Canadian Northern Economic Development Agency - 2014-15 Departmental Performance Report

External Factors

While each territory and region is unique, economic development throughout the North is more challenging due to a sparse and widely distributed population, cyclical downturns due to a dependence on natural resource extraction, an infrastructure gap, and labour-market challenges.

In 2014, the North's real gross domestic product (GDP) rose by 3.2%, higher than the overall national increase of 2.4%. However the northern economy remains sign ificantly less diversified than Canada as two sectors – mining, quarrying, and oil and gas extraction, and public administration – account for more than 40% of the North's GDP. This has not changed significantly over the past five years.

The North's infrastructure gap is continuing to be a significant risk factor. For example, the absence of existing infrastructure can increased capital costs by 15% for diamond mines to 2.5 times for base metal mines (when compared to the rest of Canada) and outranks all other elements in determining whether a major natural resource project can advance to production.^{Footnote 4}

In addition, 24% of working-age Northerners (aged 25-64) have not completed Grade 12, almost double the 13% of working-age Canadians. This situation poses an additional challenge preventing Northerners from fully benefiting from economic development opportunities.

Internal Factors

As a small Agency, CanNor relies on its service delivery agreements with other government departments (AANDC, Health Canada, Public Works and Government Services Canada, and Shared Services Canada) to help deliver its core internal functions such as information management and information technologies, finance, and staffing. As a consequence, there is a continuous need to ensure the interoperability between CanNor's customized tools and processes, such as OpSTART, and the systems provided by these other departments. In addition CanNor's ability to launch new initiatives or join broader Government of Canada initiatives is often dependent on the timeframes set by other departments.

In 2014–15, there continues to be strong competition for skilled professionals in the North, which creates ongoing recruitment and retention challenges for CanNor. This adds to the risk of CanNor being unable to build a representative workforce as required under Article 23 of the Nunavut Land Claims Agreement. Interest from southern candidates in northern positions is limited and often only for short-term assignments which adds to the difficulty in filling long-term skill gaps within CanNor's northern workforce.

The decentralized nature of CanNor's limited resources poses additional challenges for the Agency, impacting its ability to capitalize on knowledge and expertise to ensure consistent delivery of its mandate. CanNor must exploit diverse multiple forms of communication and information technology to manage effectively.

Description

This sub-program supports the growth and expansion of northern businesses, including small and medium enterprises, through advice and funding support. The sub-program's objective is to encourage a competitive, diverse northern business sector that is aligned with economic development opportunities across the North.

Budgetary Financial Resources (dollars)

The difference between Planned Spending and Actual Spending is primarily due to increased funding received due to the renewed SINED and funding support for the CNIM.

Human Resources (FTEs)

The Agency's planned FTE count did not include FTEs associated with the SINED program as it had not been renewed at the time the RPP was drafted. The renewal of SINED added 14 FTEs to the Business Development sub-program.

Performance Results

Performance Analysis and Lessons Learned

Overall, the growth rate of northern GDP was greater at 3.2% than the rate of growth for Canada as a whole at 2.4%. Northwest Territories and Nunavut had the highest growth rates in the country at 6.8% and 5.8% respectively. Growth occurred across a range of sectors, particularly the construction sector, which experienced strong growth rates increasing 45% in Nunavut and 22% in NWT. Conversely, Yukon experienced a downturn (-1.2%) in its GDP partly due to a 7% contraction in its non-renewable sector.

The North's economy continues to be less diversified than Canada's national economy. In 2014, the index for the North was 88.01 compared with 93.01 for Canada as a whole. This is a decrease from the five-year high value of 88.52, which was registered in 2013. Two sectors –mining, quarrying, and oil and gas extraction, and public administration – account for more than 40% of the North's GDP. Over the past five years, the relative contributions of northern industry sectors have not changed significantly.

CanNor's support for a growing and diversified Northern economy is particularly evident under SINED, which funded 47 projects, totaling more than $17.7 million in 2014–15 including investments into sectors such as:

One of the ways that the Agency's investment enhances economic development is by increasing the accumulation of reliable information and knowledge about the North. For example, in 2014–15, CanNor supported significant investment in geological research projects across the territories. This investment produced nearly 1700 new data sets, 40 reports, 34 conference presentations, 7 new maps and 4 graduate theses, all available to companies, prospectors, academics and governments. This new collection of reliable information about mineral and energy deposits will help support the long-term economic success of Canada's North.

