ARCHIVED - Western Economic Diversification Canada

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Section I - Overview

Minister's Message

Reshaping the economic landscape of the West

Western Canada's identity is closely tied to its spectacular natural landscapes.  The West's rugged coastline, soaring mountains, dense forests and rolling prairies define not only the region, but also the regional economy.  Forestry, fishing, agriculture, and oil and gas are the foundation of the western economy, and have made the region a driving force behind Canada's prosperity.

For more than 20 years, Western Economic Diversification Canada (WD) has worked to enhance and complement those natural resources by creating a more diversified western economy with strong, competitive and innovative businesses and communities.

As Minister of WD, I have had the great pleasure of travelling and visiting communities throughout the West.  I have seen firsthand the positive impact of WD's investments.  WD is achieving its mandate by developing policies and delivering programs that lead to economically viable communities with a high quality of life, a competitive and expanded business sector, and a strengthened western Canadian innovation system.

I firmly believe that talent and technology are the primary drivers of a more diversified economy, both in the West's traditional areas of strength and in emerging knowledge sectors.

Over the year ahead, we will focus on encouraging the introduction of new products, technologies, and innovations to existing production and processes.

Expanding economic opportunities in rural areas is another important priority for WD, particularly where community sustainability has been threatened by events like the Mountain Pine Beetle infestation that is destroying vast stretches of northern forest.

We will strengthen rural diversification through projects that increase the capacity of communities to undertake applied research and development (R&D) and value-added processing, supporting economic growth that creates new business and employment opportunities.

Outside the West's traditional sectors, WD will promote the development, commercialization, application and adoption of technology in key areas of western strength, such as information and communications technology (ICT), health industries, biotechnology, environmental technologies and ocean technologies, as well as cross-sectoral platform technologies such as nanotechnology and synchrotron.

Enhanced productivity and competitiveness of western businesses remain priorities for WD, and we will provide access to capital, information, training, skills development, and trade and export opportunities for small and medium-sized enterprises in western communities large and small.

To advance trade and investment opportunities between Canada and the US, WD partners with other federal departments, orders of government and organizations through initiatives like the Enhanced Representation Initiative and its successor, the North American Platform Program.  Through initiatives like the Asia-Pacific Gateway and Corridor Initiative, we are investing in the West's ability to capitalize on the commercial opportunities associated with the rapidly growing economies of Asia and their links to North American markets.

As we move forward, WD's activities will pursue the goals of Advantage Canada, the Government of Canada's long-term economic plan that aims to improve our quality of life and ensure a strong economy.  Through leadership in creating a western economic advantage, we are ensuring that the West strengthens Canada's position in the global economy and contributes to a prosperous future for Canadians.

 

 

 

______________________________________
The Honourable Rona Ambrose, P.C., M.P.

 

 

Management Representation Statement

I submit for tabling in Parliament, the 2008-2009 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 2008-2009 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:

• It adheres to the specific reporting requirements outlined in the Treasury Board of Canada Secretariat guidance;
• It is based on the department's Strategic Outcomes and Program Activity Architecture that were approved by the Treasury Board;
• It presents consistent, comprehensive, balanced and reliable information;
• It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
• It reports finances based on approved planned spending numbers from the Treasury Board of Canada Secretariat.

 

 

______________________________________
Oryssia J. Lennie
Deputy Minister
Western Economic Diversification Canada

 

Raison d'être

Western Economic Diversification Canada (WD) was established in 1987 to lessen the West's (British Columbia, Alberta, Saskatchewan and Manitoba) strong economic dependence on its natural resources.  Under the Western Economic Diversification Act, 1988, the department is mandated to:

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 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:

• promoting equal opportunities for the well-being of Canadians; and
• furthering economic development to reduce disparity in opportunities.

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.  They provide scope for tailored approaches within each region to take into account unique economic and industrial circumstances and to capitalize on regional strengths.

Organizational Information

WD's Head Office is located in Edmonton, Alberta, co-located with the Regional Office for Alberta.  Regional offices are located in each of the other western provinces - Winnipeg, Saskatoon and Vancouver - with a liaison office in Ottawa and a regional satellite office in Calgary.  The department's Deputy Minister is located in Edmonton and Assistant Deputy Ministers (ADMs) are located in Vancouver, Edmonton, Saskatoon, Winnipeg and Ottawa. 

