2016-17 Departmental Results Report - operating context and key risks

 

Operating context

Atlantic Canada’s economy has undergone significant transformation over the past few years. While resource-based industries, such as fishing and forestry, and associated manufacturing activities remain important to the economy, especially in rural areas, economic activity in the region has diversified. Since 2000, economic growth in Atlantic Canada has been driven by the mining and oil and gas sectors, the information and communication technologies sector, the construction industry, finance and insurance, and retail trade. This diversification resulted in improved living standards compared to Canada as a whole. Real gross domestic product (GDP) per capita has risen to stand at $37,980,[1] representing 82%[2] of the national level in 2016, up from 76%[3] in 2000.

Commodity exports from Atlantic Canada have progressed well during this period, outperforming the rest of the country. Much of this was due to increased shipments of refined petroleum, crude oil, minerals and seafood products. Atlantic exports are also diversifying over time, with highly innovative sectors, such as aerospace, growing in importance. While the Atlantic region is still reliant on the United States as an export destination, the region’s firms have become more engaged in global value chains and have expanded into other markets, such as the European Union and Asia.

Notwithstanding these improvements, and despite strong growth before the recession, Atlantic Canada’s recovery from the economic downturn has been slow. Before the recession, the region’s economic growth, driven by offshore oil development in Newfoundland and Labrador, was on par with that of Canada. Since 2010, real GDP has grown in Atlantic Canada, but growth remains significantly below the national level. Most recently, Atlantic Canada’s economy expanded in 2016, recovering somewhat from two straight years of subpar growth. Real GDP increased by 1.4%[4] in 2016 (to $91 billion), above the national average of 1.3%.[5]

On the trade front, the value of exports from Atlantic Canada declined by about 9%[6] in 2016 compared to 2015, mainly due to an 18%[7] decline in the value of energy exports. The value of non-energy exports rose by 1%[8] during the same period.

Additionally, increased global competition means businesses in Atlantic Canada need to be more competitive and productive. Research and development expenditures in Atlantic Canada (an indicator in understanding innovation and productivity levels) rose by an annual average of 3.6%[9] from 2003 to 2013, exceeding the national increase of 2.6%[10] – with improvement occurring in the private and higher education sectors. In order to succeed and grow, firms also need to be able to access the skilled and unskilled labour required for their businesses. To this effect, the share of immigrants to Atlantic Canada rose from 1.5% of the national total in 2005 to 4.6% in 2016.[11]

