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Minister's Message

As Minister responsible for Western Economic Diversification Canada (WD), I am pleased to present the Departmental Performance Report for the year ending March 31, 2011.

For nearly 25 years, WD has worked to support the long‑term development and diversification of the western economy, while playing a vital role in helping build a stronger West within a stronger Canada.

By investing in projects and activities that encourage technology commercialization, promote business productivity and competitiveness, and support trade and investment, WD is helping sustain today’s economic recovery, while supporting the economic development and diversification of tomorrow.

Over the past year WD continued to dedicate resources towards the implementation of Canada’s Economic Action Plan.  Our Government remains committed to ensuring that the stimulus program is completed and Canada returns to balanced budgets.  In addition, the department continued to focus on activities that support its core mandate.

At this point, Canada’s economic recovery is underway, reflecting, in part, the efforts of WD and the Government of Canada’s measures under the Economic Action Plan.  However, the global economy is still fragile and, as we move forward, WD will carry on making strategic investments in partnerships, projects and programs that strengthen innovation, support entrepreneurship, open doors to global markets, and contribute toward a sound economic future for Canadians.

 

Minister of State's Message

As Minister of State for Western Economic Diversification, I am pleased to present the Departmental Performance Report for the year ending March 31, 2011.

WD's mandate is to promote the development and diversification of the economy of Western Canada and to advance the interests of the West in national economic policy, program and project implementation.

WD is achieving this outcome through strategic investments that assist business development, bolster innovation, and promote economic development.  The department also plays a key role in ensuring western interests are recognized in national decision making.

Through targeted support of major undertakings, such as investments in technology adoption and commercialization projects, and projects to improve business productivity, we are ensuring that the region's global competitiveness and opportunities for trade and investment continues to increase.  We had also been dedicated to the timely and targeted implementation of Canada’s Economic Action Plan, under which WD invested in more than 1,000 projects across the West.  These investments have had a strong impact on jobs and growth.

In 2010–11, WD approved over 100 projects that leveraged additional funding from other partners.  Through partnerships with provincial and municipal governments, universities, research institutes, industry and not-for-profit organizations, WD’s work continues to support and nurture a robust, resilient and diversified western economy.

As we move into the next phase of Canada’s Economic Action Plan, WD will continue to work closely with its partners and stakeholders to improve the long-term competitiveness of the West.  WD will foster economic growth by delivering policies and programs that support innovation, business development and community economic development.  Together, we are building a stronger West for a stronger Canada.

 

Section I: Departmental Overview

Raison d’être

Western Economic Diversification Canada (WD) is the federal government’s regional economic development agency in the West. Established in 1987, WD possesses an in-depth understanding of the western Canadian economy and has developed strategic relationships throughout the West. This strong presence enables the department to successfully invest in economic diversification and development initiatives and to deliver national programs in the four western provinces.

To deliver on its mandate, the department concentrated its efforts in its four program activities – Business Development; Innovation; Community Economic Development; and Policy, Advocacy and Coordination.

Responsibilities

As a key contributor to a prosperous western Canadian economy, WD has participated in building on the West’s traditional economic strengths while supporting the transition to a more diverse, modern economy. The West is an increasingly important gateway for international trade, a growing centre of Canadian innovation and a leader in developing communities that support entrepreneurship and economic diversity. While the global economic downturn clearly demonstrated the necessity for further economic development and diversification, the West is leading Canada’s economic recovery and has emerged better prepared to capitalize on global opportunities.

WD’s program activities form the foundation for decisions related to strategic investments in projects and the development of partnerships and new initiatives.  The department also selects related areas of priority which, in 2010–11, were as follows:

• Technology Commercialization:  Assisting researchers and businesses to convert new technologies and ideas into commercial products;
• Business Productivity and Competitiveness:  Supporting businesses to develop, innovate, and increase their productivity and competitiveness; and
• Trade and Investment:  Supporting trade development and investment so that western Canadian companies can expand their markets.

Headquartered in Edmonton, Alberta, WD ensures a strong voice for the West in national economic decision-making and provides a strong federal presence in western Canadian economic development.  In this dual role, WD represents a crucial focal point for the Government of Canada’s ability to deliver on its economic priorities in the West.  As last year demonstrated, WD’s strong ties in the West allow the department to quickly capitalize on long-term relationships and regional knowledge to successfully deliver national initiatives in the West.  This includes programs and initiatives such as Canada’s Economic Action Plan (EAP) to stimulate economic recovery, infrastructure programming to upgrade and expand western Canadian infrastructure and the Economic Development Initiative (EDI) aimed at supporting businesses and economic development in western Canadian Francophone communities.