Each of the western Assistant Deputy Ministers is accountable for the delivery of programs and services in their region that contribute to achieving the department's Strategic Outcomes.  In addition, the ADMs each have corporate accountabilities.  The Ottawa-based Assistant Deputy Minister and the Director General Policy lead the department's advocacy activities.  The department also works closely with other government departments and other Regional Development Agencies.

WD's Executive Committee is composed of the Deputy Minister, five Assistant Deputy Ministers, the Director General Corporate Finance and Programs, Director General Corporate Services, Director General Policy and the Director Corporate Communications.

Western Economic Diversification Canada Organization Structure

 

Voted and Statutory Items displayed in the Main Estimates (000's)

Vote or Statutory Item	Truncated Vote or Statutory Wording	2008-2009 Main Estimates	2007-2008 Main Estimates
1	Operating expenditures	48,753	42,527
5	Grants and contributions	215,271	205,495
(S)	Contributions to employee benefit plans	5,322	5,188
	Total Department or Agency	269,346	253,210

The 2008-2009 Main Estimates for Western Economic Diversification are $269.3M, a net increase of $16.lM from the 2007-2008 Main Estimates. The net increase is primarily due to funding increases for the construction of the International Vaccine Centre's (InterVac) Biosafety Level III Containment Facility in Saskatoon ($27.0M), and funding received in response to the mountain pine beetle infestation in British Columbia, which consists of the Community Economic Diversification Initiative ($25.4M), and the Airport Improvements Initiative ($14.9M). Major decreases for the department are related to the Infrastructure Canada Program ($27.9M), which sunsets March 31, 2011, and the winding down of the 2005 Alberta and Saskatchewan Centenaries ($27.4M).

Departmental Planned Spending Table and Full-time Equivalents

($ thousands)	Forecast Spending 2007-2008	Planned Spending 2008-2009	Planned Spending 2009-2010	Planned Spending 2010-2011
Collaboration and Coordination	5,885	5,866	5,866	5,866
Research and Analysis	4,157	4,160	4,160	4,160
Advocacy	2,660	2,683	2,684	2,684
Community Economic Planning, Development and Adjustment	101,452	109,137	73,325	44,445
Infrastructure	29,946	2,084	1,525	930
Business Development and Entrepreneurship	53,777	58,190	54,375	44,503
Innovation	55,333	87,226	70,893	51,135
Total Main Estimates	253,210	269,346	212,828	153,723
Adjustments:
Supplementary Estimates:
Supplementary Estimates (A)1	71,199	-	-	-
Supplementary Estimates (B)2	(284)	-	-	-
Collective Bargaining	313	-	-	-
Operating Carry Forward	2,361	-	-	-
Infrastructure Canada Program		8,700	1,500	-
Community Economic Diversification Initiative	-	3,600	-	-
Forecasted Lapse3	(51,100)	-	-	-
Total Adjustments	22,489	12,300	1,500	-
Total Planned Spending	275,699	281,646	214,328	153,723
Less: Non-respendable revenue	3,649	2,000	2,000	2,000
Plus: Cost of services received without charge	4,161	4,495	4,521	4,366
Total Departmental Spending	276,211	284,141	216,849	156,089
Full-time Equivalents	384	403	378	348

There is a net decrease in planned spending for 2008-2009 and future years that is mainly due to the following changes in the Program activities:

Community Economic Planning, Development and Adjustment - Although there is a net increase in 2008-2009 for this activity, overall planned expenditures are decreasing in future years.  This decrease is attributable to the sun setting of time-limited programs / initiatives, such as the 2005 Alberta and Saskatchewan Centenaries, the Stronger West initiative, the Official Languages Minority Communities Initiative, plus one-time funding received in support for initiatives such as the transfer from the RCMP in support of the construction of the Mounted Police Heritage Centre and funding in support of the Asia-Pacific Gateway & Corridor.  However, there is an increase in planned spending for 2008-2009 regarding the federal government's response to the mountain pine beetle infestation in British Columbia, through the Community Economic Diversification and Airport Improvements Initiatives.  In 2008-2009, one-time funding will also be transferred from Natural Resources Canada for the Britannia Mines Interpretive Centre. 

Infrastructure - The decrease in this program activity is primarily due to the ending of the Infrastructure Canada Program, which was scheduled for March 2009, but has been extended to March 2011.  WD delivers the Municipal Rural Infrastructure Fund (MRIF) and projects under the Canada Strategic Infrastructure Fund (CSIF) on behalf of Infrastructure Canada and operations and maintenance (O&M) funding for both MRIF and CSIF is included in WD's resource allocations.  Grants and Contributions (G&C) resource allocations for MRIF and CSIF, however, form part of Infrastructure Canada's resource allocation.

