ARCHIVED - RPP 2006-2007
Atlantic Canada Opportunities Agency

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Section IV – Other Items of Interest

Provincial Economic Challenges

In New Brunswick the rationalization in the forestry sector continues to have a major impact, with several permanent and temporary mill closures occurring again in 2005-2006, including the permanent shutdown of Smurfit-Stone in Bathurst.  The Agency is working with local communities to develop responses to these job losses and diversify the economies.  Positive growth continues in the construction sector, with large projects being planned in the 2006-2007 period including the liquefied natural gas terminal in Saint John and the refurbishment of Point Lepreau nuclear-powered electrical generating plant.  Large road construction projects will contribute to the growth of GDP during 2006-2007.  The slowdown in the resource sectors is having a negative impact on the manufacturing sector, and is expected to continue into 2006-2007.  The manufacturing sector lost 7,900 jobs between January and September 2005, and the appreciation of the Canadian dollar could continue to constrain production.

Prince Edward Island's main challenges in promoting business growth are to achieve further economic diversification through cluster development in the bio-resource, aerospace, information and communications technology, tourism, and wind energy sectors.  Human capital development, along with more highly developed immigration policy approaches, will be a vital lever of economic growth in both the short and long term.  Key learning and research initiatives with both Holland College and the University of Prince Edward Island will be further developed.  The role of private industry in the federal-provincial labour development area will be enhanced through the vehicle of the new Association of Sector Councils.  Implementation of infrastructure projects under Municipal Rural Infrastructure Fund, gas tax, and the federal-provincial umbrella governance framework will be a key feature of the coming year.  To take greater advantage of emerging economic opportunities, federal-provincial partnerships in innovation, human capital, trade, tourism, and investment will be enhanced in an increasingly targeted and strategic manner.

The challenge in Nova Scotia continues to be ensuring that economic growth is experienced not only in urban areas but also rural ones.  A recent Conference Board of Canada analysis of Nova Scotia's economy[14] predicts that, overall, real GDP growth in Nova Scotia in 2005 and 2006 will be driven by the services and retail sectors.  As these sectors tend to be concentrated in urban centres, it will provide stimulus to these specific areas.  The report goes on to forecast continued difficulties for the sectors primarily located in the rural areas of Nova Scotia.  These include the mining and construction sectors, fisheries and forestry, and tourism.  In the mining sector, results of drilling for natural gas have not been as encouraging as was hoped, and this has resulted in a number of delays and cancellations of exploration activity.  Reduced quotas on the herring and crab fisheries, combined with a late season start due to bad weather, have impacted negatively on the fishery.  Expected declining housing starts, both domestically and in the U.S., are expected to slow the forestry and construction sectors.  Finally, rising costs of gasoline have discouraged motorists from visiting the province.  For many rural communities, tourism provides not only revenues but seasonal work.  These economic developments are likely to increase the division between urban and rural development.

Economic restructuring continues to evolve in Cape Breton after the closure of the island's two major industries, coal and steel.  Investments in a number of sectors over the past five years have helped to mitigate the negative impact of these closures.  Employment in the tele-service industry has meant the addition of 3,500 jobs, and this is leading to a restructuring in the type of work being done in Cape Breton.  Value-added manufacturing has been a growing segment of the economy, notably auto-parts manufacturing, with potential for future expansion.  It is anticipated that a liquefied natural gas terminal will be operational in the strait area by late 2008.  Construction of the terminal is expected to take about 36 months and will employ approximately 600 people at peak construction.  Keata Pharma Inc. began construction of a new building to house a pharmaceutical manufacturing facility.  The venture is expected to create 177 new jobs.  Cape Breton University, in partnership with the company, launched a new Biotechnology and Pharmaceutical Technology Certificate Program to train potential employees.  It is anticipated that the facility will be operational by September 2006.

A particular challenge for Newfoundland and Labrador is the loss of employment in rural resource-based industries.  The closure or downsizing of major facilities over the past year has seriously affected the economic prospects of several communities.  The coming year holds the possibility that other operations, particularly fish plants, will also close or will cut back production.  This is expected to exacerbate rural outmigration in these areas.  An opportunity lies in the much-improved fiscal position of the government of Newfoundland and Labrador.  The renegotiation of the Atlantic Accord benefits, and increased revenue from offshore oil and gas, transformed a projected 2005-2006 budget deficit of $492.5 million into a surplus of $1.5 million.  The provincial government now has greatly increased flexibility to deal with emerging opportunities.  Another opportunity is the robust economic growth of the St. John's area, fuelled largely by offshore oil and gas development.  Close to half of the province's population now resides within commuting distance of St. John's.