In order to ensure the department’s programs and activities meet the expectations of western Canadians and align with government priorities, WD undertook a comprehensive review of its programs and spending.  Through this strategic review process, the department will be able to identify future improvements such as shifting resources to higher priority programming, winding down underperforming programs and finding operational efficiencies.  As a result, WD will continue to be well positioned to meet the future needs of western Canadians.

The Department Performance Report (DPR) provides a summary of the results achieved by WD in 2010–11, against the backdrop of the commitments and expected outcomes articulated in the department’s 2010–2011 Report on Plans and Priorities (RPP).  The DPR illustrates the various mechanisms by which WD is able to achieve results, such as direct investment through grant and contribution (G&C) programs; the implementation of shared, multi-year initiatives with the four western provinces; the support of entrepreneurs through the Western Canada Business Service Network (WCBSN); and the undertaking of research to better understand the challenges and opportunities specific to Western Canada.  As will be highlighted in Section II, WD’s approach continues to focus on developing sectors and positioning western firms to capitalize on federal Industrial and Regional Benefits and procurement opportunities.

 

Strategic Outcome(s) and Program Activity Architecture (PAA)

The chart below illustrates WD’s complete framework of program activities and program sub-activities that contributed towards WD’s strategic outcome in 2010–11. This structure is the basis for reporting results in this document:

Strategic Outcome	Program Activities	Program Sub-Activities
The western Canadian economy is developed and diversified	Business Development	Improve Business Productivity
		Market and Trade Development
		Industry Collaboration
		Foreign Direct Investment
		Access to Capital
	Innovation	Technology Adoption and Commercialization
		Technology Linkages
		Technology Research and Development
		Community Innovation
		Technology Skills Development
		Knowledge Infrastructure
	Community Economic Development	Community Planning
		Community Development
		Community Economic Adjustment
		Community Infrastructure
	Policy, Advocacy and Coordination	Collaboration and Coordination
		Research and Analysis
		Advocacy
	Internal Services	Governance and Management Support
		Resource Management Services
		Asset Management Services

 

PAA Crosswalk

WD received Treasury Board approval to amend its Program Activity Architecture (PAA) in May 2009.  The change was made in relation to the department's continued implementation of the Treasury Board Policy on Management, Resources and Results Structure, a government-wide approach to the collection, management and reporting of financial and non-financial performance information.  The new, streamlined PAA improves the department’s focus on outcomes in planning and reporting, improves the communication of benefits to the public, and strengthens the capacity to evaluate programs in order to better allocate resources.

The table below illustrates the changes made to WD’s PAA (The Internal Services program activity remains unchanged.):

WD's PAA

PAA for 2009–10	New PAA for 2010–11
Strategic Outcome(s)
1.  Entrepreneurship and Innovation: The western Canadian economy is competitive, expanded and diversified	1. The western Canadian economy is developed and diversified
2.  Community Economic Development: Communities in Western Canada are economically viable
3.  Policy, Advocacy and Coordination:  Policies and programs that strengthen the western Canadian economy
Program Activities
1.1 Business Development and Entrepreneurship	1.1 Business Development
1.2 Innovation	1.2 Innovation
2.1 Community Economic Planning, Development and Adjustment	1.3 Community Economic Development
2.2 Infrastructure
3.1 Advocacy	1.4 Policy, Advocacy and Coordination
3.2 Collaboration and Coordination
3.3 Research and Analysis

 

Organizational Priorities

Priority Status Legend

Priority	Type1	Program Activity
Business Productivity and Competitiveness	Previously committed to	Business Development
Status
Definition: to support the growth and competitiveness of western Canadian small business Status: Mostly Met Invested $11.7 million in 18 business productivity projects, which are expected to increase sales by $93.2 million; create or maintain 4,837 jobs; and create, maintain or expand 1,099 businesses. Examples of these investments that contributed to the business productivity and competitiveness priority, include: Alberta Metal Fab Innovation Program to increase productivity in Alberta's metal fabrication and machinery manufacturing sector; FPInnovations projects in Saskatchewan, Alberta and British Columbia to transfer knowledge in the value-added forest products sector; and Northern Mining Sector Council Inc. to establish simulator-based underground mining training programs in Northern Manitoba. Continued to support small- and medium-sized enterprises (SMEs) by providing risk capital and business services through the Loan and Investment Program (LIP) and the WCBSN. While lending totals by WCBSN members remained strong, lending decreased 13.55 percent from 2009–10 levels, due to greater availability of credit through conventional lenders.

