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In 2007, Western Economic Diversification Canada (WD) marks 20 years of generating long-term prosperity and economic stability for western Canadians. For two decades we have championed the West's potential in the federal realm and enriched the West's economic success by supporting economic diversification and development to complement its rich abundance of natural resource wealth.
Over the last year, extensive consultations took place with western stakeholders and western caucus, resulting in a renewed focus on WD's economic mandate and initiatives that support long-term economic benefits for Western Canada.
In 2007-2008, we will continue to focus on stimulating a robust, resilient and diversified western economy. Mirroring many of the priorities outlined in the Advantage Canada Plan, the economic and fiscal update announced in November 2006, we will invest in activities that will increase the region's global competitiveness, value-added processing and manufacturing productivity. We will enable companies to bring new technologies to market and expand access to global markets. We will also contribute strongly to Canada's Asia-Pacific Gateway and Corridor Initiative through targeted investments in the West that build infrastructure and facilitate export opportunities. Continuing to nurture entrepreneurial acumen among westerners will remain a key priority.
Our core programs and services are designed to generate long-lasting and measurable growth in the West, ensuring Canadian taxpayers receive good value for their money. For example, WD's investment in the WestLink Innovation Network has been addressing the shortage of trained technology commercialization managers in Western Canada. The WestLink Technology Commercialization Internship Program provides science and technology graduates with intensive real-life experience in high-technology companies, university technology commercialization offices and venture capital firms. WestLink has been acknowledged nationally and internationally as a leader in developing the next generation of technology managers. Eighty eight per cent of these graduates are now employed in this specialized field, and most have remained in the West.
Through support for skills development and apprenticeship programs linked to the West's growing knowledge-based economy, we will broaden the capacity of urban and rural western communities, and provide opportunities for Aboriginal youth to actively participate in the West's burgeoning economy. Simultaneously, WD will promote the expansion of research and development of business clusters within vital growth sectors to further boost the West's knowledge-based economy.
Accelerating business growth and strengthening global competitiveness among the West's impressive network of small- and medium-size enterprises (SMEs) will continue to be a priority during 2007-2008. By working collaboratively with members in the Western Canada Business Service Network (WCBSN), other business service organizations and associations, we will improve access to risk capital, business services and global markets for SMEs.
WD takes pride in working strategically through mutually beneficial partnerships with other orders of government, academic institutions, private sector organizations, and the not-for-profit sector on projects and initiatives with long-term economic benefits that will secure the future for westerners.
By focusing on economic opportunity, WD seeks to address the unique challenges within each region, and is helping to build a solid foundation upon which Western Canada can grow and prosper. Through WD, Canada's New Government is committed to ensuring economic prosperity throughout Western Canada and for western Canadian families. By investing in the West, we are ensuring a stronger, more prosperous Canada.
The Honourable Rona Ambrose, P.C., M.P.
I submit for tabling in Parliament, the 2007-2008 Report on Plans and Priorities (RPP) for Western Economic Diversification Canada.
This document has been prepared based on the reporting principles contained in Guide for the Preparation of Part III of the 2007-2008 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:
Oryssia J. Lennie
Western Economic Diversification Canada
Reason for Existence
Western Economic Diversification Canada's mandate is to promote the development and diversification of the economy of Western Canada (Manitoba, Saskatchewan, Alberta and British Columbia) and to advance the interests of Western Canada in national economic policy, program and project development and implementation.
