ACOA's Outlook Document
INTRODUCTION
Established in 1987, ACOA is a dedicated, regionally-based
agency which, in partnership with the private sector and federal
and provincial departments and agencies, works to increase opportunities
for economic development in Atlantic Canada and, more particularly,
to enhance the growth of earned incomes and employment opportunities
in the region. Through its legislation, the Agency is mandated
to:
- develop and deliver locally-sensitive business programs and services;
- coordinate federal economic development program activities; and
- advocate the region's interests in the development of national policies, programs and services.
ACOA is also mandated to provide a single point of
access to federal government programming and services for the
small business sector in Atlantic Canada.
Since February, 1996, the Agency has been a member
of the Industry Portfolio 13 departments and agencies that
report through the Minister of Industry to Parliament. The Portfolio's
strategic approach to economic development optimizes the core
capabilities and diverse strengths of its members. The foundation
of this approach is a commitment by its members to cooperation
and partnerships, concepts which are central to how ACOA addresses
the needs and opportunities of Atlantic Canadian small- and medium-sized
enterprises (SMEs). The Industry Portfolio brings certain advantages
to ACOA, such as positioning it to more effectively carry out
its coordination mandate. Similarly, ACOA brings certain unique
capabilities and advantages to the Portfolio, such as an extensive
private/public sector network, experienced field personnel and
a client base exceeding 10,000. These facts render the relationship
mutually reinforcing.
CURRENT FISCAL/POLICY CONTEXT
THE FISCAL FRAMEWORK
The federal economic policy framework emphasizes
job creation, the value of the community, entrepreneurship development,
innovation, export-orientation and efficient government. The
Speech From the Throne and the 1996 Budget focused on adopting
a coordinated, strategic approach to the management of government
and fostering a positive climate for jobs and economic growth,
placing particular emphasis on: SME development; creating opportunities
for youth; science and technology; and enhancing export development
and foreign investment.
ACOA's own strategic priorities clearly support these
goals and its work has already yielded considerable benefits to
the region. The next few years will see an even greater emphasis
on the promotion of science and technology, opportunities for
youth, trade and SME development.
BUDGETS AND PROGRAM REVIEW
The Agency's resources have been reduced substantially
over the past several budgets, and this is reflected in the resources
allocated for 1996-97. Spending authority for 1996-97 will be
$16.2 million less than the previous year. This will happen in
spite of the addition of several programs such as Community Futures,
TAGS, etc., whose costs add up to $67.8 million. Reductions in
other programs, however, amount to $83.9 million. These reductions
are mainly the result of cuts to the federal/provincial agreements,
the Business Development Program (formerly the Action Program)
and a wind-down of the Fisheries Alternatives Program and the
Canada Infrastructure Works Program.
The second round of Program Review calls for a further
reduction in the Agency's reference level of $8.8 million in 1998-99.
These reductions will be realized through a restructuring
of the Agency's core programming as follows: $4.4 million from
the consolidation of federal/provincial agreements; and a further
$4.4 million expected to be generated from the consolidation of
business assistance into a single program.
THE OUTLOOK: STRATEGIC PRIORITIES
ACOA's principal corporate objectives of growth in
earned income and opportunities for employment are guided by six
strategic priorities.
ENTREPRENEURSHIP DEVELOPMENT
The Rationale Small-
and medium-sized business is the engine of job growth in the Atlantic
economy. In fact, SMEs generate more than 90 per cent of all
new jobs.
The Challenge ACOA
seeks to increase the number of people starting and expanding
businesses in Atlantic Canada, supporting the development of an
entrepreneurial economy, by promoting self-employment as a viable
option to traditional employment, and by providing more and better
opportunities for people to learn about the entrepreneurial process.
Key Planned Activities (FY 1996 - 1999)
As follows:
- Promote entrepreneurship to increase number of
people intending to start business.
- Support services and programs targeted at young
people to increase their interest, and involvement, in entrepreneurship.
- Support the Institute of Small Business Counsellors
Inc. to ensure that counsellors demonstrate a consistently high
standard of professional service across the region.
- Support specific training programs to help more
women establish businesses.
- Support programs designed to help people identify
good business ideas to increase the number of successful new businesses.
- Build better partnerships with other governments
and business organizations to ensure that entrepreneurship development
benefits from a more coordinated and comprehensive approach.
TRADE
The Rationale
Trade fuels economic growth, building business opportunities and
generating jobs: every $1 billion increase in exports creates
11,000 jobs. Indeed, export expansion in the region over the
past four years has created more than 15,000 jobs. Notwithstanding
this fact or Atlantic Canada's proud mercantile traditions
trade activities lag the rest of Canada and currently account
for only 21 per cent of the region's Gross Domestic Product.
The Challenge
ACOA seeks to enhance Atlantic Canada's trade and export skills
by coordinating and delivering federal government resources designed
to prepare more of the region's companies to capitalize on international
business opportunities and to identify, produce and provide commercially
viable goods and services for foreign markets.