Priority	Type1	Program Activity
Trade and Investment	Ongoing	Business Development
Status
Definition: to enhance SME participation in global markets, create value-added opportunities through Western Canada’s trade gateways and corridors, and raise Western Canada’s visibility as a competitive investment location Status: Met All Invested $3.1 million in nine market and trade development projects that are expected to result in three activities that promote participation in major international events, 18 industry associations/ partnerships, 175 companies participating in export and market development initiatives, and five export-ready companies, including: Regina’s Western Canada Farm Progress Show to attract new international buyers for western Canadian products. Invested $400,000 in Economic Development Winnipeg to support an international investment attraction initiative for Winnipeg, which is expected to result in $12.0 million in direct foreign investment. Supported other initiatives that contributed to the trade and investment priority, including: North American Platform Program (NAPP) to strengthen trade and investment linkages with the US and Mexico; and Industrial Regional and Benefits (IRBs) to help western firms engage in Canada’s IRBs and access international procurement opportunities, and represent the West in IRB-related policy development.

Priority	Type1	Program Activity
Technology Commercialization	Ongoing	Innovation
Status
Definition:  to facilitate the translation of knowledge and technology into commercial opportunities Status:  Met All Invested $49.5 million in 26 technology adoption and commercialization projects which are expected to result in 96 technology demonstrations, 39 technologies adopted, two licences executed, 54 technologies to market, 13 spin-off companies formed, 24 patents filed/issued, $2.5 million venture capital invested, and 129 prototypes developed.  These projects include: GRAND (Graphics, Animation and New Media Network of Centres of Excellence) in Vancouver to further commercialize innovative new media technologies; Capilano University to support training in the British Columbia film industry; TECTERRA Inc. to support commercialization of geomatics technology in Alberta; Livestock Gentec to assist the livestock genetic research program at the University of Alberta and commercialize the intellectual property (IP) developed; University of Saskatchewan Toxicology Centre to further develop a new technology to extract petroleum hydrocarbons and waste products from oil sands; and Musculoskeletal Innovation and Product Development Centre to develop and commercialize new prosthetics, lubricants and related medical devices in Manitoba.

Priority	Type1	Program Activity
Public Service Renewal	Previously committed to	All
Status
Definition: to sustain the necessary complement of qualified, motivated and knowledgeable staff to deliver on WD’s mandate and contribute to federal priorities Status: Met All Increased employment equity representation and appointed 11 new graduates into the federal Public Service through strategic external recruitment. Provided career advancement within the department through 63 internal employment opportunities. Continued to focus on employee development through identification of performance goals, development of personal learning plans and a collective performance review process. Contributed to workplace renewal by: Supporting managers through a series of information and training sessions and middle management participation in regional and national middle manager forums; Increasing the focus on Official Languages training, leadership training and development, and expanding succession planning initiatives; and Maintaining the focus on Public Service values through the development of WD’s draft Values and Ethics Code of Conduct, delivery of employee information sessions, inclusion of values & ethics training in the orientation sessions for new staff, and the development and distribution of values & ethics workplace scenarios.

Priority	Type1	Program Activity
Performance Measurement	Previously committed to	All
Status
Definition: to ensure value for money, support organizational decision-making and demonstrate results Status: Met All Reviewed and implemented improved performance measures by: Implementing a more streamlined PAA, with one Strategic Outcome and five Program Activities; Launching a comprehensive review of the PAA to identify its strengths and weaknesses, and determine the need for further refinement or revision; Undertaking a review of the WD Performance Measurement Framework; and Developing and distributing a Performance Measurement reference guide for project officers to promote a better understanding and more consistent use of the performance measures used to report project results. Developed innovative performance measurement approaches by: Developing and applying project case studies to better demonstrate the success of WD’s investments over time; and Completing a comprehensive suite of standard performance reports in the WD Reporting Centre, improving the quality and timeliness of performance reporting. Further developed WD’s project management system, Gateway by: Developing an on-line progress reporting module within Gateway to facilitate client reporting; and Implementing a three-year action plan to further develop Gateway, including the development of a Client Relationship Management module.