Financial Resources (thousands)
*The reduction in financial resources from 2007-2008 to 2008-2009 reflects the planned completion of Alberta and Saskatchewan Centenary projects and the Infrastructure Canada Program in 2007-2008.
|1. Support for business competitiveness and growth||Ongoing|
|2. Improve linkages between strategic infrastructure investments and economic development initiatives||Updated commitment|
|3. Greater emphasis on supporting commercialization and value-added production||Updated commitment|
|4. Improve international competitiveness and strengthen trade and economic corridors of importance to the West||Ongoing|
|5. Strengthen accountability, transparency, and performance reporting with members of the Western Canada Business Service Network (WCBSN) and improve coordination among WCBSN members and other business and economic organizations||New|
|6. Implement a modern management agenda that focuses on improving management practices within the department including strengthening accountability to Canadians, integration of human resource planning and risk assessment with business planning, and improving information management||Ongoing|
Program Activities by Strategic Outcome
|Planned Spending (000's)||
|Expected Results||2007-2008||2008-2009||2009-2010||Contributes to the
|A competitive and expanded business sector in Western Canada and a strengthened western Canadian innovation system (Entrepreneurship & Innovation)|
|Business Development & Entrepreneurship||The growth of small businesses in Western Canada and their improved capacity to remain competitive in the face of rising global competition.||57,786||58,170||54,268||1 - Business competitiveness & growth
2 - Linkages between strategic infrastructure investments and economic development
3 - Commercialization and value-added production
5 - Strengthen accountability, transparency, and performance reporting
|Innovation||An increase in knowledge-driven and value-added economic activities, built on both traditional and emerging industries, that creates a more diversified and resilient economy in Western Canada.||64,696||63,548||63,214||
3 - Commercialization and value-added production
|Economically viable communities in Western Canada with a high quality of life (Community Economic Development)|
|Community Economic Planning, Development and Adjustment||To ensure strong and viable communities in urban and rural areas of Western Canada capable of responding to challenges that hinder competitiveness, opportunities, and quality of life.||103,952||55,010||55,615||
|Infrastructure||To improve and expand sustainable public infrastructure that enhances the quality of the environment and allows for long-term economic growth.||29,946||2,013||1,396||2 - Linkages between strategic infrastructure investments and economic development|
|Policies and programs that support the development of Western Canada (Policy, Advocacy and Coordination)|
|Collaboration & Coordination||Better coordinated economic development activities and programs in the West.||5,885||5,885||5,885||All program priorities|
|Advocacy||An improved understanding and awareness of western issues and increased access to and participation in federal programs by the region.||2,660||2,660||2,660||All program priorities|
|Research & Analysis||An enhanced dialogue around and understanding of western issues, challenges, opportunities and priorities.||4,157||4,157||4,157||All program priorities|
Federal policies and programs to promote economic development have been an integral part of Canadian economic and industrial policy for many decades. The importance placed on regional development policy within Canada's federal system is reflected by the inclusion of regional development policy and objectives in Section 36 of the Constitution Act, 1982, which commits the federal and provincial governments to:
Federal regional development policies and approaches are rooted in the recognition that Canada is a vast and diverse country made up of a number of regions with distinct socio-economic characteristics, industrial structures and economic opportunities. They provide scope for tailored approaches within each region to take into account unique economic and industrial circumstances and to capitalize on regional strengths. Regional development initiatives often address gaps in programs and services at the national level, and provide an on-the-ground capacity to work with local and regional organizations and businesses to promote economic growth and development.
Since 1987, responsibility for federal regional development activities rests with three regional development agencies – Atlantic Canada Opportunities Agency (ACOA), Canada Economic Development for Quebec Regions (CED-Q) and Western Economic Diversification Canada (WD). In Northern and rural Ontario, FedNor plays a role similar to that of the three regional development agencies; however, it is an organization within Industry Canada, not a separate department.
Initially created as a special operating agency in 1987, WD was established as a federal department, through the Western Economic Diversification Act, 1988. The department is responsible for economic diversification and development in the four western provinces: British Columbia (BC), Alberta (AB), Saskatchewan (SK), and Manitoba (MB).
Since 2003, real Gross Domestic Product (GDP) growth in Saskatchewan, British Columbia and Alberta has met or exceeded the national growth rate, and the rate of real GDP growth in Manitoba has steadily increased. GDP growth in Alberta and British Columbia is forecast to continue to exceed the national average through 2007, with lower rates of growth in Saskatchewan and Manitoba.