Business Development and Entrepreneurship - The net increase in planned spending for 2008-2009 is primarily due to funding received for Canada Business Service Centres and for WD's contribution to the Enhanced US Representation initiative.  However, planned spending for this activity is reduced due to the sunsetting of funding in March 2010, which was approved in Budget 2005.

Innovation - There is an increase in planned spending in this activity for 2008-2009 and 2009-2010 related to the construction of the International Vaccine Centre's (InterVac) Biosafety Level III Containment Facility in Saskatoon.  Planned spending for this activity will be reduced in 2010-2011 due to the sunsetting of funding in March 2010, which was approved in Budget 2005.

¹ Supplementary Estimates (A) adjustments include the following initiatives: 

2007–2008 Supplementary Estimates (A)
($ millions)	Vote 1	Vote 5	TOTAL
Infrastructure Canada carry forward	-	16.55	16.55
Flood Risk Structural Mitigation	-	16.50	16.50
Community Economic Diversification Initiative	1.20	9.73	10.93
International Vaccine Centre's (InterVac) Facility	-	12.00	12.00
Airport Improvements Initiative	0.45	5.44	5.89
Canada Business Services Centres	3.70	-	3.70
Reinvestment of receipts from repayable contributions	-	2.93	2.93
Alberta and Saskatchewan Centenaries	-	2.31	2.31
Public Service Modernization Act	0.20	-	0.20
Legislated requirement to review G&C programs	0.18	-	0.18
CSIF – Red River Floodway Expansion	0.01	-	0.01
TOTAL	5.74	65.46	71.20

² Supplementary Estimates (B) adjustments include the following initiatives:  

2007–2008 Supplementary Estimates (B)
($ millions)	Vote 1	Vote 5	TOTAL
Transfer from Canadian Heritage – Official Languages Minority Communities projects	-	0.05	0.05
Transfer to Canadian Institutes of Health Research – Return on Investments in Canadian Health Research project	-	(0.03)	(0.03)
Transfer to Indian and Northern Development – support the Yukon Pacific Council	(0.03)	-	(0.03)
Transfer in support of the Minister's Regional Office in Saskatchewan	(0.27)	-	(0.27)
TOTAL	(0.30)	0.02	(0.28)

³ The forecasted lapse relates to the Infrastructure Canada Program, the Alberta and Saskatchewan Centenaries, the Community Economic Diversification and Airport Improvements Initiatives (Mountain Pine Beetle) and the International Vaccine Centre's (InterVac) project.  WD has received approval, through the 2008-2009 Annual Reference Level Update (ARLU) process, to reprofile $37.3M to future years.  WD will seek Treasury Board approval to reprofile the remaining $13.8M through the 2008-2009 Supplementary Estimates and 2009-2010 ARLU process.

Summary Information

Financial Resources ($ thousands)

2008­–2009	2009–2010	2010–2011
$281,646	$214,328	$153,723

 Human Resources

2008–2009	2009–2010	2010–2011
403	378	348

* The reduction of departmental resources over the planning horizon reflects the one-time support of initiatives such as the Prince Rupert Port Authority, the Primrose Lake Air Weapons Range and the winding down of time-limited programs such as the 2005 Alberta and Saskatchewan Centenaries and the Infrastructure Canada Program.  This reduction is offset in 2007-2008 by increased spending for the construction of the International Vaccine Centre's (InterVac) Biosafety Level III Containment Facility in Saskatoon and the BC Flood Risk Structural Mitigation grant.  As well, in 2008-2009, there is planned spending for the federal government's response to the mountain pine beetle infestation in British Columbia through the Community Economic Diversification and the Airport Improvements Initiatives that sunset March 2009.  A funding reduction in 2010-2011 is related to the sunsetting of funding which was approved in Budget 2005.

Although the department's resources are reduced significantly due to the sunsetting of the Infrastructure Canada Program, WD continues to deliver programs such as the Municipal Rural Infrastructure Fund (MRIF) and projects under the Canada Strategic Infrastructure Fund (CSIF), on behalf of Infrastructure Canada, through an Other Government Department (OGD) suspense account.  Under this delivery mechanism, the G&C resources associated with these programs are reflected in Infrastructure Canada's reference level versus WD's.  The graph above illustrates the magnitude of WD's delivery of Infrastructure programming.

