ACOA Five-Year Report to Parliament 1993-1998
tabled by the Honourable John Manley, Minister responsible for ACOA on October 7, 1998
The ACOA Act requires that every five years the Minister for ACOA present to Parliament a report "providing an evaluation of all activities in which the Agency was involved and the impact those activities have had on regional disparity".
The report is a retrospective of ACOA’s last five years. The major message in the Report is that the Agency has worked to implement the federal government’s Jobs and Growth Agenda including: helping small- and medium-sized businesses (SMEs) develop and commercialize new technology; supporting science, technology, and the creation of knowledge; connecting Canadians to the information highway; governments working together in partnership; increasing opportunities for Canadians in rural communities; expanding Canada’s trade base; expanding opportunities in Aboriginal communities; and, increasing opportunities for youth.
ACOA programs go far beyond providing interest-free loans to SMEs. In fact, more than 60% of expenditures go to initiatives designed to assist SMEs indirectly through providing the resources and environment necessary for competitiveness. These initiatives are undertaken with an ever-increasing range of partners that include Industry Portfolio members, provincial and municipal governments, business associations and community organizations.
The bulk of the Report uses case studies of individual initiatives grouped by the Agency’s priorities and programs to demonstrate ACOA’s achievements in delivering on the federal government’s priorities. The case studies, bolstered by third party testimonials, provide solid evidence of ACOA’s contribution to economic development in a personalized, reader-friendly manner.
The Report relies on findings from a number of evaluations and studies by external experts for estimates of the overall impact of ACOA programming on the Atlantic economy and on regional disparity. For example, analysis using the econometric model of the Conference Board of Canada, indicates that the region’s unemployment rate in 1997 was 2.8 percentage points lower than it would have been without ACOA programming.
Executive Summary
ACOA was created in 1987 to coordinate and implement the federal government's
economic development initiatives in Atlantic Canada. It was part of
a broader move by the Government of Canada towards a decentralized,
regionally-based approach to economic development. In keeping with
this approach, the Agency's head office was located in Moncton, New Brunswick.
The Agency's mandate is to act as the federal government's agent in
increasing opportunity for economic development in Atlantic Canada.
In fulfilling its mandate, ACOA was to be guided by the principle
that sustained economic development must come from within the region, and
that Atlantic Canadians should be encouraged to take greater responsibility
for this development with the federal government as a partner.
Independent evaluations of ACOA's first five years showed that ACOA
had been more responsive than earlier centralized approaches to regional
needs as programs had been designed in consultation with Atlantic
Canadians. ACOA's first-hand knowledge of regional conditions had
enabled it to reconcile local development needs with federal priorities.
During its second five-year period, ACOA has built on the strengths
of this regionalized approach. In response to the external environment
in which it works, federal economic development priorities and the
unique needs of the Atlantic region, the Agency has revisited and
strengthened its overall approach in order to improve its effectiveness.
A number of major themes summarize this evolution:
1. ACOA has increasingly sought out partners in the private sector, communities, and
provincial and federal governments to stimulate economic development. The
Agency's mission is "to work in partnership with the people of Atlantic Canada toward
the long-term economic development of the region." Partnerships engage a variety of
resources, experiences and skills. For example, in the community economic development
area, close to 1,200 dedicated volunteers direct the activities of the organizations
partnering with ACOA. ACOA's role in these partnerships can be as leader, coordinator,
or active participant.
2. Increased emphasis on community and rural economic development. To encourage
Atlantic Canadians to accept greater responsibility for economic development, the
Agency works with communities where local creativity and initiative is shown. The
Agency's aim is to strengthen the capacity of local organizations to plan and implement
their economic priorities. In support of the federal government's priority on rural
renewal, the Agency has put in place measures to address the special challenges of rural
areas.
3. Increased role as a delivery agent for federal economic development programs. The
success of a program depends on workable design and delivery at the local level. ACOA,
with its extensive network in the region, increasingly has taken on the delivery of federal
government programs such as the Canada Infrastructure Works Program, the Canada
Business Services Centres and the Canadian Forces Base Closure Adjustment Program.
4. Increasing emphasis on bringing national policies and programs to bear on the
unique needs of the region. With a broad mandate for economic development, ACOA
is in a unique position to play a leadership role for the federal government in the Atlantic
region. An example, is the responsibility the Agency has taken for bringing federal
programs to the support of major opportunities such as offshore oil and gas development.
The creation of the Industry Portfolio has brought greater coordination among federal
economic development departments and strengthened ACOA's capacity to tailor federal
programs to regional needs.