Key Planned Activities (FY 1996 - 1999)
As follows:
- Provide export-readiness training to increase
number of new exporters.
- Facilitate greater diversity in exportable products
to build new markets.
- Help SMEs strengthen their international business
performance and export sales.
- Expand and enhance the Team Canada approach to
trade programming in the region to ensure completion of a comprehensive
regional Trade Plan for each of the four Atlantic Provinces.
INNOVATION AND TECHNOLOGY
The Rationale
Innovative companies are growing companies. They create jobs
and new opportunities
for business faster and more successfully than those
that lack access to state-of-the-art research and production systems.
Despite significant improvements in the use of innovation and
technology in Atlantic Canada in recent years, the region still
lags the rest of Canada in R&D expenditures.
The Challenge
ACOA seeks to enhance SME productivity and competitiveness by
improving access to innovation and technology through programs
designed to increase diffusion of best-practice technology, foster
the development and commercialization of technology-based tradeable
goods and services, and develop regionally-strategic sectors.
Key Planned Activities (FY 1996 - 1999)
As follows:
- Develop 12 international research and development
partnerships by 1998.
- Develop a fully operational technological benchmarking
targets program, against which SMEs can measure their industry
competitiveness, R&D intensity and capability.
- Develop 15 new research-private sector linkages
for technology commercialization.
- Help raise the percentage of SME sales generated
by research and development activities.
- Help increase the number of scientists and engineers
working at SMEs.
TOURISM
The Rationale
Tourism is one of the world's fastest-growing industries. It
is also an important economic activity in Atlantic Canada with
annual revenues averaging $2.2 billion. Every $1 million increase
in tourism revenues generates 10 jobs.
The Challenge
ACOA seeks to build the industry into a long-term generator of
new jobs by helping industry organizations and private-sector
operators become more efficient in their use of resources and
by emphasizing a coordinated approach to international marketing,
research, and training.
Key Planned Activities (FY 1996 - 1999)
As follows:
- Support the Atlantic Canada Tourism Partnership
(ACTP), a broadly based federal-provincial-industry tourism development
organization established by ACOA.
- Encourage private sector investment in cooperative
tourism marketing campaigns.
- Encourage growth in the number of tourism operators
in Atlantic Canada.
- Increase the number of training programs offered
to industry.
- Increase the number of graded roof accommodations
and campgrounds.
BUSINESS MANAGEMENT PRACTICES
The Rationale
Enterprises that operate according to formal business management
practices (BMP) are, on average, 10 per cent more productive than
those that do not. Atlantic Canada's manufacturing productivity
is low within Canada, and Canada's productivity is low by world
standards.
The Challenge
ACOA seeks to promote the awareness and adoption of formal business
management practices in support of its broader objective to foster
economic growth in the region.
Key Planned Activities (FY 1996 - 1999)
As follows:
- Develop a baseline survey on the awareness and
use of BMP in Atlantic Canada.
- Develop a profile of "growing" SMEs
for reference by counsellors.
- Develop a library of materials which articulate
world-class BMP practices.
- Develop and implement an awareness/communication
strategy to ensure that more businesses adopt Quality Management
Practices (QMP).
- Coordinate a consultative planning process for
BMP initiatives involving the private sector and the provincial
governments.
ACCESS TO CAPITAL AND INFORMATION
The Rationale
Among the greatest barriers to the start-up and expansion of SMEs
in Atlantic Canada is insufficient access to capital and information.
Adequate access to capital and information is necessary in a
healthy, growing economy.
The Challenge
ACOA seeks to break down barriers which prevent SMEs from acquiring
the resources they need to start-up and expand and create jobs
by providing a type and a form of strategic assistance that is
unique among government departments and agencies, and the private
sector, in Atlantic Canada. Typically, these investments strive
to fill financing gaps in intangible projects critical to SME
competitiveness such as new technology, software, prototypes,
staff training, trade development and quality improvement, which
are often considered too risky for conventional lenders.
Key Planned Activities (FY 1996 - 1999)
As follows:
- Encourage conventional lenders to increase investments
in strategic projects necessary to SME development.
- Provide loans with special emphasis on projects
critical to SME competitiveness.
- Encourage the formation of investment funds to
lever capital from others.
- Implement a seed capital program targeted at
youth.
- Provide a business information network centered
at Canada Business Service Centres.
- Develop a more streamlined application and evaluation
process.
- Revise payment procedures to make program operations
more responsive and efficient.
SERVICE LINES
ACOA links its strategic priorities to its clients
through an array of programs, or service lines. These programs
include:
BUSINESS DEVELOPMENT PROGRAM (BDP)
The BDP is designed to help SMEs establish, expand
or modernize by offering access to capital in the form of interest-free,
unsecured repayable contributions and has a special focus on those
intangible projects critical to competitiveness, often considered
too risky for conventional lenders. As such, it is unique among
government departments and agencies, and the private sector, in
Atlantic Canada.
Key Objective (FY 1996-1999):
Contribute to the creation of 13,500 jobs in Atlantic Canada.
ACF EQUITY ATLANTIC INC.