Description

This sub-program supports community-level investments in infrastructure and organizations, and individual-level investments in skills and capacity development. The sub-program's objective is the establishment of economically sustainable northern communities with a high quality of life for residents.

Budgetary Financial Resources (dollars)

The difference between Planned Spending and Actual Spending is due to NAEOP lapsing $2 million and a reallocation of $1.3 million in contribution funds from the Community Development sub-program to the Business Development sub-program. The remainder of the difference is due to lower operating costs including lower staffing.

Human Resources (FTEs)

Performance Results

Performance Analysis and Lessons Learned

Through NAEOP, CanNor supports increased participation by northern Inuit, Métis and First Nations communities and businesses in economic opportunities. As more northern Aboriginal communities develop capacity, overall readiness, and economic development plans, the focus under NAEOP will shift towards implementing these efforts. This is expected to result in an increasing number of Aboriginal entrepreneurs and businesses accessing funding under NAEOP. In 2014–15, this shift began to occur as NAEOP's investments supporting business development increased by $2.7 million from the previous year whereas community planning investments fell by $2.1 million. CanNor will continue to effectively respond to this shift by closely monitoring the ratio of business development to community planning funding.

In 2014, the northern labour force participation rate fell 2% from the previous year compared to 0.5% nationally due to a decline in the NWT and Nunavut. The drop in NWT is in part linked to working-age individuals leaving the territory. With its young population, the decline in Nunavut is partially the result of an increasing number of youth still completing education or unable to gain an initial foothold in the labour market due to a lack of essential workplace skills. Through NABEP, CanNor is helping to increase northern residents' labour market participation. For example, in 2014–15, Yukon College hosted 22 adult basic education training courses, 215 students participated in these courses, of which 122 were subsequently hired and another 57 went on to further education.

In 2010-11, CanNor funded 9 feasibility studies for economic infrastructure projects such as hydro developments, wind energy, and an incubator mall. As of March 2015, these studies have not yet led to new infrastructure. Infrastructure building in the North continues to be a challenge due to short construction seasons, high demand for available infrastructure dollars, and overall capacity to support projects. In addition, larger scale projects may fall outside the five-year window due to their more extensive environmental review processes. CanNor will continue to closely monitor the effectiveness and outcomes of feasibility studies.

Description

This sub-program informs departmental decision making by providing a solid base of knowledge and understanding to develop effective programs and federal initiatives; to support the development of the Agency's strategic priorities; to provide input to national programs and policies; and to establish strategic partnerships with governments and stakeholders from the private and not-for-profit sectors. CanNor puts a particular emphasis on the overall performance of the natural resource development sector.

Budgetary Financial Resources (dollars)

Human Resources (FTEs)

Performance Results

Performance Analysis and Lessons Learned

CanNor is committed to continuously improving delivery of its programs. By March 31, 2015, CanNor had implemented a suite of measures in response to the Auditor General's report to improve the efficiency and effectiveness of the Agency's business processes.^{Footnote 11} For example, CanNor has implemented service standards, a performance measures reporting template, and standardized assessment processes such as more robust project risk assessment tools.

In 2014–15, CanNor continued to bring a "northern lens" to other federal government programming and policy making. Some of CanNor's impact in this area includes:

• working with the Department of Fisheries and Oceans and the Atlantic Canada Opportunities Agency to develop the "Certification and Market Access for Seals Program," which received funding through Budget 2015;
• partnering with the other regional development agencies and Infrastructure Canada to develop the "Canada 150 Community Infrastructure Program," which received funding through Budget 2015;
• partnering in Environment Canada's and Parks Canada's work on enhancing tourism around northern national parks and protected areas;
• undertaking research and policy development, alongside its partners such as Infrastructure Canada, to examining existing gaps in northern economic infrastructure and exploring potential solutions, including removing regulatory barriers related to resource development infrastructure and leveraging private resource sector investments and targeted federal infrastructure funding; and
• assisting AANDC and Industry Canada, to develop a series of comprehensive analyses and options papers on the state of connectivity in the North and its economic implications, which informed Industry Canada's analysis related to funding of northern connectivity under the Connecting Canadians Program.