Priority	Type1	Program Activity
Integrated Risk Management	Previously committed to	All
Status
Definition: to ensure the comprehensive and consistent use of risk information to inform departmental management Status: Met All Approved a new departmental Risk Management Policy. Completed risk-based policies, such as the new Departmental Security Plan. Renewed WD’s Corporate Risk Profile and aligned the renewal process more closely with WD’s planning cycle.

Priority	Type1	Program Activity
Information Management	Previously committed to	All
Status
Definition: to enhance access to information supporting decision-making and communication with Canadians Status: Somewhat Met Established an Information Management governance model with senior executive leadership. Completed realignment of functional areas to optimize Information Management operations. Completed multi-year implementation plans for both Electronic Records and Document Management, and digitization of paper records. Engaged subject matter experts for duration of project with executive approval for funding. Developed and provided Information Management Awareness sessions for staff.

 

Risk Analysis

Operating Environment

As part of its planning process, the department undertakes a formal risk assessment which serves as the foundation for the department’s Corporate Risk Profile and helps to inform its priority setting.  Throughout the year, WD continues to assess external and internal factors that may adversely affect the delivery of its programs and services to western Canadians.  The key risks that impacted WD’s performance in 2010–11 are outlined below.

External Risks

Despite persistent uncertainty, the global economic recovery continued to gain momentum in 2010–11.  Consumer demand in the US improved and was reinforced by additional monetary and fiscal stimuli.  Growth in Europe was encouraging, though ongoing challenges with sovereign debt continued to plague the region.  Strong growth in emerging markets drove demand for commodities, while some emerging economies began to implement more restrictive monetary policy to contain inflation.

As anticipated in the 2010–11 RPP, Western Canada recovered quickly from the 2009 global economic downturn, with gross domestic product (GDP) increasing 4.2 percent in 2010.  Growth was driven by primary sectors, which benefitted from the rebound in commodity prices.  Accordingly, exports were up in all western provinces except Manitoba, whose proportionally large manufacturing sector was challenged by the appreciation of the Canadian dollar.

Outside of British Columbia, the majority of western exports remained reliant on the American market.  Western Canada’s commodity-based economy is undermined by persistent weakness in innovation and productivity, as reflected by the region’s comparatively low expenditures on research and development (R&D), investment in information and communications technologies (ICT), and university income from the commercialization of IP.

The extent to which external risks hindered the achievement of targets is presented in Section II.

Internal Risks

In 2010–11, the department identified six potential risks which may inhibit achieving objectives:  the delivery of the EAP, measuring and demonstrating results, Public Service Renewal, financial management, values and ethics, and policy and programming.  In response, the department established mitigation plans to manage negative impacts associated with its corporate risks.  Although delivery of the EAP remained a top priority, the department renewed its commitment to enhance performance measurement and reporting, take measures to renew the Public Service and build upon existing sound financial management practices.  In response to the new Government of Canada’s Code of Conduct, WD recognized values and ethics as an area of emphasis in 2010–11 and accelerated efforts to ensure policy and programming is relevant and effective.  To assure greater reliability, these risks and mitigation plans were reviewed by the external Departmental Audit Committee.

Summary of Performance

WD’s performance during 2010–11 is summarized in the following tables:

• Total financial and human resources; and
• Performance by strategic outcome.

Departmental performance against its targets is explained in greater detail, both by strategic outcome and at the program activity level, in Section II of this report. The online version of the DPR includes hyperlinks to WD’s Web site, where more details of the results of WD-funded projects are provided.

2010-11 Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
428,958	490,273	466,491

2010-11 Human Resources (FTEs)

Planned	Actual	Difference
474	455	19

To measure progress against its strategic outcome, WD has selected four performance indicators and established targets, which it tracks annually.  These indicators provide a broad macroeconomic context for WD’s planning and reporting; the targets reflect economic forecasts for Western Canada for the 2010–11 planning period.  The performance against the targets provides feedback on how accurate these forecasts were, and may help to explain some of the contextual barriers encountered in addressing priorities during the year.