This initiative, a $30 million venture capital fund,
addresses the deficiency in venture capital availability in Atlantic
Canada. ACF is cost-shared equally by ACOA, Atlantic provincial
governments and chartered banks. The company will make equity
and quasi-equity investments normally in the range of $150,000
to $750,000 in growth-oriented firms in the Atlantic region.
The company will be operated by the private sector on a full commercial
basis, and at arm's length from governments.
Key Objectives (FY 1996 - 1999)
As follows:
- Disburse $10 million to ACF over
five years in three repayable contributions.
- Identify approximately 35 equity investments
in companies over the first five years of the fund.
- Ensure an effective investment strategy, developed
by CEO and approved by Board of Directors.
COMMUNITY BASED ECONOMIC DEVELOPMENT (CBED)
CBED is a grass-roots action by members of a community
to improve their economic conditions. Government can help by
making its own resources more accessible and by forging links
and partnerships among private and public sector stakeholders.
Key Objectives (FY 1996 - 1999)
As follows:
- Create 3,600 private-sector jobs in communities
across the region.
- Forge strategic alliances within each region
to improve client service.
- Increase community and private sector participation
in CBED.
- Enlist community-based organizations as distribution
points for government programs.
CANADA BUSINESS SERVICE CENTRES
CBSCs, located in all four Atlantic provinces, provide
business-related services and products to SMEs and aspiring entrepreneurs
in the region. As the managing partner for the Atlantic Canada
Business Service Centre network, ACOA is responsible for planning,
developing and implementing policies and procedures which simplify
client access to government business.
Key Objectives (FY 1996 - 1999)
As follows:
- Promote the availability of government business
information resources.
- Introduce direct access to information at a wide
variety of business support organizations.
- Make available to the private sector, via the
electronic highway, key business information.
COOPERATION PROGRAM
COOPERATION Agreements are comprehensive, federal/provincial,
cost-shared programs in such areas as: entrepreneurship, innovation
and technology, marketing and trade development, and human resource
development. They are designed to improve the environment for
economic growth. At present, there are 17 bilateral and four
pan-Atlantic agreements. The Agency intends to consolidate these
into one broadly-based agreement for each province.
Key Objectives (FY 1996 - 1999)
As follows:
- Deliver ACOA's strategic priorities by supporting
initiatives to improve economic environment.
- Consolidate COOPERATION Agreements into a single
agreement per province.
ADVOCACY AND COORDINATION AND PROCUREMENT
ACOA's advocacy of Atlantic Canada has been reinforced
by the Agency's membership in the Industry Portfolio. The advocacy
function is also advanced through the corporate procurement strategy
which attempts to bring more government contracts and industrial
benefits to the Atlantic region. ACOA's procurement efforts will
place more emphasis on SMEs in the space and high-technology sectors,
and on off-shore contracts related to international development.
Key Objectives (FY 1996 - 1999)
As follows:
- Expand Atlantic Canada's influence within the
national decision-making process.
- Secure the participation of Atlantic firms on
all major DND procurements.
- Ensure the Canadian Space Agency makes progress
in meeting its procurement and jobs targets.
- Increase Atlantic Canadian use of federal science
and contracting and spending.
- Increase access to CIDA procurement.
NON-CORE ACTIVITIES
ACOA undertakes activities which do not constitute
core service lines but are, nonetheless, vital to the general
economic health of the region:
- Canada Infrastructure Works Program (CIWP), generating
short-and long-term employment.
- Base closure adjustment activities, generating
economic diversification and new employment.
- Borden-Cape Tormentine redevelopment programs,
generating new employment.
- Atlantic Groundfish Strategy (TAGS) assists communities
in levering development project investments and in developing
long-term employment opportunities for displaced fishers and fish
plant workers.
PERFORMANCE INDICATORS
At the corporate level, job impact is used
as the central indicator of performance. This includes both creation
of new jobs and the maintenance of threatened ones. At the macro
level, impact on Gross Domestic Product (GDP) is also reported.
The Auditor-General concluded that GDP is a relevant measure
but suggested intermediary indicators as a means to clarify performance.
The Agency is therefore working on additional corporate indicators
to measure productivity of client businesses: increase
in domestic and export sales, business start-up
and success rates, increase in earned
income and investment. Since 1992, client surveys
have provided information instrumental to the Agency's efforts
to improve its service standards and streamline its delivery process.
ACOA has also adopted a service quality statement now
publicly displayed at all ACOA offices. Moreover, every region
has established a client complaint and redress mechanism.
CONCLUSION
In sum, ACOA has assembled a broad range of resources
designed to provide the business community, and particularly entrepreneurs
and SME owners, with a multi-faceted array of business services
and programs. The result is a support system which is unique
in the region for its comprehensiveness and its relevance to the
real needs of its clients. By focusing on specific strategic
priorities and the core service lines which support them, the
Agency is positioned to deliver in the context of its full
membership in the Industry Portfolio the federal government's
jobs and growth agenda in the Atlantic Provinces.
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