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Minister's Message

For more than two decades, the Atlantic Canada Opportunities Agency (ACOA) has provided programs that foster innovation, promote economic diversification, and enhance the competitiveness of businesses and communities throughout Atlantic Canada.

Our government continues to support ACOA and the people of Atlantic Canada. We confirmed our support most recently through Budget 2010, which announced ongoing funding for two key ACOA programs: the Atlantic Innovation Fund and the Innovative Communities Fund. This commitment is a testament to how well these programs are working in Atlantic Canada.

In 2009, in response to the global economic downturn, our government gave the Agency responsibility for delivering two of its short-term stimulus programs – the Community Adjustment Fund and the Recreational Infrastructure Canada Program – in Atlantic Canada. These initiatives are allocating $135 million in the region over two years to address the needs of businesses, key industry sectors, and communities, to help create jobs and lay the foundation for long-term prosperity.

In 2009-2010, in addition to providing timely delivery of this support, ACOA continued to collaborate with its government and private sector partners to ensure long-term competitiveness and increased productivity in Atlantic Canada’s economy by supporting research and development and its commercialization. The Agency also continued to advance the Atlantic Gateway, and helped businesses enhance their export readiness to better capitalize on trade and investment opportunities.

It is my pleasure to present the 2009-2010 Departmental Performance Report for the Atlantic Canada Opportunities Agency. The results in this report clearly outline ACOA’s continued success in contributing to a stronger, more innovative Atlantic Canadian economy.

Section 1 : Agency Overview

1.1 Raison d’être and Responsibilities

Established in 1987, ACOA is the federal department responsible for the Government of Canada’s economic development efforts in the provinces of New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador.

ACOA’s head office is in Moncton, New Brunswick. Offices are located in all four provincial capitals in Atlantic Canada, each led by a regional vice-president. The Agency also provides services via a range of local field offices throughout the four provinces. In addition, through its Ottawa office, ACOA ensures that Atlantic Canada’s interests are reflected in both the policies and programs developed by other departments and agencies of the federal government.

Although the Agency’s policies and program tools have changed since its inception, the overall goal remains constant. ACOA helps the Atlantic region to realize its full economic potential in terms of productivity, competitiveness and growth. This is achieved by identifying and addressing structural challenges in the economy, helping communities and businesses to overcome barriers, and finding new opportunities for growth. ACOA is committed to helping the region make the transition to a more innovative, productive and competitive economy.

1.2 Strategic Outcome and Program Activity Architecture

The diagram below illustrates ACOA’s strategic outcome and Program Activity Architecture (PAA). The Agency’s program activities and program sub-activities are aligned to the strategic outcome of a competitive Atlantic Canadian economy.

The PAA reflects the results of policy research and analysis, periodic review of program effectiveness, ongoing dialogue with stakeholders in the region, and the priorities and directions of the Government of Canada.

Descriptions of each of ACOA’s program activities can be found in Part II of the Main Estimates document on the website of the Treasury Board of Canada Secretariat at http://www.tbs-sct.gc.ca/est-pre/20092010/me-bd/ACOA-APECA-eng.asp.

Strategic Outcome	Program Activity	Program Sub-activity
A competitive Atlantic Canadian economy	Enterprise Development	Innovation Entrepreneurship and Business Skills Development Trade Investment Financing Continuum
	Community Development	Community Mobilization Community-based Business Development Community Investment Infrastructure Programming
	Policy, Advocacy and Coordination	Policy Advocacy Coordination
	Internal Services	Governance and Management Support Resource Management Services Asset Management Services

1.3 Summary of Performance

1.3.1 Financial and Human Resources

 Financial Resources ($ millions)

Planned Spending	Total Authorities	Actual Spending
338.3	411.9	403.8

Agency planned spending of $338.3 million was increased by $73.6 million during the year, comprising $55.8 million in transfer payments and $17.8 million in operating costs. This increase is mainly attributable to new authorities provided under Canada’s Economic Action Plan (CEAP). Actual spending of $403.8 million included $306.9 million in transfer payments and $96.9 million in operating costs, resulting in a surplus of $8.1 million, of which $4.0 million will be available in 2010-2011 through the operating budget carry forward. Further information on variances is found in Section 1.5 Expenditure Profile.