It is expected that WD will deliver the Communities Component of the Building Canada Fund (BCF) on behalf of Infrastructure Canada and O&M funding for BCF will be transferred to WD's resource allocations in 2008.  G&C resource allocations for BCF-CC are included in the RPP of Infrastructure Canada. 

Departmental Priorities

Name	Type
1. Technology Commercialization	Updated, on-going priority
2. Trade and Investment	Updated, on-going priority
3. Business Productivity & Competitiveness	Updated, on-going priority
4. Rural Diversification	New priority
5. Management Excellence	Updated, on-going priority

Note: A more detailed discussion of these priorities is available beginning on page 24.

WD's Strategic Planning Framework

Western Economic Diversification's basis for reporting to Parliament is its Program Activity Architecture (PAA).  The purpose of the PAA is to explain the relationship between the program activities the department undertakes and the three strategic outcomes it is working to achieve.  The PAA seeks to describe how the department manages the resources under its control to achieve intended results/outcomes.

Each of WD's strategic outcomes is associated with two or three program activities.  Each program activity is in turn associated with one or more program sub-activities.  WD's PAA provides the framework that links expected results and performance measures to individual activities.  Actual results are reported in terms of PAA activities and sub-activities.

The framework on the following page depicts the logical relationship among WD's strategic outcomes and its program activities.  It also demonstrates how WD's 2008-2009 priorities contribute to achieving the department's strategic outcomes, and how WD contributes to Government of Canada outcomes.

In Section II, Analysis of Program Activities by Strategic Outcome, further details on WD's program sub-activities can be found in the tables describing the performance measurement strategy for each program activity.

The following chart shows planned spending for 2008-2009 by both Strategic Outcome and Program Activity:

Western Economic Diversification Canada Strategic Planning Framework 2008-2009
Government of Canada Outcome Areas
Strong Economic Growth	An Innovative and Knowledge-Based Economy
How WD contributes to a stronger Canada
WD Mandate To promote the development and diversification of the western Canadian economy, coordinate federal economic activities in the West, and reflect western Canadian interests in national decision making.	WD Vision To be leaders in creating a more diversified western Canadian economy that has strong competitive and innovative businesses and communities.
Our 2009 - 2009 Priorities
Technology Commercialization Trade & Investment Business Productivity & Competitiveness Rural Diversification Management Excellence
These priorities will be WD's focus in 2008 - 2009 to achieve the following Strategic Outcomes
Our Strategic Outcomes Policy Advocacy & Coordination Policies and programs that support the development of Western Canada Community Economic Development Economically viable communities in Western Canada with a high quality of life Entrepreneurship & Innovation A competitive and expanded business sector in Western Canada and a strengthened western Canadian innovation system Our Program Activities ·   Collaboration & Coordination ·   Advocacy ·   Research & Analysis ·   Community Economic Planning, Development & Adjustment ·   Infrastructure ·   Business Development & Entrepreneurship ·   Innovation
A stronger West. A stronger Canada

 Program Activities by Strategic Outcome

		Planned Spending (000's)
	Expected Results	2008–2009	2009–2010	2010–2011	Contributes to the following priority
Strategic Outcome:	A competitive and expanded business sector in Western Canada and a strengthened western Canadian innovation system (Entrepreneurship & Innovation)
Program Activity: Business Development & Entrepreneurship	Strong SMEs in Western Canada with improved capacity to remain competitive in the global marketplace	58,190	54,375	44,503	· Trade and Investment · Business Productivity & Competitiveness
Program Activity: Innovation	An increase in knowledge-driven and value added economic activities	87,226	70,893	51,135	· Technology Commercialization · Rural Diversification
Strategic Outcome:	Economically viable communities in Western Canada with a high quality of life (Community Economic Development)
Program Activity: Community Economic Planning, Development and Adjustment	Communities have increased economic opportunities and capacity to respond to challenges	112,737	73,325	44,445	· Rural Diversification
Program Activity: Infrastructure	To maximize economic, social, cultural and environmental benefits to western Canadians through investments in public infrastructure in a coordinated manner with provincial and municipal governments	10,784	3,025	930
Strategic Outcome:	Policies and programs that support the development of Western Canada (Policy, Advocacy and Coordination)
Program Activity: Collaboration & Coordination	Better coordinated economic development activities and programs in the West	5,866	5,866	5,866	· All program priorities
Program Activity: Advocacy	Decisions by other organizations that improve economic policies and programs in the West	2,683	2,684	2,684	· All program priorities
Program Activity: Research & Analysis	Improved understanding of western Canadian economic issues, challenges, opportunities and priorities	4,160	4,160	4,160	· All program priorities
Total Planned Spending		281,646	214,328	153,723