BDP Repayable Contributions Portfolio
(Update as of December 2005)

Since 1995 ACOA has provided interest-free, unsecured loans to SMEs under the Business Development Program (BDP) to help them start up, expand, improve productivity, develop new markets or undertake other growth-oriented activities.  Commercial assistance is repayable over an average repayment term of five to seven years.  The collection of repayable contributions under the BDP is expected to total at least $55.2 million in 2006-2007.  The cumulative rate of defaulted contracts and write-offs since 1995 is 14.2% ($117.9 million of a total $831.2 million).  Over the past two years, the average annual combined default and write-off rate was 3.38% (3.8% as at December 31 in fiscal year 2005-2006).  It is anticipated that the Agency will write off approximately $15 million in 2006-2007.

Historically, ACOA collects approximately 78% of its forecast scheduled repayments on all repayable programs.  Approximately 16% of those annually forecasted revenues end up being rescheduled to future years, and approximately 6% represent defaulted contracts and write-offs.

Risk Rating	Current Mix	Anticipated Mix
Low Low-medium Medium Medium-high High	11% 24% 37% 22% 6%	10% 25% 35% 25% 5%

Risk Mix

The planned risk mix for 2006-2007 is shown in the table at right.  The current portfolio mix is approaching the desired risk mix distribution.  The latest BDP evaluation suggested that the Agency may have drifted toward more capital asset-based or lower-risk lending; however, more emphasis is being placed on "incrementality" and "need" in the due diligence process.  This, in turn, is leading to a slightly higher risk mix for the receivables.

For more information on repayable contributions,
see:  http://www.acoa-apeca.gc.ca/e/financial/repayable/index.shtml egional Prescence Init

Government Themes and Management Issues

1. Federal Regional Councils

Federal Regional Councils bring together senior officials of federal departments and agencies.  Councils play an important role as an executive forum to help improve service delivery, communication with provincial governments and other federal departments on regional perspectives and federal initiatives, as well as co-operation and co-ordination with other jurisdictions.

It is anticipated that the Federal Regional Councils will take on an enhanced role in 2006-2007 and will be asked to implement a new initiative aimed at strengthening the federal presence in the regions.

Some of the specific regional initiatives to be undertaken are outlined below.

New Brunswick

While continuing to address priority public management files in 2006-2007, the Federal Council will focus on enhancing the federal presence in the region and providing horizontal input into national policy and program development.

The council will also look at renewing its involvement in several other projects, including accessing funding through the Public Service Modernization Act's Strategic Investment Fund and the Official Languages Innovation Fund.

Prince Edward Island

The Prince Edward Island Federal Council will focus in support of the Federal Presence in the Regions Initiative.  This will include developing and strengthening working relationships with central agencies; deputy ministers and assistant deputy ministers; line departments/agencies; provincial government officials; and stakeholders at all levels (national, regional, provincial and municipal).  The council will develop a Government of Canada strategic plan for the P.E.I. region, which embarks on a whole-of-government approach and outlines how federal policy and program instruments might help serve P.E.I. in its objective to become a stronger, more self-reliant partner in the federation.

The council will continue to focus on regional horizontal priorities such as official languages, human resources, rural community development, and communications.  

The council will work to support the achievement of common national priorities as identified by the chairs of the Federal Councils.  They include:

• identifying optimal federal capacity/presence in each region;
• supporting areas where councils can play a value-added role, such as Public Service Modernization Act implementation and the common shared services initiatives;
• developing provincial/regional strategies or action plans in support of regional ministers' objectives and priorities; and
• supporting Service Canada and integrated service delivery.

Nova Scotia

The Nova Scotia Federal Council will continue to support transitional and corporate initiatives.  Transitional initiatives include work on Aboriginal, strong neighbourhoods, and security files.  Corporate initiatives include work on official languages, human resources modernization, service delivery, diversity and learning.