Human Resources (Full-time Equivalents)

Planned	Actual	Difference
715	718	(3)

1.3.2 Performance Summary

Strategic Outcome: A competitive Atlantic Canadian economy

Performance Indicator	Five-year Target (2008-2009 to 2012-2013)	Performance
Increase in Atlantic gross domestic product (GDP) for every dollar of ACOA expenditure in direct support of business	$4 to $5	On track. $7.20 (performance is calculated over a five-year period, which will end in 2012-2013. Result reported is for the 2003-2008 period.)

Program Activity	($ millions)					Alignment with  Government of Canada Outcomes
	2008-2009 Actual Spending	2009-10
		Main Estimates	Planned Spending	Total Authorities	Actual Spending
Enterprise Development	215.0	198.7	200.7	212.5	192.2	Strong Economic Growth
Community Development	113.1	87.7	91.6	145.8	155.7
Policy, Advocacy and Coordination	13.3	11.1	11.1	12.8	13.0
Internal Services	0.0	34.9	34.9	40.8	42.9
Total	341.4	332.4	338.3	411.9	403.8

 

In the above table, Internal Services 2008-2009 spending is distributed among the spending figures of the other three program activities. However, beginning with the 2009-2010 estimates cycle, Internal Services spending is displayed separately from the other program activities. This should be recognized in any effort to compare program activity spending between fiscal years.

Within 2009-2010, the difference between actual spending and total authorities in Enterprise Development is mainly attributable to lower expenditures under the Atlantic Innovation Fund (AIF) and lower operating costs. Actual spending in Community Development is higher than total authorities due to increased demand under the Business Development Program (BDP).

1.3.3 Contribution of Priorities to Strategic Outcome

The following table discusses the progress of ACOA’s operational and management priorities in reaching its strategic outcome, “A Competitive Atlantic Canadian Economy.”

Operational Priority	Type1	Performance Status: Successfully met all priorities
Productivity	Previously committed to	ACOA builds innovation capacity in the region by providing funding for research and development (R&D) projects and for the adoption/adaptation of leading-edge technologies that lead to enhanced productivity. In 2009-2010, the Agency invested more than $73 million in R&D projects and over $11 million in technology adoption/adaptation projects. The Agency also invested more than $8.5 million toward improving business competitiveness through a number of activities such as training, hiring skilled personnel, and improving productivity and/or quality.
Innovation and commercialization	Previously committed to	The Agency has placed an increased focus on commercialization by supporting R&D projects that have the best probability for commercial success, as well as by identifying and pursuing commercialization opportunities throughout Atlantic Canada. In 2009-2010, the Agency approved $1.1 million in commercialization initiatives, and is focused on assisting Atlantic Canada’s small and medium-sized enterprises (SMEs) and institutions reach their commercialization potential through project investments that include: just-in-time consulting, senior management mentoring, investor readiness training, and access to international markets, as well as cluster development.
Trade and Atlantic Gateway	Previously committed to	ACOA continued its efforts in relation to the priorities stated in the Government of Canada’s Global Commerce Strategy and the Americas Strategy by contributing to at least four initiatives linked to emerging markets such as India and Peru. For instance, the Agency led exploratory trade missions in Vietnam and India, as well as facilitated an incoming India mission. Connections in existing markets (e.g. the United States) as they relate to export, investment and technology opportunities were also maintained throughout the year. The Agency continued its coordination efforts with federal and provincial partners, along with private sector stakeholders, to develop an Atlantic Gateway and Trade Corridor Strategy. In concert with government partners, non-government organizations and industry stakeholders, the Agency delivered on activities established in the pan-Atlantic marketing plan to promote the Atlantic Gateway and Trade Corridor in international markets.
Balanced approach in rural/urban development	Previously committed to	Atlantic Canada is characterized by a large rural population, requiring a balanced approach in support of development opportunities in both rural and urban communities. In 2009-2010, ACOA’s investment of $123.4 million through CEAP initiatives provided improved capacity for Atlantic businesses to recover from the economic downturn. Furthermore, through continued investment in its network of community economic development partner organizations, direct investment in infrastructure and other community projects funded through the Innovative Communities Fund (ICF), and investments in Aboriginal and francophone minority communities, ACOA supported economic opportunities in both rural and urban communities throughout Atlantic Canada. Of the $132.3 million in funding received by ACOA for the delivery of CEAP initiatives, 97% was committed by March 31, 2010.

