2017-18 Departmental Results Report - operating context and key risks
Operating context
The Atlantic Canadian 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 Atlantic Canada’s 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 construction sector, the information and communications technology sector, the business support services sector and retail trade. Because of this diversification, living standards have improved in the region. Real gross domestic product (GDP) per capita has risen to stand at $38,628,[1] representing 81%[2] of the national level in 2017, up from 76%[3] in 2000.
Growth in commodity exports from Atlantic Canada has progressed well during this period, performing better than 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 still relies 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, the recovery in Atlantic Canada since the economic downturn has been slow. Before the recession, economic growth in the region, driven by offshore oil development in Newfoundland and Labrador, was on par with Canada. Since the recession, real GDP has grown in Atlantic Canada, but remains below the national level. More recently, after a sound expansion in 2016, Atlantic Canada’s real GDP increased by 1.8%[4]in 2017 (to $92.5 billion). However, the region’s performance remained below the national level, as real GDP for Canada, fuelled by a booming housing market and strong consumer spending, rose by 3.3%.[5]
On the trade front, strong growth in the world economy, a stable Canadian dollar, and improved energy prices have helped lift exports from Atlantic Canada. The value of commodity exports from Atlantic Canada increased by 16%[6]in 2017 compared to 2016, mainly due to a 27%[7]increase in energy exports. The value of non-energy exports rose by 8%[8] during the same period.
Additionally, increased global competition is requiring businesses in Atlantic Canada 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 2.5%[9]from 2005 to 2015, exceeding the national increase of 1.6%[10]– with improvement occurring in businesses and higher education institutions. In order to succeed and grow, firms also need to be able to access the skilled and unskilled labour force 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 4.1% in 2017.[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 expected results 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. - Priority files led by executive committee members ensured a more cohesive and proactive approach to managing current priorities, including contributions to various national strategies such as Canada’s Innovation and Skills Plan and the Atlantic Growth Strategy. - Throughout the year, policy research and analysis were conducted on major trends affecting the region. ACOA also supported key reports examining the many factors influencing the regional economy and how the region can adapt to take advantage of new opportunities. - ACOA responded to current priorities by leveraging the flexibilities of its programming. The Risk Management Committee met on a regular basis to review risks and mitigating measures. |
Enterprise Development Community Development Policy, Advocacy and Coordination |
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 Innovation Agenda Results and Delivery Charters: - Innovation and Skills Plan and its regional component, the Investing in Regional Innovation and Development framework - 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. - ACOA focused on ongoing, proactive intelligence gathering and facilitated federal-provincial dialogues. The Agency was 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 and the Innovation and Skills Plan. - Moreover, ACOA 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. The Risk Management Committee met on a regular basis to review risks and mitigating measures. |
Community Development Enterprise Development Policy, Advocacy and Coordination |
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 Innovation Agenda Results and Delivery Charters: - Innovation and Skills Plan and its regional component, the Investing in Regional Innovation and Development framework - Atlantic Growth Strategy |
During the past year, ACOA’s work continued to be driven by client requirements, Government of Canada priorities, and ever-changing local and regional economic landscapes, as described in the operating context. These drivers gave rise to uncertainties that can affect the Agency’s ability to achieve expected results.
Through its risk response strategies (in this case, its management action plans), ACOA continued to address challenges and capitalize on opportunities. The Agency focused its activities and resources to ensure proper alignment of its mandate with the Government of Canada priorities. The Agency accomplished this through strong collaboration and information sharing within the Innovation, Science and Economic Development portfolio, and with other federal and provincial departments and agencies, and by delivering its programming in a manner that was integrated, strategic, and responsive to the circumstances affecting each Atlantic province.
Internally, ACOA is working to align its current structures, processes, programs, and human and financial resources. This alignment work aims to respond to the number and complexity of priorities, as well as to deliver and report on results in a timely and sustained manner while meeting client expectations. In light of the economic context in Atlantic Canada, part of the alignment work resulted in the creation of regional priority files championed at the assistant deputy minister level and focused on taking full advantage of new opportunities in the region.
[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 11, 2018. 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 11, 2018. 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 10, 2018. 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 10, 2018. Calculations by ACOA.
[6] Trade Data Online; Innovation, Science and Economic Development Canada. Data retrieved on May 11, 2018. Calculations by ACOA.
[7] Ibid.
[8] Ibid.
[9] Statistics Canada, Table 358-0001 - Gross domestic expenditures on research and development. Data retrieved on May 11, 2018. Calculations by ACOA.
[10] Ibid.
[11] Statistics Canada, Table 051-0037 - International migration components, Canada, provinces and territories, quarterly (persons). Data retrieved on May 11, 2018. Calculations by ACOA.
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