British Columbia and Alberta are among the economic leaders in Canada. The energy sector continues to anchor Alberta's growth. Strong world commodity prices boosted corporate earnings and led to record levels of investment in exploration, development and the construction of industrial facilities in 2006. British Columbia's economy is benefiting from the combined impact of high commodity prices, low interest rates driving demand for residential construction, and a series of major public infrastructure projects.
Economic growth rates in Saskatchewan and Manitoba have been more modest. High oil and natural gas prices have contributed to economic growth in Saskatchewan, as have other natural resources such as uranium and potash. Saskatchewan also has a growing ag-biotech sector to complement the province's traditional strength in agricultural production. In Manitoba, high levels of construction activity and a strong manufacturing sector are driving the economy, and construction rates are projected to remain strong in 2007. Manitoba will also benefit from a strong mining sector and alternative energy development.
Recently, strong global demand and high prices for commodities, have led to booming economies in Western Canada. Indeed, the western economy has increasingly anchored the Canadian economy. In 2005, for the first time, western exports of mineral fuels and oil exports ($88 billion) exceeded exports from Ontario of motor vehicles and parts ($78 billion).
However, this dependence on natural resources makes Western Canada vulnerable to volatility in the commodity markets. A larger proportion of Western Canada's GDP from goods producing industries is generated by agriculture, forestry and mining. Whereas the rest of Canada generates a greater proportion of GDP from goods producing industries from the manufacturing sector, Western Canada will be disproportionably affected when the current booming commodity markets flatten.
In addition to volatile commodity markets, resource dependent economies are more vulnerable to disruptions from trade disputes and natural disasters. This makes it particularly important to address the long-term economic sustainability of the region and underlies WD's strategic investments in supporting development and diversification of the economy of Western Canada.
Across Western Canada, labour shortages are cited as the most significant problem facing the economy. In 2005, unemployment rates ranged from a low of 3.9 per cent in Alberta to 5.9 per cent in British Columbia – all considerably below the national average of 6.8 per cent. The populations of the two most western provinces are growing due to immigration and the arrival of Canadians in search of jobs and higher wages. Despite this growth, neither province is able to meet the labour demands of their expanding economies. The populations of Manitoba and Saskatchewan have not grown at the same pace as the rest of Canada and both provinces are facing serious labour shortages, in large part due to the inter-provincial migration.
The Aboriginal population is the youngest and fastest growing population group in Western Canada, and offers considerable opportunity to address some of the labour force constraints facing the West. The rate of labour force participation among the off-reserve Aboriginal labour force remains consistently lower than among the non-Aboriginal labour force, and the unemployment rate is higher. However, the Aboriginal population is becoming increasingly engaged in the labour market; from 2001 to 2005, labour force participation rates amongst the off-reserve Aboriginal labour force increased and the unemployment rate declined in all four western provinces. The degree to which these young people can be integrated into the labour force is an important factor in addressing labour shortages across Western Canada.
Other challenges to the region include the impact of the US slowdown on the forest products sector. Rising housing costs in Alberta and British Columbia may contribute to a slow-down in inter-provincial migration. Higher input costs are also impacting the manufacturing sector and squeezing profit margins in the agricultural sector.
|The ongoing challenge: develop and diversify the western economies to reduce reliance on primary resources|
The ongoing challenge for Western Canada is to reduce the region's reliance on primary resources. The current strong performance of resource driven sectors provides an opportunity for public and private investment that will diversify the economic base, hasten the transition to knowledge-driven industries, and increase the value-added and market penetration of western goods, services, and technologies. WD works in collaboration with provincial and municipal governments, other federal departments, industry associations and not-for-profit organizations to develop and diversify the economy of Western Canada.