5. A more integrated region-wide approach to development. ACOA has been able to
bring about a region-wide approach in a number of areas such as tourism and export
development. This Atlantic agenda is crucial for effectiveness in an area comprising four
provincial governments and a small widely-dispersed population.
6. ACOA's support to SMEs has become more diverse and sophisticated. As a member
of the Industry Portfolio, the Agency implements the priorities of the federal
government's Jobs and Growth agenda. ACOA support includes programs designed to
help Atlantic SMEs compete in the global knowledge-based economy through support for
innovation and technology skills development, export market development and improved
information and services to SMEs. In its entrepreneurship development and SME
support activity, the Agency has tailored programs to the needs of special communities
such as Aboriginals and youth.
In fiscal year 1997-98, direct financial assistance to business accounted for less than 40%
of ACOA's expenditures. The majority of expenditures are used to fund shared programs
with partners such as business associations, provincial governments, universities and
community economic development organizations in support of small business
development.
7. Increasing focus on "value for money". Agency program spending is very small in
relative terms, representing only 1.5% of total federal spending in Atlantic Canada in
1996. Therefore, if the Agency is to make an impact, it is crucial that expenditures focus
on those areas which provide the greatest benefits to the regional economy. Accordingly,
spending has been increasingly focussed on the development of small- and medium-sized
enterprises (SMEs), rather than on resource development or infrastructure. Analyses
have shown that assistance to SMEs is easily the most cost-effective approach to
economic development.
By implementing locally-developed approaches, ACOA and its partners have produced
considerable benefits for the region, as evidenced in the following sections.
Economic Impact of ACOA Activity
ACOA's impact is more evident when comparing the gains achieved by its clients against the
region's performance. For example, Statistics Canada has estimated that total business
employment in Atlantic Canada declined by about 6% from 1989 to 1995, but that employment
by ACOA clients increased by 9.5%.
The following results are based on external evaluations and analyses. An audit by
PricewaterhouseCoopers concluded that these estimates were reasonable and likely conservative:
- from 1992 to 1997, the impact of ACOA programming on Atlantic GDP has grown from
$1.4 billion to $3.7 billion a year;
- over the ten years of its operations, every $1.00 of ACOA spending under the Business
Development Program, Community-Based Economic Development, and the
COOPERATION Program generated $5.00 of GDP impact;
- from 1988 to 1997, the Conference Board of Canada's model has calculated that ACOA
program spending of $3.2 billion generated $3.9 billion in personal income taxes and
sales taxes;
- the Atlantic unemployment rate is 2.8% lower due to ACOA programming than it would
have been without that programming.
From 1992 to 1997, earned income per capita improved from 74.2% of the national average to
75.5%. This is a continuation of a long-term trend that began in 1961. However, because
ACOA expenditures represent less than 1% of Atlantic income (as measured by Gross Domestic
Product) such aggregate measures do not accurately reflect the impact of ACOA programming.
In fact, the gains achieved by recipients of ACOA programs have been largely overshadowed by
restructuring in the economy, especially the collapse of the groundfish fishery, which occasioned
the largest employment loss in an industrial sector in Canadian history.
Some Specific Examples of ACOA at Work
Perhaps, the best appreciation of the impact of ACOA's activities on the economic development
of the region is obtained by looking at those areas where the Agency has focussed its efforts.
ACOA support for economic development is wide and multi-layered. No part of it is self-contained; projects have an impact across a wide spectrum. Assistance to a business, for
example, is also assistance to the community where that business resides. Or, assistance to a
community to develop a tourist attraction is assistance to the tourism industry. It is important to
remember this in reading the following summary, which is split into several main groups.
Technology: Understanding and using modern technologies is a critical part of successful
economic development. "Knowledge-based" industries have been growing faster than the
overall economy everywhere, and it is important that Atlantic Canada be part of this growth.
ACOA has supported technology and innovation in four main ways:
- Helping companies innovate; for example, by supporting the lengthy process of
developing then marketing technology-based commercial products, assisting the
development of multimedia companies in Cape Breton, or linking traditional industries,
like the Newfoundland fishery, with centres of research and innovation;
- Helping workers develop technical skills; for example by providing support to the
Aviation Maintenance Institute to develop skills for Prince Edward Island's fledgling
aerospace industry, or helping New Brunswick forest product workers adapt their skills
to new technologies;
- Helping people understand and use technology and science; by helping build a series
of provincial networks that improve access to technology and information by means of
special communications systems. Examples are the STEM~Net system in
Newfoundland, Prince Edward Island's Knowledge Economy Partnership, and Nova
Scotia's STANet. In each case, ACOA has joined provincial and private sector partners
in long-term programs of support to improve access to technology. That in one case
(STEM~Net), it has become the standard for Industry Canada's national SchoolNet
project;
- Helping build alliances for technology development; like the Clinical Trials Atlantic
Corporation, a knowledge-based cluster of universities and teaching hospitals that
performs clinical tests on new pharmaceutical products.
