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Western Economic Partnership Agreements

This chapter provides an overview of WEPA in terms of its priorities, eligible recipients and costs, review of applications, governance, differences in delivery across the four provinces, budget and expenditures, and logic model. It also compares the current round of WEPAs to previous agreements.

Overview of the Existing Agreements

1.  Priorities

These cost-shared agreements promote co-operation in planning and decision-making, recognizing the unique characteristics of each provincial economy while supporting national economic priorities. The current round of WEPAs focuses on the following federal priorities:

  • Supporting the creation and growth of knowledge-based research and development, business clusters; and the commercialization of new products, technologies and services out to market;
  • Supporting trade and investment promotion;
  • Enhancing business productivity and competitiveness; and
  • Increasing value-added production in traditional industries.

Each of the agreements also reflects priorities identified by the signing provincial government. In Manitoba, the Canada-Manitoba WEPA integrates the above strategic priorities as well as the promotion of economic development through tourism opportunities – promoting Manitoba as a tourist destination across the globe. In Saskatchewan, the WEPA objectives include community and regional development and diversification to support projects that sustain and enhance economic opportunities for Saskatchewan communities and geographic regions including developing opportunities for greater Aboriginal participation in the economy.

In Alberta, the WEPA is focused on expanding the knowledge-based economy through technology commercialization in priority sectors. The aim is to attract investment, support entrepreneurs and increase the number of high-tech companies in Alberta. The priorities for funding under the Canada-British Columbia WEPA include Asia Pacific, labour market and trade, Aboriginal inclusion, 2010 Olympics and Paralympics Winter Games and knowledge based industries.

2.  Eligible Recipients

Eligible recipients include non-profit organizations, post-secondary institutions, hospitals and regional health centres undertaking research and new technology development, First Nations band councils, individuals undertaking research, co-operatives, small and medium-sized commercial not-for-profit enterprises, federal crown corporations, provincial departments and agencies, and municipal governments.

3.  Eligible Costs

Funding can be contributed towards eligible costs, including operating and capital costs, that are incurred by the recipient and which, in the opinion of the department, are reasonable and are required to achieve the results to which they relate. Examples of eligible costs are:

  • Operations, maintenance;
  • Personnel: salary and benefits;
  • Equipment purchase and lease;
  • Information management and information technology acquisitions;
  • Legal, administrative, accounting, licensing, permits, consulting fees;
  • Rents, leases, leasehold improvements;
  • Acquisitions of proprietary processes;
  • Interest charges, insurance, fees, taxes;
  • Supplies, transportation;
  • Capital improvements related to projects; and
  • Other costs that are reasonable, incremental and directly attributable to activities necessary to achieve desired results, as specified by the agreement.

4.  Review of Project Proposals

Projects are assessed against a range of investment criteria including relevance to the WEPA strategic priorities, economic development impacts, feasibility/sustainability, strategic fit, range of support, leveraged funding, rural impact and commercialization potential. Project proposals are assessed independently, according to established procedures, by each partner prior to consideration for final approval by the Management Committee.

5.  Governance of the WEPA Decision Making Process

Each WEPA is managed by a management committee established by the federal and provincial ministers and co-chaired by senior federal and provincial representatives for each region. The Management Committee develops administrative guidelines for the application, assessment, approval, reporting, implementation and monitoring of projects as well as measurement of results achieved. Decision-making for project selection is achieved through consensus. While the federal and provincial governments share the overall contributions to the agreement equally, there is flexibility regarding the contribution of each partner to specific projects or initiatives. The contribution funding is provided by each partner directly to the project proponents to carry out projects that have been approved by the Management Committee.

6.  Differences in Decisions across the Four Provinces

While the structures of the agreements are largely the same across the four provinces, there are differences. In particular, differences exist with respect to:

  • Whether specific dedicated provincial government funding was set aside for WEPA. In Manitoba and Saskatchewan, the provincial contribution was formally approved by the Treasury Board and established as a specific line item in the provincial budget. In Alberta and British Columbia, there is no dedicated funding but rather funding is secured on a project-by-project basis from a variety of ministries and programs. The absence of dedicated funding can make WEPA more vulnerable to shifting priorities, provincial cutbacks or budget freezes.
     
  • The approval authority for the provincial funding. In Manitoba, each project receiving provincial funding requires Treasury Board approval. In Saskatchewan, no further approval is required beyond the department’s input to the Management Committee. In Alberta and British Columbia, once projects are approved by the Management Committee, the provincial contributions need only be signed off by the Deputy Minister of the funding ministry.
     