To enhance its regional presence, the Nova Scotia Federal Council will work with other Federal Regional Councils on four common priorities that were identified by council chairs.  These include:

1. assessments of regional capacity and federal presence;
2. a strategic plan to promote stronger federal presence in the regions;
3. integrated service delivery initiatives supporting the launch of Service Canada; and
4. promotion and implementation of the integrated management agenda.

Newfoundland and Labrador

The Newfoundland and Labrador Federal Council will continue to deliver the programs of the Canada School of Public Service, which provides interdepartmental training to members of the federal public service.  The council will carry out a needs assessment for French language training among federal public service employees, and will also hire a French language training co-ordinator.

2. Official Languages Act, Section 41

On the national front, the Atlantic Canada Opportunities Agency will maintain its active participation on the National Committee on Economic Development and Employability and on the National Committee of Co-ordinators Responsible for the Implementation of Section 41 of the Official Languages Act.  The Agency's President will actively pursue participation in the deputy ministers' committee on Official Languages with the Privy Council Office, and Agency personnel will continue to collaborate on Citizenship and Immigration Canada's Francophone Minority Communities Steering Committee.

ACOA will maintain its working relationship with the Economic Development and Employability Network (Réseau de Développement économique et d'employabilité), both nationally and in each of the Atlantic provinces.  In addition to the regular contacts it maintains with organizations representing Acadians and Francophones in the four Atlantic provinces and the assistance it provides for their activities, the Agency will continue to collaborate with the region's four French-language economic development organizations.

In the Atlantic region, the Agency will continue its participation in the official languages sub-committee of each of the region's four Federal Councils.  ACOA will continue to help various Acadian and Francophone organizations in the region to stimulate and drive economic development in their communities.  The Agency also works with minority language communities to ensure that their needs are an integral consideration in ACOA's research into economic development and entrepreneurship.

ACOA will continue to implement measures identified in the memorandum of understanding it entered into with Industry Canada, under which the Agency has already invested over $2 million in tele-learning for the region's French-language post-secondary institutions and it will, over the next two years, invest $400,000 in internships for Acadian and Francophone youth.

ACOA will continue to oversee contributions awarded to Acadian and Francophone groups by regional economic development organizations and local business development corporations.  The Agency also promotes Acadian and Francophone representation on the boards of these funding organizations, and requires the provision of services in both official languages at Canada Business Service Centres throughout the four Atlantic provinces.

3. Service Improvement Initiative, Citizen-centred Service Delivery

The Agency continues to support the Service Improvement Initiative.  Building on excellent results from its second client survey in 2003-2004, the Agency will continue to refine service delivery practices.  A third client survey based on the common measurement tool (CMT) process will be completed during 2006-2007.

The service improvement plan (SIP) compiled during 2005-2006 will require continual modification to maintain relevance.  As the Agency repositions to reflect changing economic circumstances, pressures and strategic directions, the improvement plans will be adjusted to meet client priorities as identified in the client survey.  It is expected that the SIP will be formalized during this period.

While current work practices support responding to client input, a formal complaint redress mechanism will be finalized and put in place.

The Agency will continue with the development of client-driven service standards for project application processing.  Both client surveys identified the "turnaround time for project approval under the Business Development Program" as an area for improvement.  In addition to providing online access to assist clients in following up on the status of their application, the Agency intends to publish standards that identify for the client information required for an efficient review and project approval process under the Business Development Program.

Results-based Management

Results-based management (RBM) is a government-wide approach to improving program and management effectiveness and accountability, and is oriented toward achieving results.  It uses results as a basis for planning, managing and reporting, and aims to improve performance by having managers compare and analyze actual results against planned results through regular monitoring, evaluation, reporting, feedback and adjustments.  ACOA has made reporting, accountability, transparency and protecting the public interest the cornerstones of its RBM approach.

The Agency will continue to invest in the development and implementation of its Management, Resources and Results Structure, a framework to integrate financial and non-financial information in a way that links the results achieved and the resources used.  The Agency is engaged in providing evidence-based information contained in performance measurement systems, audits, evaluations and reviews to external stakeholders such as central agency officials, parliamentarians and the general public.  The Agency will continue to do so in a format that will facilitate their analysis and be useful to gauge Agency performance to deliver results.  The same information also serves ACOA managers in making strategic and operational decisions on improving the overall effectiveness of the Agency's programming, and in being accountable for results.