Innovation and technology are key factors in the West's economic development and diversification. They offer the potential for improved productivity in the primary resource sector. Innovation and technology will also make the West more competitive in the production and trade of value-added goods and services related to its natural resources. Looking beyond the traditional resource sectors, investments and policy approaches that promote innovation and technology growth and development will help all four western provinces capitalize on the expansion of knowledge-based industries such as the life sciences, environmental technologies, and information communications technology (ICT).
Canada is a trading nation; almost 38 per cent of Canada's GDP is from exports. In Western Canada, exports accounted for a low of 29 per cent of GDP in British Columbia, to a high of 41 per cent of GDP in Saskatchewan. However, the proportion of GDP from exports across the West is lower than in Ontario. Ensuring the long-term growth and development of the West will require a greater focus on international trade and investment. It is crucial that western Canadian businesses, research institutions, and communities are internationally competitive.
Access to the US market will continue to be extremely important. In 2005, 84 per cent of Canadian exports went to the US. The proportion of exports to the US from Alberta and Ontario were surprisingly consistent at approximately 89 per cent of all exports. However, the rate was much lower across the rest of Western Canada.
Beyond the US, there are a number of emerging international markets that are opportunities for Canadian exporters. China and India are examples of economies that are currently demanding large quantities of raw materials; however, as incomes and standards of living within these countries grow there may be greater opportunities to export other goods.
Asian markets are already important for Western Canada; China and Japan, along with the US, are the top three export markets for the West. However, this differs in Ontario where exports to the UK were greater than exports to Japan. These differences highlight the importance of regionally targeted strategies to develop and expand export opportunities.
The western Canadian economies are challenged to position themselves competitively so they can benefit from new and emerging export opportunities. In 2007-2008, WD plans to concentrate on increasing western Canadian awareness of, and access to, Asia-Pacific markets through strategic investments in the Asia-Pacific Gateway and Corridor Initiative. The department also plans to further strengthen trade with the US by expanding the range of information, advisory and market development tools and services available within the West about opportunities in the US and promoting the development of a mid-continent corridor leading to mid-western US markets and Mexico.
As the western Canadian economy develops and grows, cooperation between industry and government will be essential to attract, train and retain the supply of labour needed to meet the demands of the economy. Intra-regional competition for labour is not a viable solution. Initiatives that focus on training and skills development, that match industry needs with available labour supply, and that adopt new technologies and business practices to improve business productivity are all required.
The increased participation of Aboriginal youth in the western labour market would address a number of issues, ranging from meeting the demand for skilled labour to addressing some of the persistent economic and social challenges experienced by Canada's Aboriginal peoples.
WD is working with industry, sector associations, provincial governments and other federal departments to identify gaps and opportunities where WD can play a role in helping to address skilled labour shortages. The department has provided support for graduate internship programs and Aboriginal apprenticeship programs where the focus is on increasing the skills and number of knowledge workers in the West. Through these collaborative arrangements with many partners, WD continues to focus on niche opportunities that maximize its investment.
A diversified economy is the economic foundation upon which strong and viable cities and communities are built. WD has been a pioneer in the development and management of horizontal collaborative initiatives designed to strengthen western Canadian cities through mechanisms such as joint investment in innovation centres, R&D infrastructure, and the tripartite urban development agreements.
Rural communities are faced with significant adjustments as they struggle with population decline, and resulting loss of economic opportunity. Governments and stakeholders are challenged to examine constructive approaches to these pressures including improving access by rural communities to business services and risk capital needed to diversify rural economies.
This Report on Plans and Priorities (RPP) demonstrates that WD's plans and priorities are aligned with these challenges and that the department is positioned to make a significant contribution to meeting them. Combined with the annual Departmental Performance Report, which provides detailed information on the department's spending and achievements, these documents demonstrate that WD is actively pursuing a long-range set of policies and investments that are having a positive impact on the economic performance and competitiveness of Western Canada.