Management Priority	Type2	Performance Status: Successfully met all priorities
Public service renewal and business/human resources integration	Previously committed to	Public Service Renewal: ACOA had successfully completed 26 public service renewal projects on March 31, 2010, involving an Agency investment of approximately $2 million over two fiscal years. Over 50% of these projects were targeted at leadership development. In accordance with the clerk of the Privy Council’s action plan on Public Service Renewal, the Agency developed and implemented human resource standards for position classifications, staffing and pay, and ensured that 100% of its managers completed a customized course related to performance management. In addition, the Agency adapted its internal performance management template for executives, to comply with the new Treasury Board Secretariat guidelines. Business/Human Resources Integration: A revised integrated business and human resources planning strategy was developed that focused on key issues such a strengthening the capacity of managers in planning, and by implementing an approach to integrated planning that was simple to apply, understand, and sustain. Extensive consultations among corporate and regional managers have resulted in the establishment of a small series of corporate and regional priorities in program delivery, human resources, and internal services. The Agency’s first integrated business plan for 2010-2011 was approved by ACOA’s executive committee in late 2009 and has served as the foundation for the preparation of individual operational plans and the integrated business and human resources plan.
Internal services	Previously committed to	In the most recent Management Accountability Framework (MAF) Round VII, ACOA has received its strongest assessment ever. The Treasury Board Secretariat observations related to ACOA’s management capacity are positive overall. In total, ACOA received seven “strong” and twelve “acceptable” results, and has eliminated all “attention required” notations, meaning 100% of the Agency’s MAF results were at “acceptable” or higher. The MAF assessment Round VII also concluded that the Agency’s management resources and results structure essentially included the necessary elements to provide insight into the performance and effectiveness of most of the Agency’s programs. In working toward maintaining management excellence, the Agency designed and implemented a comprehensive infrastructure supporting the values and ethics function in the early part of fiscal year 2009-2010. A values and ethics strategy, a communications plan, a guide, and a learning strategy were developed. Leadership has been demonstrated by setting an example, and engaging employees in dialogue. The Agency’s efforts were recognized during the MAF assessment for Round VII in which ACOA received “strong” rating in this area.
Risk management	Previously committed to	ACOA has continued to further develop its integrated risk management approach within the organization. The Agency has been recognized during the MAF assessment Round VII for sustaining the momentum created in the previous year, and it has continued to expand its internal corporate risk profile consultations. ACOA has also implemented an internal communications strategy and, as a result, received its best MAF assessment to date on risk management.

1.4 Risk Analysis

1.4.1 ACOA’s Response to the Changing Economic Landscape

ACOA operates within a changing Atlantic Canadian economic landscape. The Agency’s broad based approach to economic development addresses the underlying structural challenges in the economy. Being proactive in identifying opportunities requires the Agency to assess external economic factors that can affect the delivery of its programs and services. The following section provides an outline of ACOA’s response to the changing economic landscape in 2009 2010. Further information on the region’s economy is available online through the link provided in Section 3 of this report (in the sub-section entitled “Atlantic Canada’s 2009-2010 Economic Overview and Provincial Economic Profiles”).

As ACOA responded to the challenges faced by the region in 2009-2010, it also continued to shape its approach to best respond to the needs of Atlantic Canadians and the requirements of an evolving economy. The Agency continued its practice of identifying key risks it could face, and developing mitigation measures to address them.

1.4.2 Challenges and Opportunities

Responding to economic challenges and creating opportunities

Even though certain signs of economic recovery are becoming increasingly evident in Atlantic Canada, many communities continued to be tested during the past year. The Government of Canada, through ACOA, continued to work directly in 2009-2010 with communities across the region, as well as with SMEs, and numerous partners in all four Atlantic provinces to ensure a competitive Atlantic Canadian economy.