Key risks

Risk Mitigating strategy and effectiveness Link to the department’s programs Link to mandate letter commitments, or to government-wide and departmental priorities
Economic Context
There is a risk that the achievement of results expected from the Agency’s economic development programming may be affected by external factors that contribute to uncertainties for economic growth in Atlantic Canada.
ACOA’s numerous networks, regional presence, strong knowledge of the region and agility were key in mitigating this risk and bringing it to an acceptable threshold.
Throughout the year, policy research and analysis were conducted on major trends affecting the region, and the Agency supported a number of key reports that examined the many ways that Atlantic Canada’s economy is being influenced and how the region can adapt to take advantage of new opportunities.
ACOA worked closely with the Privy Council Office ( PCO) and other federal and provincial partners to develop the Atlantic Growth Strategy. This initiative was announced by federal ministers and Atlantic premiers in July 2016 to increase federal-provincial collaboration for the betterment of the region. More specifically, ACOA led efforts to develop and launch the new federal-provincial Atlantic Trade and Investment Growth Strategy and a new strategic, collaborative approach to tourism in the region. It also supported the development of key pan-Atlantic innovation initiatives and launched the Accelerated Growth Service in the region.
The Agency engaged in a number of internal exercises to develop new frameworks and strategies to better position ACOA to respond to new challenges and opportunities in the region, including a new framework for productivity and growth.
Enterprise Development
Community Development
Policy, Advocacy and Coordination
Ministerial Mandate Letter:
  • to help Canadian businesses grow, innovate and export; more specifically, to make strategic investments that build on competitive regional advantages
  • to develop an Inclusive Innovation Agenda
Results and Delivery Charters
Atlantic Growth Strategy
External Capacity
There is a risk that partner, community and client capacity for the identification, development and successful implementation of strategic projects may not be sufficient to support the optimal achievement of ACOA’s program objectives.
ACOA’s numerous networks, regional presence, strong knowledge of the region and agility were key in mitigating this risk and bringing it to an acceptable threshold.
The Agency focused on ongoing, proactive intelligence gathering and facilitated federal-provincial dialogues, and has been a strong partner and coordinator in joint meetings and shared actions with all key partners. These engagement efforts, along with a solid integrated planning process, contributed to understanding and strategically addressing differences in how this risk expresses itself across ACOA regions. This led to identifying partnership opportunities and potential alignment of provincial opportunities under the Atlantic Growth Strategy, the Innovation and Skills Plan and clean technology commitments. Under the Atlantic Growth Strategy, ACOA also worked closely with the PCO and other departments to support the Atlantic Growth Advisory Group’s approach to engaging with Atlantic Canadians.
Moreover, the Agency adopted a strategic approach to building partnerships and capacity to foster growth and diversification in Indigenous communities, rural communities and Government of Canada priority sectors.
Community Development
Enterprise Development
Policy, Advocacy and Coordination
Ministerial Mandate Letter:
  • to help Canadian businesses grow, innovate and export; more specifically, to make strategic investments that build on competitive regional advantages
  • to develop an Inclusive Innovation Agenda
Results and Delivery Charters
Atlantic Growth Strategy

ACOA’s work is driven by client requirements, Government of Canada priorities, and ever-changing local and regional economic landscapes, as described in the operating context. These drivers give rise to uncertainties that can affect the Agency’s ability to achieve expected results.

ACOA’s organizational priorities reflect the above factors and the need for sound fiscal management and continuous improvement. ACOA’s key risks and response strategies have supported its plan to address current challenges and capitalize on opportunities in a manner that is integrated, strategic and nimble, and responsive to the circumstances facing each Atlantic province.

In addition to its department-specific risks, ACOA monitored relevant Government of Canada risks and ensured alignment with whole-of-government strategies. Information Management and Information Technology security represented an area of uncertainty given the frequency, complexity and severity of cyberattacks. ACOA mitigated this risk through ongoing collaboration with Shared Services Canada and other federal departments to undertake the following: coordinate actions and share best practices and information resources; implement Government of Canada policies and procedures; and undertake proactive internal communications to promote employee awareness.

 

[1] Statistics Canada, Table 379-0030 - Gross domestic product at basic prices, by North American Industry Classification System, provinces and territories, and Table 051-0001 - Estimates of population. Data retrieved on May 1, 2017. Calculations by ACOA.

[2] Ibid.

[3] Statistics Canada, Table 379-0031 - Gross domestic product at basic prices, by North American Industry Classification System, monthly, and Table 051-0001 - Estimates of population. Data retrieved on May 1, 2017. Calculations by ACOA.

[4] Statistics Canada, Table 379-0030 - Gross domestic product at basic prices, by North American Industry Classification System, provinces and territories. Data retrieved on May 1, 2017. Calculations by ACOA.

[5] Statistics Canada, Table 379-0031 - Gross domestic product at basic prices, by North American Industry Classification System, monthly. Data retrieved on May 1, 2017. Calculations by ACOA.

[6] Trade Data Online; Innovation, Science and Economic Development Canada. Data retrieved on May 2, 2017. Calculations by ACOA.

[7] Ibid.

[8] Ibid.

[9] Statistics Canada, Table 358-0001 - Gross domestic expenditures on research and development. Data retrieved on May 3, 2017. Calculations by ACOA.

[10] Ibid.

[11] Statistics Canada, Table 051-0037 - International migration components, Canada, provinces and territories, quarterly (persons), CANSIM. Data retrieved on June 12, 2017. Calculations by ACOA.

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