Agency Context

The Agency

The Atlantic Canada Opportunities Agency (ACOA) is the arm of the federal government whose mission is to work in partnership with Atlantic Canadians to improve the economy of communities in the region. We accomplish this through a regional strategy that aims to improve economic performance and enhance the region's competitiveness. Working with partners in all levels of government, the private sector, academia and non-governmental organizations, ACOA seeks to advance the government's agenda for economic opportunities and innovation in order to serve the needs of businesses, organizations, individuals and communities in Atlantic Canada.

Established in 1987, ACOA offers a broad range of programs and services designed to improve the climate for business growth. The Agency ensures that a wide variety of business development tools and resources are available to Atlantic entrepreneurs throughout all stages of the business life cycle, from the time they are thinking about setting up a new business, to the time they are planning for growth and expansion.

ACOA is a federal agency with a difference. Its mandate and organizational structure were determined following consultations with Atlantic Canadians from across the region. The result was that, for the first time, a federal organization charged with regional economic development in Atlantic Canada was headquartered in the Atlantic region, and now has 36 regional and field offices in cities and towns throughout the four Atlantic provinces.

The Government of Canada's Commitment

The Government of Canada remains committed - indeed, it is a legislated requirement - to reducing regional disparities and ensuring that Canadians in all parts of the country benefit from a strong economy and the services that such an economy can provide. It is within this context that the Atlantic Canada Opportunities Agency is mandated to tackle the economic development challenges facing Atlantic Canada, identify and address structural weaknesses (market failures) in the economy, help communities and businesses overcome barriers, and find new opportunities for growth. It is also within this context that ACOA is committed to helping the region make the transition to a more innovative, productive and competitive economy.

ACOA's Approach

ACOA is taking an aggressive approach to overcoming regional barriers to growth and identifying dynamic opportunities, recognizing that an economy must have a number of conditions in place in order to succeed.

ACOA's broad-based approach to regional economic development addresses underlying structural challenges in the economy more effectively and more equitably than a narrowly focussed tax-based incentive approach.

At the national level, the Agency carries out this mandate by advocating for Atlantic Canada's interests, priorities and concerns in other federal government policy-making decisions and investments that have a direct impact on the Atlantic economy.

At the regional level, ACOA conducts policy research and analysis that help provide the intellectual foundation for a comprehensive and strategic approach to regional development. Furthermore, the Agency plays a key role in co-ordinating pan-Atlantic development strategies, programs and initiatives, working closely with the provincial governments, Atlantic universities and research institutes, business organizations and other stakeholders in the region to reduce duplication and maximize impact.

Locally, ACOA works with its partners to provide communities with the tools and resources they need to build more self-reliant local economies. The Agency also works locally to improve the growth and competitiveness of Atlantic enterprises through a variety of programs and services designed to increase start-ups, expansions and modernization.

Recognizing the growing correlation between innovation and productivity, Agency programs place emphasis on fostering research and development, technology adoption, skills development, and the improved access to capital required to make these kinds of investment in innovation possible.

The Atlantic Innovation Fund is a driving force behind the latest acceleration of Atlantic research and development. The Strategic Community Investment Fund (SCIF) is helping small and rural communities to strengthen their economic base. The Business Development Program and other ACOA programs are helping thousands of entrepreneurs to start up and expand businesses, optimize trade and export opportunities, and develop new tourism products.

These programs are strategically important. In the 1990s, 70% of the jobs created by new firms in Atlantic Canada were attributed to small businesses. ACOA places particular emphasis on providing people with the tools they need to efffectively start, modernize or expand their businesses.

Results

ACOA recognizes that regional economic development is not an exact science and that there is no easy way to build an economy.

Nevertheless, our broad-based approach to development has helped create thousands of jobs in Atlantic Canada, and our investments in the region have helped increase wages and salaries and business survival rates.

More information on results may be found in the Summary and Details of Performance sections.

Challenges and Risks

The Atlantic economy was not immune to the significant economic shocks endured by the rest of Canada in 2003. The high value of the Canadian dollar affected export revenues in the region, most notably from manufacturing and tourism. Exports of food products, newsprint and lumber from Atlantic Canada were all negatively impacted by the appreciation of the Canadian dollar. The spillover effects from Severe Acute Respiratory Syndrome (SARS) and the weak global economy also affected tourism activity. In some provinces, this had the effect of straining ACOA's programming as provincial budgets were cut to deal with these pressing realities. In addition to the challenge of adjusting to the rising dollar, the business community faced increased insurance and energy costs.