Small- and Medium-Sized Business: Over 95% of businesses created in Atlantic Canada
between 1989 and 1995 had less than 100 employees (90% had less than 20). New and existing
SMEs were responsible for 58% of new jobs in Atlantic Canada.
SMEs, unfortunately, have a high failure rate in their first few years of existence, and thus find it
difficult to attract capital to start and grow, and to get the right advice. Overcoming these
hurdles is one of ACOA's priorities. It has been successful at doing this. Statistics Canada
tabulations show that survival rates for ACOA manufacturing clients are higher in the first three
years of business than they are for all manufacturing companies.
ACOA's main tool for assistance to SMEs is the Business Development Program. It offers
interest-free, unsecured loans, which are repayable since early 1995. Over the 1993-1998
period, the Business Development Program has supported the creation or maintenance of almost
44,000 jobs. Client surveys indicate that without ACOA assistance only 5% of investments
would have gone ahead as planned.
ACOA also offers advice and information through a network of Canada Business Service
Centres, that dealt with almost 90,000 enquiries in 1995/96 alone, by fax, phone, Internet or in
person. Apart from these generic forms of assistance, ACOA also has programs to improve
SME business management practices (through quality management programs, self-help
diagnostic tools and workplace literacy, for example) and to assist SMEs gain better access to
federal procurement contracts.
Entrepreneurship: Entrepreneurs are at the heart of Atlantic economic development, and
ACOA's Entrepreneurship Strategy has been described by the Organization for Economic
Cooperation and Development as unique "... because it makes the promotion of entrepreneurship
an explicitly stated objective ... [The] strategy is a long-term one, yet early results are
promising."
The Strategy has five key components:
- Research into the nature of entrepreneurship;
- Making people more aware of entrepreneurship as an employment alternative;
- Orienting and educating people to become entrepreneurs;
- The provisions of business support services such as training and counselling; and
- The promotion and support of entrepreneurial networks.
One measure of the success of ACOA's approach to entrepreneur development is that in 1991,
only 7% of Atlantic Canadians expressed the intent to form a small business, but by 1997 this
proportion was 16%. While it is difficult to determine ACOA's precise impact, its activity is
certainly a major contributing factor to this change.
Projects have been tailored to communities with special needs, and young people. As examples
of the former, a project was designed to develop entrepreneurial skills for the Black community
in Nova Scotia, and another for Aboriginal people in New Brunswick. The New Brunswick
project involved a partnership with the Aboriginal community, the provincial government, the
Business Development Bank of Canada, and the Department of Indian Affairs and Northern
Development. Young people have been introduced to entrepreneurship by the Centre for
Entrepreneurship Education and Development in Nova Scotia, and by Enterprise Centres at the
YMCA and YWCA in St. John's and Glace Bay.
Tourism: ACOA has fostered a regional approach, using mechanisms like the Atlantic Canada
Tourism Partnership (ACTP), for promotion of regional tourism; the Atlantic Canada Tourism
Grading Authority, to bring standardized quality ratings to tourist accommodations; and the
Atlantic Canada Tourism Showcase, for tourism operators to meet potential buyers such as bus
associations. In each of these three cases, ACOA formed a partnership with provincial tourism
departments and industry associations to take advantage of economies of scale in what has
traditionally been a very fragmented industry. Promotions through ACTP alone are estimated to
have brought in $66 million in incremental tourism revenues from 1994 through 1997. These
promotions have resulted in a significant return on the expenditure of public funds. For instance,
the 1997 international campaign resulted in close to six dollars of tourist expenditures for every
dollar spent on promotion.
ACOA has also supported specific tourism-related projects. The organization of the Celtic
Colours Festival in Cape Breton, a celebration of music and culture that began in 1997, was an
attempt to extend the tourism season in that region. Another initiative involved joining public
and private sector partners in developing world-class tourism products in Bouctouche, New
Brunswick. The area is now attracting international recognition for its mixture of ecological and
cultural destinations. A third initiative involved support of local development associations in
Newfoundland in the development of the Viking Trail, partly in preparation for the Viking
Millennium celebrations in 2000.