 

Economic Overview of the Western Provinces ¹

In recent years, Western Canada as a region has led the country in economic performance.  Real gross domestic product (GDP) for the West grew 4.3 per cent in 2006, exceeding the national average of 2.8 per cent.  This trend is projected to continue and the region will maintain its leading position in the country over the next few years.  Western Canada has benefited from the fast growing global demand for commodities and the development of the mining and energy industries.  This economic boom, however, is subject to fluctuations in the world market, and masks the need to continue diversifying from a resource-based economy.  Another characteristic of the economic boom in Western Canada can be described by the record low unemployment.  The region, challenged by severe labour shortages and demographic shifts, has been relying on inter-provincial and international migration to fill the gaps.

Manitoba

In 2006, for the first time since 1998, Manitoba's economic growth rate was higher than the national average.  Buoyed primarily by a healthy construction sector, high agriculture production and a strong manufacturing sector, the province's real GDP grew by 3.2 per cent.  For 2007 and 2008, the construction sector should continue to be strong, while growth in the manufacturing and mining sectors is also expected to be robust.  The unemployment rate is forecasted to be only 4.3 per cent in 2007-2008, while 9,000 new jobs are projected in 2008.  According to the Conference Board of Canada's projection, Manitoba's economy should grow by 3.7 per cent in 2007 and 3.5 per cent in 2008, respectively.

Saskatchewan

In sharp contrast to the rest of Western Canada, Saskatchewan's real GDP actually contracted by 0.4 per cent in 2006; it was the only province to experience a decrease in GDP that year.  This drop was largely attributed to difficulties in the agriculture, forestry, and mining sectors.  Fortunately, the province's economy is expected to expand in 2007 by an impressive 4.3 per cent, second highest in the country, fuelled primarily by a booming potash production and large positive net migration.  The significant influx of people moving to Saskatchewan is creating strong demand for housing, powering the construction sector.  Migration to the province, however, is expected to slow down considerably in 2008, causing a slight retreat in construction activities.  The boom in the mining and retail sectors should also cool down, but agriculture output is expected to recover.  Overall, Saskatchewan's economy is forecasted to grow at a more sustainable but still respectable rate of 2.8 per cent in 2008.

Alberta

After a remarkable growth rate of 6.6 per cent in 2006, Alberta's real GDP is expected to have grown at the more moderate but still impressive rate of 3.4 per cent in 2007, and the province's economy is forecast to grow by 3.6 per cent in 2008.  The decreased growth rates are primarily attributed to a major slowdown in drilling activity due to low natural gas prices, while uncertainty caused by the proposed new royalty regime is further dampening activity.  Growing service and manufacturing sectors, in combination with rising non-conventional oil production, will help keep the economy strong.  With an average unemployment rate of only 3.5 per cent, the province will continue to see positive net inter-provincial migration, although the flow is expected to diminish.  Strong household income gains helped drive retail sales up by an estimated 11.2 per cent in 2007, the fourth consecutive year of double-digit growth.  The housing market is predicted to cool off though, after substantial gains in 2006 and 2007.

British Columbia

British Columbia's real GDP growth rate was a solid 3.3 per cent in 2006, and should continue to grow steadily at 2.9 per cent in 2007 and 3.0 per cent in 2008.  BC's forestry sector has been hit hard by the US slowdown and a strong Canadian dollar.  The newsprint and paper manufacturing sectors have also been adversely affected.  The US slowdown has also impacted the BC tourism sector, which was already impacted by increased border security and higher fuel costs.  The primary reason for BC's stable and impressive growth is a strong construction sector that is active both in the development of facilities for the upcoming Winter Olympics, as well as residential construction.  Second only to Alberta, BC's unemployment rate is only 4.1 per cent; BC's buoyant labour markets generated large positive net migration to the province.  The manufacturing sector is expected to have contracted for 2007, but should rebound in 2008.

BC's Interior Region continues to feel the impact of the mountain pine beetle infestation.  In recent years, these communities were buffered by high demands for BC wood but with this demand falling-off, mills across BC have closed.  The long-term economic prognosis of beetle-impacted communities is discouraging, as there will be limited suitable sources of wood fibre, likely for decades.