ACOA’s efforts were aimed at strengthening the capacity of its many partners, and to aid in the diversification of local economies through the promotion of:

• competitive and sustainable Atlantic enterprises, especially SMEs;
• dynamic and sustainable communities; and
• policies and programs that strengthen the Atlantic economy.

Competitive and sustainable Atlantic Canadian SMEs

Labour productivity in the region is at 85% of the national level³, largely due to lower levels of R&D spending, technology adoption, exporting, educational attainment, and worker training. During the past fiscal year, ACOA continued to support a range of productivity improvements in SMEs through technology adoption, private sector R&D, and the commercialization of new technologies, by means of funding tools such as the BDP and the Atlantic Innovation Fund (AIF). The Agency’s investments in large, leading-edge R&D projects with the private sector and institutions such as regional universities, community colleges, and research institutes via the AIF resulted in 30 projects valued at $62.4 million being approved. These efforts assisted in advancing Atlantic Canadian SMEs’ level of competitiveness in national and global markets.

An example of how ACOA promoted a competitive Atlantic economy in 2009-2010 was its support of Springboard Atlantic Inc. This network, consisting of fourteen universities and four provincial community colleges, and with a mandate to provide support for the commercialization of research in Atlantic Canada through the transfer of knowledge and technology to the region’s private sector, continued to be instrumental in facilitating public-private partnerships. The network contributed to a more robust research environment across Atlantic Canadian universities, generated innovation-based developments for businesses and communities, and enhanced the development of the region’s knowledge economy.

Through continued ACOA support and the Agency’s alignment of its efforts with national priorities within the Global Commerce Strategy, SMEs throughout the region were able to cope with the evolving global economic situation in 2009-2010. ACOA’s business, export and investment programs and initiatives helped the region’s SMEs to capitalize on new priorities and emerging opportunities on a national and global scale. The Agency undertook a number of trade missions in countries including India (education, biotechnology, food and beverages, and digital media), Peru (Atlantic Gateway file), and Scotland (energy) to help SMEs expand their markets. As well, ACOA continued providing value-added trade programming that increased the productivity and competitiveness of SMEs within the region.

Dynamic and sustainable communities

The Agency’s focus on competitive and sustainable Atlantic enterprises assisted the region to prosper, as did its emphasis on communities and their development in a changing economic climate. In response to a number of economic challenges facing communities throughout the country, ACOA, along with other regional development agencies, actively participated in the design and delivery of two CEAP initiatives, namely the Community Adjustment Fund (CAF) and the Recreational Infrastructure Canada (RInC) program. Through the delivery of the CEAP, ACOA had, and continues to have, a positive impact on the regional economy by helping communities expand, upgrade and renovate community facilities, creating jobs for Atlantic Canadians, and mitigating the impacts of the global recession.

Since the launch of both the RInC and CAF programs, funding has been announced for numerous projects across the region. As of March 31, 2010, ACOA’s RInC allocation of $34.1 million was fully committed toward 230 projects. Under the CAF program, a total of $89.3 million was committed toward 159 projects. Of the Agency’s total CAF allocation of $98.4 million, $8 million has been identified for a regional lobster marketing and product development program.

Policies and programs that strengthen the Atlantic economy

Through its policy and advocacy activities, ACOA continued defending and promoting the interests of Atlantic Canada on a number of policy issues relevant to the region, including the Atlantic Gateway, aerospace and defence, resource industries, population and immigration, science and technology, energy and environment, and bio-science.

The Agency remained focused on promoting regional events in order to bring Atlantic Canadian stakeholders together, while maintaining its involvement in international activities such as the Organisation for Economic Co-operation and Development’s Territorial Development Policy Committee (TDPC). Through the TDPC, ACOA had the opportunity to promote the Canadian regional development model and gain a better appreciation of international best practices. At the regional level, the Agency organized the Atlantic Canada Student Summit (ACSS), offering post-secondary students the opportunity to share ideas on the future of the region with Atlantic Canadian business, academic and political leaders. The ACSS was an ideal occasion to discuss the region’s economic challenges and assist in identifying possible opportunities. One strong message emerging from the event was the students’ desire to continue to convene and discuss such priorities and ideas on a regular basis.