Description

This sub-program engages a range of economic actors (government, non-governmental organizations, Aboriginal organizations and private companies) to address the economic priorities of the North, and to leverage resources and investments by building partnerships and coordination with other federal departments and northern stakeholders. CanNor's Northern Projects Management Office (NPMO ) is a reflection of this approach as it works with project proponents, federal and territorial departments, Aboriginal communities and others to advance resource development.

Budgetary Financial Resources (dollars)

Human Resources (FTEs)

Performance Results

The actual results are not available (N/A) because this performance indicator is under development. Rather than have detailed separate project agreements for each major project, the methodology was changed to develop compendium for each territorial regulatory regime. These compendiums, along with a standardized template for project agreements, will be implemented in 2015-16.

Performance Analysis and Lessons Learned

CanNor's ability to foster successful resource development in the North is largely the result of efforts made to build and deepen partnerships and coordination with northern partners, including industry and Aboriginal organizations. Some of NPMO 's achievements over the past year include:

• acting as a single-window for issues management for 350 industry engagements as tracked through NPMO 's database;
• working with communities across the North - Pond Inlet, Kugluktuk and Cambridge Bay in Nunavut, the Yellowknives Dene First Nation, Tulita and Fort Resolution in the Northwest Territories, and Little Salmon Carmacks First Nation in Yukon – to develop community readiness plans in order to help communities prepare to maximize the positive and mitigate the negative socio-economic impacts of planned major resource development projects;
• chairing 14 Resource Development Advisory Group sessions across the North, attended by project proponents, territorial and federal regulators, and Aboriginal representatives, enabling the proponent to obtain early feedback on a proposed project before the project enters the environmental assessment process;
• providing an opportunity for Aboriginal, territorial, and federal partners to look more broadly at resource development in each territory through eight Territorial Project Committee meetings;
• developing a Crown Consultations Tracker, which consolidates information gathered from Aboriginal engagements and consultations undertaken by proponents and government officials collaboratively working to ensure the Crown is meeting its duty to consult; and
• coordinating federal input into the regulatory process through Project-Specific Working Groups, and in doing so, working to improve regulatory cooperation in the North through project-specific work plans.

Budgetary Financial Resources (dollars)

The difference is between Actual Spending and Planned Spending was due to higher than expected volumes in translation and external services to support staffing actions. Although spending was higher than planned, the three-year spending trend for Internal Services continues to decrease (see Budgetary Performance Summary table).

Human Resources (FTEs)

Performance Analysis and Lessons Learned

As committed to in the Agency's Management Action Plan^{Footnote 12} in response to the Auditor General's Spring 2014 report^{Footnote 13}, CanNor filled nine positions in the Iqaluit office, increasing its percentage of CanNor FTEs to 31%. Approximately 24% of staff members in the Iqaluit office are NLCA beneficiaries. The remaining employees were split between the Yukon (14%) and NWT (22%) regional offices and the Ottawa liaison office (33%).

CanNor approved an IEP, an obligation under the Nunavut Land Claims Agreement, for 2014-17.  As part of the implementation of that plan, the first cohort of Inuit participants completed the ILDP project.  CanNor subsequently hired two of the 12 ILDP graduates to full-time positions. The Agency is committed to continue the implementation of IEP through providing learning opportunities, coaching, and mentoring to employees, as well as raising awareness of employment opportunities, as part of ongoing efforts to recruit and retain Nunavut Land Claims Agreement beneficiaries in the Iqaluit office.

As part of its continuous efforts to improve the efficiency and effectiveness of financial management, the Agency successfully implemented the SAP financial system and a new travel system. These initiatives required extensive reworking of existing workflows and training.

The quality assurance role in contribution reporting from recipients was established in CanNor Finance (previously with AANDC). Efficiencies were gained through centralizing this function in the Agency's headquarters.

In 2014–15, CanNor concluded its first annual review against its Office Accommodation Framework, which demonstrated the Agency's continuous optimization of space since its inception.

CanNor was not part of the transfer to the government-wide email and document management systems in 2014–15. Internal preparations have been adjusted to reflect the new transfer date in Fall of 2015.

The Agency updated its website to add improved and detailed information for its clients on program applications and business tools, including application forms, program terms and conditions, and service standards.  CanNor actively participated in collaboration with other government departments, in the work to migrate its web content to the new Canada.ca site, with a view to ensuring that its role as a hub for northern information, programs and services would feature prominently. The Agency initiated work to improve its intranet site to make collaboration tools more accessible, and promote information sharing across regions and teams.