Challenges and Risks Facing Western Canada

Western Canada has benefited greatly from natural resources, particularly energy resources, and a strong global demand.  In 2006, natural resources accounted for 12.3 per cent of total GDP in Western Canada, which was much higher than the national average of 5.9 per cent (Figure 1).  The region's lack of diversification and ongoing reliance on the resource sector make its economy vulnerable to a number of risks, including: volatile commodity market prices; disruptions from trade disputes or disasters such as the mountain pine beetle, floods and softwood lumber; and environmental issues including potential conflicts between growth in resource extraction and environmental concerns, as well as sustainability issues related to water, increased greenhouse gases, pollution and health issues.  An example is the depressed agricultural and forestry commodity prices as a major contributor to the economic slowdown in Saskatchewan in 2006.

To diversify its economy, Western Canada needs to expand and strengthen its value-added industries.  Currently, manufacturing accounts for a much smaller component of the western Canadian economy (10.2 per cent) than the national average (15.8 per cent, Figure 1).  Western Canada has strong potential in knowledge-based manufacturing sectors such as aerospace and biotechnology, and value-added manufacturing of forestry products, petroleum refining, bitumen upgrading, chemical production, and agri-foods. These sectors, however, are challenged to become more innovative, more productive, and increase investment in machinery and equipment in order be competitive in a global environment.  Increasing productivity is fundamental to raising the living standards of all western Canadians.

One of the most significant barriers to the expansion of knowledge-based industries is the commercialization of new technologies.  In general, firms in the West employ fewer highly qualified personnel (HQP) and have lower business expenditures on research and development (BERD), resulting in fewer technologies being commercialized (Figures 2 and 3).  Other key issues include: lack of access to early stage capital to facilitate company start-up and growth, experienced management, and systems in place to support knowledge-based companies to take research from the development stage to a commercially viable business.

The Speech from the Throne (SFT) on October 16, 2007, stressed the importance of supporting Canadian researchers and innovators to develop new ideas and bring them to the marketplace through Canada's Science and Technology (S&T) Strategy.  This focus will have a positive impact on Western Canada's innovation system and commercialization performance.

Much of Western Canada's economic growth relies on trade.  In 2006, the dominant export market of the western provinces was the United States, ranging from 61.2 per cent in British Columbia to 88.6 per cent in Alberta.  As a result, Western Canada's economy is sensitive to the impact of US market slowdowns as well as the rising Canadian dollar.  Western Canada needs to expand access to markets such as those in the Asian Pacific, and to increase inter-provincial trade.  The West will benefit from capitalizing on opportunities such as Canada's Asia-Pacific Gateway and Corridor Initiatives to promote trade, investment and international competitiveness and reducing its dependence on US markets.

According to 2007 data, 36 per cent of Canada's small- and medium-sized enterprises (SMEs, <250 employees) were located in Western Canada.  Small businesses (< 50 employees), in particular, dominate Western Canada, creating approximately 80 per cent of new jobs and employing approximately 64 per cent of the labour force.  The number of small businesses per capita in Western Canada is 30 per cent higher than in the rest of Canada.  Research indicates that SMEs that export perform better than non-exporters; however, only a small proportion of SMEs are exporters.  An entrepreneurial and competitive business environment is critical to encouraging more businesses to be linked to global supply chains and to compete globally. 

The current labour and skills shortages, identified as one of the most significant problems in Western Canada, are restricting the ability of some business to sustain and expand. Shifting demographic trends such as an aging population are also affecting the availability of labour.  Labour shortages may be partially addressed through increased participation of the Aboriginal population, immigration, education and training, delayed retirement and more flexible work arrangements.

The rural areas experience all of the challenges identified above; however, these challenges are exacerbated due to the lack of critical mass and capacity.  Lack of economic and educational opportunity has resulted in migration of young people to urban areas.  Since many rural areas are dependent on the extraction of natural resources, diversifying the rural economy requires investment capital, transportation infrastructure, and communications systems.  Opportunities may exist in building and developing value-added processing and niche manufacturing to increase rural diversification.

Linkages Between Government-Wide Priorities and WD Priorities

The most recent SFT stated that Advantage Canada remains the cornerstone of Canada's economic plan, including ensuring an innovative and entrepreneurial business environment.  As the lead for regional development in Western Canada, WD's economically focused priorities align very well with Advantage Canada and the SFT.

Advantage Canada, a long-term strategic economic plan designed to improve our country's economic strength and prosperity, focuses on the creation of five competitive advantages that will help Canadians improve quality of life and succeed on the world stage.