WD was established in 1987 to provide a strong federal presence in the West and to lessen Western Canada's strong economic dependence on its natural resources. The Western Economic Diversification Act, 1988, gives the department a broad economic development and diversification, coordination and advocacy mandate to:
"promote the development and diversification of the economy of Western Canada and to advance the interests of Western Canada in national economic policy, program and project development and implementation."
The department's main activities consist of providing grants and contribution funding for projects that contribute to WD's strategic outcomes. A range of programs are used to deliver on WD's mandate and these are described in more detail in Annex A, as well as on WD's website at: http://www.wd.gc.ca/programs/default-eng.asp. WD posts listings of approved grants and contributions projects in excess of $25,000 on the departmental website at the following address: http://www.wd.gc.ca/gandc/default-eng.asp.
WD relies upon its strong relationships with provincial governments, municipalities, universities and other post-secondary institutions, business associations, community economic development organizations, financial institutions, and the not-for-profit sector to deliver on its mandate effectively. Many of these relationships have resulted in formal agreements between two or more orders of government to deliver on joint priorities, such as the Western Economic Partnership Agreements (WEPAs), the Urban Development Agreements, and the Canada-Saskatchewan Northern Development Agreement. These agreements are sub-programs of WD's ‘flagship' program, the Western Diversification Program, and are described in more detail on WD's website at the address noted above.
Small business growth and competitiveness is critical to the development and diversification of the western Canadian economy, and the department contributes to the success of small- and medium-sized enterprises (SMEs) in the West by making resources available for them to grow their businesses. Rather than providing funding directly to individual businesses, the department works with industry or business organizations and other entities such as members of the Western Canada Business Service Network (WCBSN). WD provides operating funding to WCBSN members (Community Futures Development Corporations, Canada Business Service Centres, Women's Enterprise Centres, and Francophone Economic Development Organizations). 2 These organizations work with their respective communities, each other, and with other organizations to ensure that SMEs have access to information and capital.
Any project being considered for approval must go through a rigorous due diligence exercise, and must contribute to one of WD's strategic outcomes. WD's performance measurement strategy includes relevant performance indicators for all program activities. Each project has measurable objectives that include one or more of these performance indicators. WD's collaboration and coordination and advocacy program activities do not generally involve project funding, as the activities often involve interventions by WD staff on Cabinet and interdepartmental issues. Reporting on the result of collaboration, coordination and advocacy activities presents additional challenges.
A continuing challenge for the department is to roll-up the results of these individual projects and activities. For example, while many projects contribute to the Business Development and Entrepreneurship program activity, their expected results are quite diverse, and in many cases the results may not occur until three to five years, or even longer, after the project was initially approved.
One segment of WD's performance measurement strategy is the reporting provided quarterly by members of the WCBSN. They provide statistics such as the number and dollar value of loans made, and other information such as the number of clients provided with information and other business services. A departmental priority in 2007-2008 will be to continue to work with WCBSN members to strengthen this performance reporting, as well as work to enhance transparency, accountability and collaboration.
WD also undertakes program evaluations and impact studies to assess the degree to which key programs succeed in contributing to the department's outcomes. These documents are available at http://www.wd.gc.ca/rpts/audit/default-eng.asp. A key undertaking in 2007-2008 will be the evaluation of WD's flagship program – the Western Diversification Program (WDP).
In the coming year, the department will continue to work on refining its performance measurement strategy in order to better demonstrate results for the resources provided.
During the summer of 2006, consultations with key western stakeholders were undertaken to examine the West's current and future challenges and opportunities, and to consider how WD can best support and add value to long-term growth and competitiveness in the West. As a result of these discussions, the department is re-defining its strategic framework to focus efforts in the following areas:
The foundation of this framework is WD's Treasury Board approved Program Activity Architecture (PAA), which has the following Strategic Outcomes:
To ensure that WD's efforts are focused on achieving these strategic outcomes and thereby contributing to the renewed vision for the department, six priorities have been identified for the 2007-2008 fiscal year.