The governments of the four Atlantic provinces also continued to face strong challenges in their efforts to maintain stable fiscal positions, with spending restraint and limited scope for tax cuts dominating both the short and long terms.

Over the long term, the main challenge facing the Atlantic economy is raising productivity levels in order to increase competitiveness. The Atlantic economy must continue to adapt to the requirements of the knowledge-based economy, which include raising overall levels of innovation and research and development, adopting advanced technologies, investing in skills development, increasing foreign investment, and becoming more export-oriented.

Newfoundland and Labrador had to face yet another significant challenge: the closure of the cod fisheries in the Gulf of St. Lawrence and along the coast of northeastern Newfoundland. In a short timeframe, a $30 million Strategic Community Investment Fund - Short Term Adjustment Initiative (STAI) program was mounted and aimed at providing employment opportunities to approximately 1,800 affected individuals. Extensive consultations with key stakeholders were held within the most affected areas in order to generate ideas for a longer term solution to the closure. The process confirmed that the biggest challenge facing rural Newfoundland and Labrador is what to do about the lack of strong wealth-creating opportunities facing many smaller communities.

Linking ACOA's Strategies to the Government of Canada's Objectives

The chart below illustrates the link between the goals and objectives of the Government of Canada and ACOA's priorities.

Financial Trends and Performance

Agency spending of $437.6 million for fiscal year 2003-2004 included $352.2 million in transfer payments and $85.4 million for operating costs and program related expenditures. Revenues were $71.7 million, with collections from repayable contributions totalling $56.4 million, and $15.3 million in miscellaneous revenues (other fees, recovery on defaults and interest). Collections from repayable contributions exceeded reference levels by $11.4 million (or 20%), and are available to support future year programming.

Unused spending authority of $8.8 million included items for $5.8 million that were beyond Agency control (the government-wide reallocation exercise, a premium paid on the conversion of other operating to salaries, and a forced lapse resulting from a change in the procedure for the accounting of costs from the Department of Justice). This results in an effective lapse of $3.0 million, or less than 1% of Agency resources.

In order to adapt to changing program requirements, the Agency sought additional authority during the year to meet special measures brought about by the closure of the cod fisheries, transferred resources to support interdepartmental government initiatives, realigned resources for Atlantic Investment Partnership programming, and obtained adjustment to statutory and other internal Agency authorities.

The Agency invested $413.2 million to support economic development (broken down by Strategic Outcome in the figure to the right), with $24.4 million spent in the financial stewardship of its resources, human resource management and improved service delivery. Continued focus by the Agency on results strengthens its commitment to fiscal prudence, accountability for the stewardship of expended public monies, and support and promotion of growth in Atlantic Canada.

Responses to Parliament

The Standing Committee on Public Accounts tabled its Sixth Report in the House of Commons on December 12, 2002, after consideration of Chapter 6 of the December 2001 Report of the Auditor General of Canada on ACOA. The Report focussed on improving methods used by ACOA to measure and report on program performance, and on the Agency's corporate code of ethics and related training program for managers and staff.

Efforts were already underway at ACOA prior to the Report to improve methods used to report program performance in Agency documents such as the annual Report on Plans and Priorities, Departmental Performance Report and Five-Year Report to Parliament, and on its Web site. Further, the Auditor General has complimented ACOA in the past for work in the complex and difficult field of performance measurement, and the Agency was awarded the inaugural Canadian Comprehensive Auditing Foundation - Treasury Board of Canada Award in 2001 for the pursuit of excellence in public performance reporting.

Following the tabling of the government's response to the Report, the Agency has taken further action to address the specifics of the report's recommendations, including:

• providing detailed information on the Agency's repayable contributions portfolio in its RPPs and DPRs (for further information, see the section entitled Business Development Program: Repayable Contributions Portfolio);
• undertaking studies to improve existing methodologies and develop new or alternative ones for measuring the impact of non-commercial (business support) projects;
• posting progress made in implementing the recommendations made by the Auditor General in her December 2001 report every six months on the Agency's Web site (see: http://www.acoa-apeca.gc.ca/e/library/audit.shtml ).