Three advantages in the economic plan - Entrepreneurial Advantage, Knowledge Advantage, and Infrastructure Advantage - are reflected in WD's Strategic Outcomes, which include enhancing economic growth and diversification to improve the competitiveness of Western Canada in a fast-changing world.

Departmental Priorities for 2008-2009

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 those discussions, the department re-defined its strategic framework and created a new vision.  Those consultations also were instrumental in helping the department determine its priorities for the 2008-2009 year.

For the upcoming year, the department has identified five priorities, including four program priorities and one management priority.  These are specific areas WD has chosen to focus and report on during the planning period.  The four program priorities are:

1. Technology Commercialization - In order to facilitate the translation of knowledge and technology into commercial opportunities, WD will make strategic investments in technology commercialization and adoption projects leading to an increase in the number of technologies developed in research institutions that have commercialization potential, and an increase in technologies adopted by existing firms.
   
2. Trade and Investment - WD recognizes that the region's interests are best served as part of a coordinated national trade agenda, with many trade and investment partners working together on improving international competitiveness and strengthening trade and economic corridors of importance to the West.  WD will focus its efforts on enhancing SME participation in international business development; enhancing investment attraction and branding; and enhancing trade corridors between the US, Asia-Pacific and Western Canada.
   
3. Business Productivity and Competitiveness - To support the growth and competitiveness of western Canadian small business, WD will focus on:
   • improving access to risk capital and business services to SMEs through programs and services offered in conjunction with other business services organizations and associations, in order to improve general availability, and the coordination and collaboration on investments and service delivery; and
     
   • working with western Canadian business, industry and research organizations to undertake systemic initiatives to enhance business productivity and competitiveness.  Activities supported by WD in this area may include promoting awareness and adoption of new management and business practices (i.e. lean manufacturing), access to supply chains, creation of business networks and access to skilled labour.
     
4. Rural Diversification - WD will promote rural diversification by supporting projects that will increase the capacity in rural communities to undertake applied R&D and value-added processing and encourage new opportunities for skilled employment.  In addition, the department will undertake research to identify opportunities to further diversify the rural western Canadian economy.

   The fifth priority is management priority and commits WD to strive towards a level of excellence in the management of resources at its disposal in pursuing its strategic outcomes.  The department has a Change Management Plan in place that is designed to provide context, direction and the basis to evaluate WD's key change initiatives.  The plan engages staff at all levels across the department in change initiatives.  WD's management excellence agenda is based on the Change Management Plan as well as the federal government's Management Accountability Framework (MAF).  It includes action on all ten elements of the MAF: Public Service Values; Governance and Strategic Directions; Policy and Programs; Results and Performance; Learning, Innovation and Change Management; Risk Management; People; Stewardship; Citizen-focused Service; and Accountability.  Within this overall framework WD selects management priorities using a risk-based approach.  WD's Executive Committee approved a comprehensive Corporate Risk Profile (CRP) in December 2006.  The following elements of WD's fifth priority, Management Excellence, flow from the CRP and comprise a key part of WD's strategy to mitigate these risks:

5. Management Excellence - during this fiscal year, WD will focus on:
   • Implementation of the government of Canada's Management Results Reporting Structure (MRRS) to improve performance planning, measurement and reporting.
   • Strengthening Internal Audit and Evaluation.
   • Strengthening accountability, transparency and performance reporting for members of the Western Canada Business Service Network (WCBSN) and improved coordination among WCBSN members and other economic development organizations.
   • Human Resources Renewal to sustain the necessary complement of qualified, motivated and knowledgeable staff.
   • Reviewing, updating and more fully integrating risk-based decision making into all elements of management.

WD's Operating Environment

On August 4, 2007, WD celebrated its 20th anniversary of providing services to western Canadians.   The department delivers a number of its own programs, as well as a number on behalf of other federal departments.  A range of key transfer payment program authorities are used to contribute to WD's Strategic Outcome and Program Activity results and thereby deliver on the department's mandate and these are described in more detail in Appendix B, as well as on WD's website at: http://www.wd.gc.ca/16_ENG_ASP.asp.  WD also provides core-operating funding to members of the Western Canada Business Service Network, ² a group of several independent organizations who provide a range of services to help create and build small businesses across the West.

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 implemented under the authority of WD's ‘flagship program', the Western Diversification Program, and are described in more detail on WD's website at the address noted above. 