The second part of the table also illustrates the distribution of WD’s overall funding by the five program activities that make up WD’s PAA for 2010–11, and includes a separate accounting of funding received by the department through the EAP.

Strategic Outcome : The western Canadian economy is developed and diversified

Performance Indicators	Targets	2010-11 Performance
Real GDP growth in western Canada	3.0% (stable growth rate)	4.2% (2010 preliminary data)
Labour productivity growth in Western Canada, measured as year-over-year change in real GDP per hour worked	1.2% (stable growth rate)	1.0154% (2010)
Primary production as a percentage of GDP	14% (continuation of downward trend)	14.5% (2010 preliminary data)
R&D intensity: gross domestic expenditures on R&D (GERD) as a percentage of GDP	1.3% (stable growth rate)	0.8% (2008)

Program Activity	2009-10 Actual Spending ($ thousands)	2010-112 ($ thousands)				Alignment to Government of Canada Outcomes
		Main Estimates	Planned Spending	Total Authorities3	Actual Spending4
Business Development	46,491	43,076	39,157	45,859	44,205	Strong Economic Growth
Innovation	86,869	59,455	59,455	73,526	77,096	An Innovative and Knowledge-based economy
Community Economic Development	66,718	54,112	58,031	58,592	46,547	Strong Economic Growth
Policy, Advocacy and Coordination	8,646	8,873	8,873	9,465	8,583	Strong Economic Growth
Canada's Economic Action Plan	186,314	245,022	245,022	283,122	262,454	Strong Economic Growth
Total	395,488	410,538	410,538	470,564	438,885

Program Activity	2009-10 Actual Spending ($ thousands)	2010-112 ($ thousands)
		Main Estimates	Planned Spending	Total Authorities	Actual Spending
Internal Services	25,815	18,420	18,420	19,709	27,606

Expenditure Profile

Canada's Economic Action Plan (CEAP)

Under Canada’s Economic Action Plan (EAP), WD was responsible for the delivery of the Recreational Infrastructure Canada (RInC) program, the Community Adjustment Fund (CAF), the Calgary Stampede project and the on-going Canada Business Network (CBN) funding in Western Canada. The department spent a total of $186.3 million in 2009–10 and $262.4 million in 2010–11. WD is also delivering the Building Canada Fund – Communities Component (BCF CC) Top-Up funding, which was announced in Budget 2009, on behalf of Infrastructure Canada (INFC), within WD’s existing operating funding levels.

Departmental Spending Trend

Spikes in actual spending over the past four years can be attributed to one-time initiatives – such as the Mountain Pine Beetle (MPB) program, the Alberta-Saskatchewan Centenaries (ASC) initiative and the International Vaccine Centre’s Biosafety Level III Containment Facility in Saskatchewan – which WD delivered in addition to its core programs.  As indicated in the performance table above, 2009–10 and 2010–11 actual spending was augmented by the delivery of EAP initiatives, CAF, RInC, the Calgary Stampede project and on-going funding for the CBN.

The wind down of some prior initiatives may also impact the department’s level of spending from year to year.  For example, expenditures under the Infrastructure Canada Program (ICP) decreased over the last three years from $12.9 million in 2008–09, to $3.7 million in 2009–10 and $166,667 in 2010–11, whereas expenditures related to the ASC initiative increased from $24,240 in 2009–10 to $6.2 million in 2010–11.  The interaction of initiatives that are winding down and others that are ramping up, results in less dramatic fluctuations in actual spending year-over-year, as is illustrated in the spending trends chart below.

The figures presented in both the performance table and the spending trends chart do not include funds spent through Other Government Department suspense accounts, on behalf of other departments.  For example, in fiscal year 2010–11, WD expended approximately $217.6 million on behalf of INFC to deliver BCF (Communities Component and Major Infrastructure Component), the Municipal Rural Infrastructure Fund (MRIF) and the Canada Strategic Infrastructure Fund (CSIF).

[text version]

Estimates by Vote

For information on departmental votes and/or statutory expenditures, please see the 2010–11 Public Accounts of Canada (Volume II) publication. WD's vote expenditures include operating expenditures, and grants and contributions. WD's significant statutory expenditures include CAF and contributions to employee benefit plans.

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