  • The level of coordination in negotiating and administering agreements. In Manitoba, each project is assigned to one of the funding partners which then take the lead in negotiating and administering the contribution agreement. In Saskatchewan, while one of the funding partners take the lead in working with a particular proponent, separate funding agreements are negotiated and administered. In Alberta, while there is a common application form used by both the department and the lead provincial ministry, applicants must work directly with both orders of government in securing funding. In British Columbia, applicants must also work directly with both orders of government in securing funding with some path-finding services provided by the department and the lead provincial ministry.

7.  Budget and Expenditures

Under the Agreements, from 2008 to 2012, the department through the Western Diversification Program authority provided $25 million in funding for each of the western provinces. The funds were matched by the respective provincial governments and expected to leverage significant investment to stimulate economies of the western provinces. The status of the existing budget, as of March 31, 2011, is summarized in the following table.

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Table 2: Summary of WEPA Budgets and Expenditures
Province Alberta BC Manitoba SK Total
Federal Status
Budget $ 25,000,000 $ 25,000,000 $ 25,000,000 $ 25,000,000 $100,000,000
Value of Projects Approved to March 31, 2011 $26,413,249 $12,802,917 $24,862,104 $19,347,495 $83,425,765
Expenditures to March 31, 2011 $16,753,000 $6,635,000 $13,670,000 $11,063,000 $48,121,000
Provincial Status
Budget $ 25,000,000 $ 25,000,000 $ 25,000,000 $ 25,000,000 $100,000,000
Value of Projects Approved to March 31, 2011 $18,685,000 $18,994,754 $24,642,100 $21,104,288 $85,795,596

As of March 31, 2011, 65 projects have been approved under the current round. Additional projects will be approved in fiscal year 2011-12. The activities funded under the current WEPAs were in:

  • Innovation: including activities leading to technology adoption and commercialization, technology linkages, applied research and development, community innovation, skills development and knowledge infrastructure.
     
  • Business Development: including activities contributing to improve business productivity, enhanced market and trade development, industry collaboration, foreign direct investment and access to capital.
     
  • Community Economic Development: including activities contributing to planning and strategies, development and viability, and economic adjustment.

The number and value of projects approved by province and sub-activity are summarized in Table 3. As indicated, the 65 projects involved assistance of $83.4 million from the department. Projects related to technology adoption & commercialization account for nearly one-half of this amount.

Table 3: Total Number of Projects and Departmental Funding by Province and Sub-Activity as of March 31, 2011
Province Alberta BC Manitoba Saskatchewan Total
Sub-Activities Number Value ($) Number Value ($) Number Value ($) Number Value ($) Number Value ($)
Technology Adoption & Commercialization 12 22,106,000 4 5,441,253 1 5,803,804 9 7,264,920 26 40,615,977
Improve Business Productivity 3 3,519,249 6 2,679,138 3 4,980,000 4 2,302,280 16 13,480,667
Market / Trade Development     3 1,713,776 7 7,112,600 3 1,380,295 13 10,206,671
Technology Research & Development         1 999,500 2 8,000,000 3 8,999,500
Foreign Direct Investment 1 788,000     1 400,000     2 1,188,000
Technology Skills Development     1 337,500 1 366,200     2 703,700
Knowledge infrastructure         1 5,200,000     1 5,200,000
Community Planning             1 400,000 1 400,000
Community Economic Adjustment     1 100,000         1 100,000
Not Noted in the Database     1 2,531,250         1 2,531,250
Provincial Total 15 26,413,249 16

12,802,917

15 24,862,104 19 19,347,495 65 83,425,765

8.  WEPA Logic Model

A formal logic model was not developed during the negotiations for the current round of agreements. The logic model for the WEPAs was developed in two parts. The first umbrella logic model (Figure 1 provided on the following page) and its narrative were developed by the department to link the priorities, activities and outcomes of the WEPAs to the departmental Program Activity Architecture. The second logic model (Figure 2) and its narrative reflect provincial priorities and their linkages to the departmental Program Activity Architecture.

Comparison to Previous Agreements

The first formal type of federal-provincial agreement for economic development in western Canada - the General Development Agreements (GDAs) - was ratified in 1974. In 1984, the GDAs were replaced with a new "umbrella" agreement - Economic Regional Development Agreements (ERDAs) between 1984 and 1994. The responsibility for the ERDAs was transferred to the department in 1987.

1.  WEPA I: 1996 to 2001

The first WEPAs covered the period from 1996 to 2001. In this round, the department contributed $20 million which was matched by $20 million in funding from each of the four western provinces for a total investment of $160 million which was invested in more than 192 projects. An evaluation of the first WEPAs showed that the funding leveraged an additional $456 million from other levels of government and the private sector. In other words, every dollar contributed by WEPA leveraged another $2.86 from other sources ($5.75 for every dollar contributed by the department). Additionally, an estimated 120 new businesses were started as a result of WEPA projects. Nearly $500 million was invested in buildings, equipment and projects creating over 1,300 full-time jobs.

