

In addition to its regular programming, the Agency has implemented ad-hoc initiatives in support of the communities and sectors hardest hit by the crisis. On that front, the Community Adjustment Fund and the Recreational Infrastructure Canada program, which stem from CEAP, have generated tangible results for Quebec communities. Forest communities have also been central to the Agency’s concerns and action, with the Agency signing agreements with the Government of Quebec and providing financial assistance to foster the creation and maintenance of jobs within those communities.

The economic crisis has had a major impact on several regions and sectors of activity. This Report, which presents the Agency’s performance over the past year, clearly shows the tangible effort and the measures implemented by the Government of Canada to help the hardest hit regions and communities get through these difficult times.

With an economic recovery on the horizon, the Agency has to continue its efforts to enable Quebec enterprises to take advantage of business opportunities and to allow communities to pursue their development.

The original version is signed by

Denis Lebel
Minister of State for the Economic Development Agency of Canada for the Regions of Quebec

1 Agency Overview

1.1 Summary information

1.1.1 Raison d’être

Object

Under its Act, which came into effect on October 5, 2005, the object of the Agency is to promote the long-term economic development of the regions of Quebec by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate. In carrying out its object, the Agency shall take such measures as will promote cooperation and complementarity with Quebec and communities in Quebec.

Vision

In the long term, Quebec’s regions and communities will have increased their development capabilities, dynamism and prosperity in a lasting and significant manner for the benefit of their citizens.

1.1.2 The Agency in action

The Agency’s aim is to increase the vitality of communities and strengthen the competitiveness of Quebec’s enterprises and regions. Through its 14 business offices and its advisors, it covers all areas of Quebec, working primarily with small and medium-sized enterprises (SMEs) and non-profit organizations (NPOs). The Agency provides consulting services, information services, financial assistance, analyses, and referral services to other government departments and agencies. It also acts with communities as an integral player in the mobilization, recovery or development of a given sector or targeted geographical area.

Regular programs:

• Community Diversification
• Business and Regional Growth
• Regional Development Research

Canada-wide program implemented in Quebec by the Agency:

• Community Futures Program (CFP)

Canada’s Economic Action Plan (CEAP) dedicated programs:¹

• Recreational Infrastructure Canada (RInC)
• Contribution program to supply the Municipality of Shannon with drinking water

Furthermore, CEAP, tabled on January 27, 2009, provided the Agency with additional funding for Fiscal years 2009-2010 and 2010-2011. Used as an economic stimulus, this funding is intended to create employment opportunities and implement adjustment measures in communities affected by the economic downturn. In particular, CEAP includes the Recreational Infrastructure Canada program and the Community Adjustment Fund (CAF) initiative.

1.2 Strategic outcome and Program Activity Architecture (PAA)

Since April 1, 2010, the Agency’s PAA has combined its three strategic outcomes in a single one.² This change was made purely for the purpose of clarification, and has no impact on the nature of its program activities. Thus, the framework of activities and related subactivities remains unchanged from the framework presented in the Report on Plans and Priorities (RPP) 2009-2010. Further information on the Agency's strategic outcome is given in Section 2.

Strategic outcome	Program activities	Program subactivities	Internal Services
A competitive and diversified economy for the regions of Quebec	Community Development	Community mobilization Local development Attractive communities	Government and management support Resource management services Asset management services
	Infrastructure	Water quality Roads and public transportation Urban or regional projects Special infrastructure- dedicated programs3
	Special intervention measures	Community adjustment to economic shocks4 Community adjustment to natural disasters
	Enterprise Competitiveness	Enterprises’ capacity development Strategic enterprises
	Competitive positioning of sectors and regions	Growth poles International promotion of regions
	Policies, programs and initiatives	Analysis and research Policies and programs Representation and influence Cooperation and collaboration

1.3 Performance summary

This section provides an overview of planned and actual financial resources (grants and contributions, and operations) and human resources expressed as full-time equivalents (FTEs), along with a summary table portraying the Agency’s performance in 2009-2010.

Financial resources for 2009-2010 (in thousands of dollars)
Planned spending	Total authorities	Actual expenditures
305,392	445,134	398,055

The variance between Planned spending and Total authorities is primarily attributable to the addition of funding for intervention under Canada’s Economic Action Plan, with a view to supporting the Canadian economy through the economic downturn.

The Agency made most of the expenditures authorized. More specifically, of the $132.3 million authorized under CEAP, $113.1 million was used, or 85.5%. The balance of these funds was carried forward to 2010-2011.

Human resources for 2009-2010 (full-time equivalents)
Planned resources	Actual resources	Variance
411	426	15

The variance of 15 FTEs primarily represents additional temporary resources hired in order to deliver CEAP.