Trade: One of ACOA's main thrusts has been to get all the provinces working together. An
International Business Development Agreement was signed in 1994, and extended in 1997,
involving three federal departments and the four provincial governments. It aims to improve
access to export markets by SMEs, by increasing their export experience and taking advantage of
economies of scale in exporting. A survey of SME participants has shown that 39% have started
exporting or have increased their exports due to the IBD Agreement.
Specific trade initiatives have included export training and education services such as the New
Brunswick Training Group Inc.
Community-Based Economic Development (CBED): Increasingly ACOA has encouraged
communities to take more responsibility for their own development, strengthening local
networks of volunteers, building local capacities to make and implement strategic plans that are
based on realistic appraisals of community assets and aspirations, and that help communities
realize their potential. This approach emphasizes local collective action.
Specific ways that ACOA has become involved in this challenge include its administration of the
community development component of the Atlantic Groundfish Strategy (TAGS), and by
assuming responsibility for the Community Futures Program and the Community Business
Development Corporations (CBDCs) in 1995. These are not-for-profit, locally-run organizations
which lend money and advise businesses in rural communities. Over the 1995-98 period, CBDC
lending has supported the creation or maintenance of over 7,000 jobs in rural communities.
In recent years, the structure of local development agencies has been reformed in three of the
four provinces. Newfoundland's system is still being reformed, although a new structure of
Regional Economic Development Boards is largely in place and each board is preparing strategic
plans. This is the latest step in a process that began in Newfoundland in 1992, emphasizing the
long-term nature of this kind of development.
There are a number of examples of how communities have developed their economic bases in
Atlantic Canada. Greater Moncton, for example, has substantially recovered from the loss of the
CN repair shops in 1988, and is now a centre for teleservice (call centres). Local entrepreneurs
are rapidly developing technology-based products and services. This has happened in a
framework of a series of strategic plans, implemented by mobilizing local volunteers, and
encouraged by a series of flexible partnerships that have included ACOA, the provincial
government, local development agencies, the Université de Moncton, local community college
campuses, and businesses.
There are other examples of ACOA involvement in community projects. The community of
Victoria in Prince Edward Island rallied around a project to repair its dilapidated wharf, a
traditional focus of community life and business. ACOA helped an Acadian community in Cape
Breton set up La Picasse, an economic centre that is now home to a call centre, an
entrepreneurial development centre, and several other businesses. The Colony of Avalon project
in Newfoundland strives to develop an historic site for tourism while financing ongoing
archaeological work. Five rural counties in eastern Nova Scotia were supported in setting up an
integrated information technology centre to improve public and business access to IT. Enterprise
Cape Breton Corporation in partnership with the Cape Breton County Economic Development
Authority has set up a program to market Cape Breton as a good place to retire. By late 1997,
some 68 new households had been set up as a result of these marketing efforts, worth an
estimated $1.3 million to the Cape Breton economy.
ACOA as Federal Delivery Agent: Taking on many more responsibilities in delivering and
coordinating federal programs in the region has typified ACOA's second five-year period. It is a
role that is natural given its familiarity with Atlantic Canada. It also means much more
interaction with other federal agencies and departments.
The Agency was a natural choice, for example, to administer the Canada Infrastructure Works
Program. Other examples are the programs put in place to help communities adjust after losing
military bases in the early and mid-1990s due to federal budget cuts such as CFB Summerside
and CFB Cornwallis, both of which have been transformed into diversified industrial parks, with
public sector employment largely replaced by private sector.
Policy Research and Analysis: ACOA has always maintained a policy analysis and research
capability, using both internal resources and independent contractors. The three essential
qualities of this research have been:
- Involvement of the private sector;
- Extensive consultation; and
- Keeping an eye on the future.
A Pan-Atlantic Economic Coordination and Research Initiative was first approved in 1992, and
has been extended through 1999-2000. Its purpose is to enhance ACOA's capability to
coordinate and plan federal activities that contribute to Atlantic Canada's economic growth.
During the mid-1990s, a major research thrust has been a series of studies to gauge Atlantic
Canada's competitiveness against other parts of North America and Europe, with very
favourable results. ACOA has enlisted outside partners (like universities and business groups) to
organize a series of Roundtables, each addressing a particular issue like community economic
development or entrepreneurship. Reports on policy research have reached a wide audience both
inside and outside Atlantic Canada.
ACOA has pursued its mandate in many areas that have been adopted by the Government of
Canada as matters of national priority including support for rural and Aboriginal communities,
science and technology, governments working in partnerships, young people, and expanding
trade. This has involved a constant evolution of the Agency's programs, operations, and role.
Much work remains to be done, however, in developing the Atlantic economy, and this will
require commitment from all partners.
|