2.  WEPA II: 2003 to 2008

The WEPAs were renewed from 2003 to 2008 with the dollar value increasing to $25 million per region. The total funding of $200 million was invested in 162 projects. The 2003 to 2008 round of agreements (WEPA II) focused on the following federal priorities:

  • Supporting the creation and growth of knowledge-based research and development, business clusters and the commercialization of new products, technologies and services out to market;
  • Supporting trade and investment promotion;
  • Enhancing business productivity and competitiveness; and
  • Increasing value-added production in traditional industries.

An interim evaluation of the 2003 to 2008 WEPAs concluded that, for every dollar invested by the department for WEPA initiatives, another $2.24 was leveraged from other sources.

Text Version, Figure 1: WEPA Logic Model

In this figure, a logic model for the Western Economic Partnership Agreement program is outlined.

 

Text Version, Figure 2: WEPA Logic Model - Provincial Priorities

In this figure, a logic model for the Western Economic Partnership Agreement’s Provincial Priorities is outlined.

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3.  WEPA III to Previous Agreements

The following table summarizes the available information on the three rounds of WEPA with respect to the terms; level of funding; number of projects funded; and leveraged funding. There is only limited data available on the cost and sources of funding for projects funded under WEPA I. There was a significant structural shift in funding between WEPA II and WEPA III. In particular, the funding allocated to technology adaptation and commercialization, foreign direct investment, and market/trade development activities significantly increased, while the funds spent on community economic adjustment, community planning, access capital, technology linkages, industry collaboration and community innovation decreased.

Table 4: Characteristics of WEPA I, II, and III
Characteristics WEPA I WEPA II WEPA III

Overview of the Agreement

Term

1996-2001 2003-2008 2008-2013
WD Funding Per Province $20 million $25 million $25 million

Total Budget

$160 million $200 million $200 million
Project Funding 1
Projects Funded 192 147 65

Average WD Funding/Project

$ 417 $ 645 $ 1,283

Leveraged WD Funding/Project

$ 2,375 $ 1,447 $ 4,470

Leveraged/WD Dollar

$ 5.70 $ 2.24 $ 3.48

Another notable difference is the decision to focus on larger projects under WEPA III, both in terms of the level of funding provided by the department and the total project costs. The average funding provided by the department increased from $644,886 under WEPA II to $1.28 million under WEPA III while the average total project costs increased from $2.09 million under WEPA II to $5.75 million under WEPA III. Of the 65 projects approved under WEPA III, 29 involved departmental contributions of $1 million or more as compared to 30 of the 147 projects approved under WEPA II. The following table compares the distribution in projects by level of funding under WEPA II and WEPA III.

Table 5: Comparison of Distribution in Departmental Funding and Total Project Costs between WEPA II AND WEPA III
Level of Funding WD Funding (number of projects) Total Costs (number of projects)
WEPA II WEPA III WEPA II WEPA III
0-49,999 28 0 8 0
50,000-99,999 20 1 12 0
100,000-499,999 48 20 42 4
500,000-999,999 21 15 30 12
1,000,000-4,999,999 29 22 33 30
5,000,000-9,999,999 1 7 16 13
10,000,000-49,999,999 0 0 6 5
50,000,000-99,999,999 0 0 0 0
100,000,000-299,999,999 0 0 0 1
Total Projects 147 65 147 65

Apart from the size of projects and distribution of funding by sub-activity, the model for WEPA III generally follows that of its predecessor. A few other notable differences between WEPA II and III are summarised as follows:

  • The department introduced a new performance measurement system for all of its projects part way through WEPA II. Reflecting its Program Activity Architecture (PAA), the department established a series of standard performance indicators for each of its sub-activities. Beginning in April 2005, the department incorporated at least one standard performance indicator into each contribution agreement. In addition to one or more standard indicators, each project may also have unique indicators on which they are required to report.
     
  • Certain provincial priorities have evolved. In Manitoba, for example, the focus shifted from community development to supporting tourism. In Saskatchewan, the focus shifted from increased productivity and diversification to supporting community development while, in British Columbia, the focus shifted from tourism, innovation, entrepreneurship, and sustainable communities to Asia Pacific, labour market and trade, Aboriginal inclusion, and 2010 Olympics.
     
  • Project funding tended to become less flexible. According to key informants, there were more rigid restrictions as to what each order of government could fund as well as the ability of proponents to transfer funding between various line items without a formal amendment.

 


[1] The funding data presented in this table is as of the time of the respective evaluations of WEPA I, II, and III and as such, may not represent the final totals.