The Agency also ensured the renewal of its programs and their ongoing alignment with the priorities of the Government of Canada. Specifically, funding for programs such as the AIF and the ICF were renewed in Budget 2010 on an ongoing basis.

1.4.3 Mitigation Measures

The potential risks are monitored continuously by the Agency to ensure that appropriate measures are applied and risks are mitigated to the extent possible. The Agency identified four key risks and associated mitigation strategies for attention in 2009-2010. These risks, and the primary mitigation measures implemented during the year, are presented below.

Key Risk/Challenge	Mitigation Measure
1. Information Management Risk The risk that senior management is not provided with the timely, relevant information and data necessary to be informed of the financial and program health of the organization, thereby adversely affecting the support necessary for making effective decisions at the corporate or portfolio level.	There continues to be attention provided to the risks associated with inadequate management information. The Agency has effective information regimes for initiatives/functions and key issues (e.g. Public Service Renewal; finance; values and ethics). Initiatives such as the enhancement of the data collection strategy and progress in the development of data/information dashboards are underway. Additionally, there is a continuation of work on the improvement of a more robust performance measurement strategy, with linkages to risk management. The Agency received a positive rating in quality of performance reporting, assessed by Treasury Board Secretariat, in the MAF. It was noted that ACOA demonstrated a strong commitment to concise, balanced reporting supported by independently verifiable performance information to substantiate performance claims and linkage of resources to results.
2. Cost of Doing Business Risk The risk that the cost of doing business escalates and represents an increasing portion of the Agency’s budget, adversely affecting operational efficiency and leading to budgetary pressures for programming.	A review of the cost of delivering the Agency’s programs was completed. As an extension of this initiative, ACOA is undertaking the identification and application of efficiencies applied to the program delivery process. The Agency will also apply information gained from a resource utilization review, evaluations, a strategic review, and program renewal to further drive opportunities for efficiencies. Spending caps were implemented, and will continue to drive efficiencies.
3. People Management Risk The risk that ACOA’s talent and agenda (leadership, recruitment, training, promotion, work/life balance, competencies) does not adequately sustain the necessary workforce required to carry out the Agency’s mandate in the future, and that the Agency experiences a significant loss of corporate memory and has difficulties implementing change management.	The Agency has carried out considerable people management mitigation measures. Projects such as the resource utilization review, integration of human resource and business plans, attrition information, learning plans for all staff, career counselling, mandatory values and ethics training, and the Leadership Development Initiative were completed, and will contribute significantly to the mitigation of risk. During Round VII of the MAF assessment, the Agency was rated as “strong” in both areas related to people management (i.e. excellence in people management, and values-based leadership and organizational culture).
4. Reputational Risk Risk may materialize when the negative publicity triggered by certain internal or external events, whether accurate or not, compromises ACOA’s reputation capital (brand), and results in a loss of credibility for the Agency.	ACOA applies communications efforts, including regular meetings with stakeholders/partners and continuous contact with clients, to promote relationships and credibility. The Agency fosters the professionalism of employees through its values and ethics strategy, which includes case studies and mandatory training on values and ethics.

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1.5 Expenditure Profile

The following table shows spending for each program activity over three fiscal years. Within the 2009-2010 fiscal year, it also compares the main estimates, planned spending, total authorized spending, and actual spending.⁴

Program Activity	($ millions)
	2007-2008	2008-2009	2009-2010
	Actual Spending	Actual Spending	Main Estimates	Planned Spending	Total Authorities	Actual Spending
Enterprise Development	213.6	215.0	198.7	200.7	212.5	192.2
Community Development	146.1	113.1	87.7	91.6	145.8	155.7
Policy, Advocacy and Coordination	11.9	13.3	11.1	11.1	12.8	13.0
Internal Services	0.0	0.0	34.9	34.9	40.8	42.9
Total	371.6	341.4	332.4	338.3	411.9	403.8

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ACOA’s actual spending for 2009-2010 was $403.8 million. Compared to actual spending of $341.4 million in 2008-2009, this represents an increase of 18%, or $62.4 million. Variances in actual spending profiles are primarily due to additional money received under CEAP activities, as more fully explained below.