Strategic outcome: A competitive and diversified economy for the regions of Quebec

Performance indicators	Five-year target (from 2007-2008 to 2011-2012)	Performance 2009-2010
Indicator of the competitiveness and diversification level of Quebec regions Direct, indirect and induced impacts in terms of jobs and wealth generated	The competitiveness and economic diversification of Quebec regions are maintained or increased.	The Agency contributed to maintaining the vitality of 30 communities by helping them mobilize, create a plan and implement development and diversification initiatives; by strengthening the tourism offering; and by supporting the creation, development and maintenance of 407 SMEs. The Agency contributed to the competitiveness of SMEs and regions through the sales growth observed in 153 SMEs assisted; through the enhancement of 201 SMEs’ productivity; and through the creation and expansion of 98 innovative enterprises. The Agency developed its ability to cater to the needs of regions, communities and SMEs through development of policies geared to the needs of regions and enterprises; through the signing of research collaboration agreements; through the staging of awareness-raising activities concerning the Industrial and Regional Benefits Policy in Quebec; and through increased collaboration with the Government of Quebec. The Agency contributed to creating employment opportunities and implementing adjustment measures in communities affected by the economic downturn, in particular through the Community Adjustment Fund and the Recreational Infrastructure Canada program. Leverage effect:5 $1 from the Agency = $2.59 in investment by the promoter and other funding sources.6 Incentive aspect of financial assistance: Of promoters, 82.6%7 stated that without the assistance from the Agency, it would not have been possible to carry out the planned activities or carry through their project. Level of satisfaction: Of promoters, 93.1% stated that they were satisfied or very satisfied with the quality of the Agency’s service.

(in thousands of dollars) Program activities	2008-2009 Actual expenditures	2009-20108,9				Link to Government of Canada performance
		Main estimates	Planned spending	Total authorities	Actual expenditures
Community Development	145,906	120,972	138,936	140,736	140,750	Strong economic growth
Infrastructure	53,607	45,588	45,588	73,401	20,982	Strong economic growth
Special intervention measures	---	---	---	100,115	99,482	Strong economic growth
Enterprise Competitiveness	56,466	71,961	71,961	73,839	69,847	Strong economic growth
Competitive positioning of sectors and regions	37,038	22,842	22,842	24,906	37,529	Strong economic growth
Policies, programs and initiatives	6,230	5,689	5,689	5,689	5,611	Strong economic growth
Internal Services10	---	20,376	20,376	26,448	23,854
Total	299,247	287,428	305,392	445,134	398,055

The difference between total planned spending and total actual expenditures is primarily attributable to additional funding under Canada’s Economic Action Plan. CEAP was voted and special intervention measures were developed in order to stimulate the economy. These activities will be continued in 2010-2011.

1.4 Contribution of priorities to strategic outcome

The Agency achieved its five priorities for 2009-2010: three program priorities, and two management priorities.

Program priorities	Type of priority11	Progress made12	Links to program activities
Accelerate regions’ and communities’ adjustment to the new economic context	Previously committed to	Met all expectations In 2009-2010, the Agency focussed on support for entrepreneurship and creation or maintenance of viable enterprises, and increasing communities’ attraction capability through their tourist and industrial attractions. This action aimed at accelerating regions’ and communities’ adjustment to the new economic context translated into approved commitments of some $126 million in 215 projects.13	Community Development The implementation in 2009-2010 of measures to ease the terms and conditions of the Community Diversification program has contributed to achieving the priority.
Reinforce the performance of innovative, competitive SMEs	Previously committed to	Met all expectations In 2009-2010, the Agency also focussed on development of enterprises’ strategic capabilities and support for startup of innovative SMEs. This action aimed at reinforcing the performance of innovative, competitive SMEs translated into approved commitments of some $65 million in 233 projects.14	Enterprise Competitiveness The implementation in 2009-2010 of measures to ease the terms and conditions of the Business and Regional Growth program has contributed to achieving the priority.
Implement the Regional Development Research program	New	Met all expectations launch of a first call for proposals in fall 2009 concerning the transformation of the manufacturing sector validation of research questions from the first call for proposals at external consultations conducted in summer 2009 with development agents.	Policies, programs and initiatives
Continue implementing the Departmental plan for enhancing program effectiveness	Previously committed to	Mostly met expectations development and deployment of most tools (e.g. online program management manual modules) in support of coherent program implementation practices development of improved claims processing so as to alleviate promoters’ administrative burden conduct of a study on operational risk management practices and development of more effective practices development of a new model for evaluating operational risk, including evaluation grids; following validation and calibration tests, the model will be deployed in a pilot project and integrated into the grants and contributions management system.	Internal Services The evaluation of implementation of the Community Diversification and Business and Regional Growth programs recommends the Agency complete the planned risk-oriented initiatives and convey progress to employees.
Reinforce Departmental performanceand risk-based monitoring, analysis and decision making	Previously committed to	Met all expectations updating of tools (performance measurement and management information system handbook) and training tour of the 14 business offices in order to clarify expectations concerning project performance monitoring, standardize data entry and present results for decision-making production of update report on Departmental risk management (Departmental risk index and profile and updated mitigation strategies) integration of Departmental risk profile with 2010-2011 RPP and integrated planning process development of an in-house communication approach concerning Departmental risk management.	Internal services The evaluation of the Management Accountability Framework – Round VII mentions that the Agency should continue taking risk into account in decision-making processes.