Providing guidance and co-ordinating the planning, performance measurement and reporting with regard to the Agency's programs is an integral part of ACOA's Corporate Planning and Performance Management (CPPM) division.  The CPPM division, through its evaluation unit, also brings value to the Agency by providing independent, objective and evidence-based information on the results of ACOA's activities.  The CPPM division promotes RBM best practices and works closely with Agency managers who have a responsibility for demonstrating performance and acting on performance information.  The division does so with the collaboration of the Audit and Evaluation Secretariat, which monitors the implementation of audit and evaluation recommendations, and provides administrative support to the Review Committee.

The Agency's Review Committee (which is chaired by ACOA's President and includes the vice-presidents from Head Office and the regions, and other senior managers) meets regularly to plan, review and revise the Agency's three-year rolling review plan.  This plan essentially details all audits, evaluations and reviews to be undertaken over a three-year period, in order to provide timely, relevant strategic information for use by Agency managers, Treasury Board, the government and Canadians.  Details on ACOA's review plan for fiscal year 2006-2007 may be found in Section III, Table 10.

In the coming months the Agency will review the governance of the evaluation function, in order to continue to enhance both its capacity to produce and use result-based performance information and implement the new policy on internal audit.  The Agency intends to review its audit and evaluation policy for the same reasons.

Corporate Services

The Corporate Services function includes a wide range of activities that support Agency outcomes.  Corporate Services works for continuous improvement in the provision of timely and quality corporate administration and the promotion of sound management.

Activities in 2006-2007 and beyond:

Corporate Planning and Performance Management

• Continue implementation of an integrated planning process for the Agency.
• Promote and co-ordinate modern business management practices within the Agency as outlined in the Management Accountability Framework.
• Strengthen linkages between planning, performance measurement, evaluation, policy and programming.
• Produce the Agency's Report on Plans and Priorities and Departmental Performance Report, in an accurate and timely manner and in accordance with prevailing parliamentary schedules and protocols.

Communications

• Work with clients and partners to promote Atlantic Canada as an increasingly innovative, export-oriented and entrepreneurial place.  Promotion will be achieved through speaking opportunities, testimonials and partner profiles, support to export and investment activities, and local outreach efforts.
• Improve the awareness and understanding of the Agency's role in enterprise and community development, as well as its programs and services and how they can be accessed.
• Support the Agency's key policy and advocacy files through strategic communications activities.

Finance and Administration

The Agency is focusing its plans and priorities on achieving excellence in the stewardship of public funds.  Three priority areas, namely management performance, expenditure management, and financial management and control, will be strengthened by focusing on the following:

• Maintaining and monitoring the government-wide management and analysis systems, including the management resources and results structure and the expenditure management information system.
• Tabling in Parliament the government's Main Estimates and Supplementary Estimates in an accurate and timely manner and in accordance with prevailing parliamentary schedules and protocols.
• Tabling the Public Accounts of Canada, including the government's audited financial statements, within prescribed deadlines as set by the Treasury Board Secretariat and Public Works and Government Services Canada.

Corporate Systems (Information Management/Information Technology)

• Through the use of Web technology and service transformation, continue to increase the availability of corporate information, integrate program management and finance reporting systems, and prepare key service systems for online delivery.
• Integrate the work of the Treasury Board Secretariat's Business Transformation Enablement Program into the enterprise architecture of the Agency.  Work in close collaboration with PWGSC and other central agencies to implement strategic new initiatives like the common administrative services.

Internal Audit

• Provide information as an aid to decision making and strategic management, and ultimately to facilitate program improvement and organizational learning through fair, reliable, valid and understandable internal audits.  Internal Audit achieves this by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.  It also provides conclusions regarding the Agency's compliance with established government regulations and rules.

Human Resources

• Modernize the human resources function by implementing, co-ordinating and monitoring all the new human resource legislation and policies.
• Develop and implement a reporting and monitoring framework for staffing.
• Increase overall training for Agency managers, with emphasis on procurement, information management, human resources and finance.
• Implement an active audit, monitoring and reporting system for position classifications.
• Continue to provide information and awareness sessions to all staff on the informal conflict management system.

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