As noted above, WD's Management Excellence priority is based on the government-wide Management Accountability Framework (MAF).  One area of the MAF is Citizen-focused Service, and given WD's reliance on its relationships with many partners/clients to deliver on its mandate, the department recently undertook a Client Satisfaction Survey.  The results of the survey were positive, will be made public, and an action plan will be developed and implemented during 2008-2009.

WD is a regionally based department.  Each western province and corporate organizational unit has a specific business and human resources plan that reflect the realities of that particular area.  A key contribution to the department's management priority of Management Excellence has been the recent introduction of a Corporate Business Plan and a Corporate Human Resources Plan along with the integration of these plans with the regional and other corporate organizational unit plans.  During 2008-2009, these plans will be further integrated and entrenched within the departmental planning and reporting framework.

Integrated Risk Management

Further integration of planning has occurred through the establishment of a comprehensive risk management strategy that is incorporated into all levels of the organization.  The department has an Integrated Risk Management Framework, to manage risk throughout the organization, from the project approval process, through to the business planning process.  WD has a current Corporate Risk Profile, and corresponding Action Plans that identify accountabilities to assist with on-going monitoring. 

WD has identified eight key corporate risks, as well as management strategies and accountabilities for each risk.  The eight corporate risks and action plans (Appendix C) identified in the current plan focus primarily on ensuring the organization manages issues related to demonstrating results, organizational responsiveness, working with partners, financial management, managing strategic communications, human resource renewal and information management. 

Public Service Renewal

WD, like many departments, is faced with the challenge of a changing, aging, and more mobile workforce.  In an effort to address these challenges, the department has developed and initiated a significant Public Service (PS) Renewal Action Plan that includes outreach, recruitment, succession planning, learning, and other initiatives.

The PS Renewal Action Plan addresses one of WD's eight key risks identified in the Corporate Risk Profile - recruitment, retention, succession planning and training, and also addresses an element of WD's Management Excellence priority - Human Resources Renewal to sustain the necessary complement of qualified, motivated and knowledgeable staff.

During the fall of 2007, WD fully integrated its business planning and human resources efforts.  A Corporate Business Plan was developed for the first time which is aligned with, and informs the Corporate Human Resources Plan.  Three overarching realities inform WD's Corporate Human Resources Plan. 

First, WD faces a renewal challenge given the fact that the executive (EX) and EX feeder groups are approaching retirement age.  In an effort to address the potential loss of corporate memory and experience needed to effectively deliver judgment-based economic programming in an extremely complex environment, WD is devoting considerable attention to recruitment, retention and development of new professionals. 

In addition, the department has also recently launched the first phase of its Succession Plan.  Staff have been invited to self-identify for future leadership positions of interest and to assess their level of readiness, and learning and development needs.  While future staffing will occur based on the merit principle, both human resources planning and learning and development strategies will be developed based on the Succession Plan.

Second, a refocused learning and development program will also be important to WD's renewal effort.  This program will target the acquisition of new knowledge and skills where gaps are identified, and the transfer of existing knowledge to both current and new professionals.  Continuous learning for all employees is key to WD's effectiveness. 

One early step will be to assess the department's internal capabilities with respect to technology commercialization, trade development, R&D based clusters and value-added resource processing, with a view to developing strategies to enhance analytical capabilities in these areas.  Another priority is to build staff skills related to building capacity in not-for-profit organizations (including members of the WCBSN) to make them more effective and accountable in their use of public funds. 

Third, the successful execution of WD's business and human resource plans hinges on attaining management excellence throughout the organization and strengthening systems of accountability.  This takes a strong organizational commitment on an ongoing basis in terms of time and resources.  It means understanding what the department currently does well and, more importantly, where WD needs to improve.  Priorities include: management training in the interpretation of collective agreements, training for all employees on giving and receiving feedback, promoting respect in the workplace, and focusing on the development and demonstration of core competencies.

Performance Measurement

The department delivers a range of grants of contribution (G&C) funding for projects that contribute to WD's strategic outcomes.  As noted above, WD delivers a number of its own programs as well as a number on behalf of other federal departments.

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 and sub-activities.  These performance indicators for all program activities and sub-activities are illustrated under the relevant program activity in Section II, Analysis of Program Activity by Strategic Outcome.  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.

During the 2007-2008 fiscal year, WD made changes to its project database, Project Gateway, to allow results data to be captured electronically within the database.

The continuing challenge for the department will be 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.  Work has commenced on setting targets for all performance indicators.

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