1.5 Risk analysis

The Agency’s intervention in relation to Quebec’s enterprises, regions and communities took place against the backdrop of an economic downturn. Indeed, 2009-2010 was characterized by lower projections for economic growth in Quebec and in Canada as a whole. Several external factors, such as the U.S. recession, disruption of global financial markets and tighter credit affected, to different degrees, a number of sectors which form the backbone of the economies of Quebec’s regions. These conditions meant there was weaker export demand, a contracting labour market and declining household consumption.

More specifically, Quebec’s gross domestic product fell back by 1.3% in 2009, following a 1.3% increase in 2008. International commodity exports shrank by 14.1% over the same period. The unemployment rate rose by 1.3%, moving up from 7.2% to 8.5%, and 37,500 jobs were lost.

This economic context made it harder for the Agency to achieve results. It had to ensure that it continued to cater adequately to the needs of Quebec’s enterprises and regions, at a time when SMEs were being more cautious in their investment decisions.

To mitigate the risk associated with the economic context, the Agency eased its operating guidelines concerning the terms and conditions of its two main programs so as to make them more accessible for SMEs and communities.

The Agency was also a key player in the implementation in Quebec of the initiatives associated with Canada’s Economic Action Plan. It devoted considerable effort to placing rapidly at the disposal of enterprises and regions funding sources available through the Community Adjustment Fund and the Recreational Infrastructure Canada program. These two initiatives, which will be continued in 2010-2011, are aimed at mitigating the impact of the economic downturn in the short term by contributing to the creation and maintenance of employment.

1.6 Expenditure profile

The Agency’s actual expenditures (including operating expenditures) for 2009-2010 stood at $398.1 million, or $285.0 million for regular programming and $113.1 million for Canada’s Economic Action Plan.

The Agency’s actual expenditures amounted to $342.0 million in grants and contributions, including $235.2 million for regular programs and $106.8 million for CEAP. The increase in grant and contribution expenditures since 2008-2009 is primarily attributable to CEAP, which aims to support the Canadian economy through the economic downturn.

The figure below shows the Agency’s spending trend over the past three years. The hatched segments of the two rightmost columns, for 2009-2010, represent the portion of total authorities and actual expenditures attributable to CEAP.

Departmental Spending Trend
(in millions of dollars)

Canada’s Economic Action Plan

The 2009 federal budget allocated $312.9 million in funding to the Agency over two years, in support of Canada’s Economic Action Plan. In 2009-2010, total authorities associated with CEAP amounted to $132.3 million, whereas actual expenditures were some $113.1 million.

The Agency received, in Budget 2009, $210.9 million in funding over two years for the CAF. In 2009-2010, the Agency spent $99.5 million for that economic stimulus initiative, which is intended to mitigate the impact of the economic downturn in the short term by contributing to the creation and maintenance of employment, while responding to the challenges of transition and community adjustment.

The Recreational Infrastructure Canada program is a Canada-wide initiative aimed at contributing to mitigating the impact of the global recession by increasing the total value of construction activities associated with recreational infrastructure. The goal of projects funded by this program is primarily to modernize, repair, replace or expand existing recreational infrastructure, such as swimming pools, arenas and sports fields. Under CEAP, $80.4 million in funding over two years was allocated to the Agency for RInC. Actual expenditures associated with this initiative in 2009-2010 were some $2.1 million. The Agency plans to spend $77.9 million in 2010-2011 (total authorities).

In 2009-2010, the Agency also paid out $6.4 million for the Contribution program to supply the Municipality of Shannon with drinking water; $3.2 million for the Pavillon de l’éducation physique et des sports (PEPS) of Université Laval (sports and physical education facility); and $1.9 million for Info entrepreneurs¹⁵ in Montréal and Ressources Entreprises¹⁶ in Québec, the two Canada Business Network (CBN) Service Centres for Quebec.

1.7 Voted and statutory items

(in thousands of dollars)			2007-2008	2008-2009	2009-2010
Vote or statutory item (S)	Truncated vote or statutory wording		Actual expenditures	Actual expenditures	Main Estimates	Actual expenditures
1	Operating expenditures		45,663	45,955	41,880	49,872
5	Grants and contributions		285,784	242,518	240,435	246,245
(S)	Grants and contributions (CAF)		---	---	---	95,749
(S)	Contribution to employee benefit plans		4,934	4,922	5,113	6,162
(S)	Minister for the Economic Development Agency of Canada for the Regions of Quebec – Salary and motor car allowance		---	24	---	2
(S)	Spending of proceeds from disposal of surplus Crown assets		4	2	---	25
Total			336,385	293,421	287,428	398,055

Total grant and contribution expenditures (Vote 5) are much the same as in 2008-2009; however, spending variations occurred at the program activity level.

The main variance is attributable to the addition of funds associated with CEAP in 2009-2010, which terminates March 31, 2011. The impact of this addition is also reflected in the higher operating expenditures.

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