• Expenditures in 2009-2010 included an incremental $45.2 million under CEAP for the Community Adjustment Fund (CAF).
• Expenditures in 2009-2010 included an incremental $11.7 million under CEAP for RInC.
• Increased expenditures of $5.1 million under the Community Development program activity due to increased demand of $8.4 million under the BDP, partially offset by decreased demand of $3.3 million under the ICF.
• Other changes representing an increase of $0.4 million due to other fluctuations in programming among program activities.

Analysis of 2009-2010

Planned spending of $338.3 million was augmented by $73.6 million provided through new authorities and transfers, including $45.2 million for the CAF; $10.4 million for RInC; $0.7 million for official languages; $1.3 million under the BDP; $3.5 million for compensation adjustments; $3.1 million for operating budget carry forward; and $1.7 million for severance pay, parental leave benefits, and leave payout; $2.6 million for the Canada Business Network; $1.7 million in support for the Building Canada program; and $3.4 million in various other minor adjustments.

Actual spending of $403.8 million represents a surplus of $8.1 million from total authorities of $411.9 million. The Agency will access a portion of this surplus through operating budget carry forward of $4.0 million to meet planned requirements in 2010-2011. The balance of $4.1 million represents a lapse.

Analysis by Program Activity

Actual spending of $192.2 million for the program activity Enterprise Development represents a surplus of $20.3 million from total authorities of $212.5 million. The variance is largely attributable to the AIF, where actual AIF spending was less than total authorities by $12.2 million. This was due to spending on projects not flowing as anticipated. In addition, operating resources were shifted in order to respond to pressures emanating from the delivery of CEAP, and to other areas such as Internal Services.

Actual spending for the program activity Community Development of $155.7 million surpassed total authorities of $145.8 million by $9.9 million. This variance was mainly attributable to increased demand in the BDP and was funded by the surpluses in the program activity Enterprise Development. Agency spending for the two program activities Policy, Advocacy and Coordination and Internal Services is more than anticipated, due in part to additional efforts in support of renewing the Agency’s programs. Additionally, funds were received from Treasury Board during the year for items such as salary increases arising from collective bargaining, which had not been included in the planned spending for 2009-2010.

[D]

Canada’s Economic Action Plan

In response to the global economic downturn, CEAP initiatives were announced in Budget 2009. Funding analysis by initiative is as follows.

• CAF actual spending of $48.5 million includes $3.3 million from ACOA’s existing appropriations. Of the initial $50.3 million authorities for CEAP, $5.1 million will be reprofiled.
• RInC actual spending of $12.9 million includes $2.5 million from ACOA’s existing appropriations.
• Actual spending for the Canada Business Network was in accordance with total authorities.

CEAP Initiative	($ millions)
	2009-2010
	Planned Spending5	Total Authorities	Actual Spending6
Community Adjustment Fund	0.0	45.2	48.5
Recreational Infrastructure Canada	0.0	10.4	12.9
Canada Business Network	0.0	2.6	2.6
Total	0.0	58.2	64.0

1.5.1 Voted and Statutory Items

This table displays the way Parliament approved resources, and shows the changes in resources derived from supplementary estimates and other authorities, as well as how funds were spent.

Vote # or Statutory Item (S)	Truncated Vote or Statutory Wording	($ millions)
		2007-2008	2008-2009	2009-2010
		Actual Spending	Actual Spending	Main Estimates	Actual Spending
1	Operating expenditures	83.1	85.6	79.6	85.7
5	Grants and contributions	279.1	246.9	245.2	262.8
7	Administration Act, to write off from the Accounts of Canada	0.0	0.0	0.0	0.7
S	Contribution to employee benefits	9.4	8.9	7.6	10.5
S	Transfer payment (Budget Implementation Act, 2009)	0.0	0.0	0.0	44.1
Total		371.6	341.4	332.4	403.8

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