Western Economic Diversification Canada
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Major Findings and Conclusions

The evaluation focused on two key components of WEPA: WEPA as a decision-making tool; and the economic development projects funded under WEPA using the WDP authority. The key conclusions arising from this review are as follows:

Relevance

1.  The need exists for economic development projects in western Canada. Economic development projects, like those that the department has funded under the Western Diversification Program authority, are still needed because they support critical areas of the economy. Programming focused on promoting research and development, commercialisation of new technologies, expanding investment, and supporting trade can help western Canada become more competitive and reduce its dependence on natural resources. The department can continue to fund similar projects in the future using its existing authorities, whether or not the WEPAs are renewed.

2.  The projects funded were aligned with departmental strategic outcomes and government-wide priorities, and were consistent with the priorities of the federal government. The department works to promote innovation, business development and community economic development in its mandate. The projects funded under WEPA contributed to each of these priority areas. The Speech from the Throne in 2011 highlighted the federal government’s commitment to supporting business development, productivity, innovation, trade, and economic competitiveness. All key informants agree that the projects funded were consistent with the federal government’s agenda in western Canada and departmental priorities.

Performance (Efficiency, Effectiveness and Economy)

3.  Although most of the projects are still ongoing, there has been significant progress made already towards meeting their objectives and generating expected impacts. At the time of this evaluation, 60% of projects were still on-going, 38% had only been recently completed and 2% had not started yet. That being said, the projects and the agreements overall are viewed as having made significant progress towards achieving their objectives. More specifically:

  • The WEPA decision making process has contributed in promoting collaboration and strengthening the partnership between the federal and provincial governments.
     
  • The projects funded have generated a wide range of impacts. Reflecting the large number of projects funded, the most significant impact was perceived to be in terms of strengthening innovation, improving business productivity, and promoting trade and market development.
     
  • Funded projects by the department have already made significant progress towards achieving their performance targets.
     
  • The impact of departmental funding extends beyond the direct impact of the funded projects to include the impacts of follow-on projects, investments, and developments. Fifty-two percent of project proponents (26 of the 50) reported that their project have already led to other projects, investments or developments. The proponents estimate that these developments will involve new investments of nearly $84 million. Proponents of spin-off projects reported that their projects generated a variety of impacts including attracting follow-on investments totalling $11 million.

4.  The WEPA decision making process had both some benefits and challenges. The key informants agreed that the WEPA decision making process had a clearly defined governance structure. It was well-structured given what it was trying to accomplish, the intended outcomes and performance measures were clear and consistent with departmental reporting requirements.

The major issues regarding the WEPA decision process include the time required for project approvals, the complexity of the project approval process, a lack of coordination in performance reporting requirements between the federal and provincial governments, and a lack of dedicated provincial funding in some provinces. Other issues arose related to the challenges in defining new priorities, administration of the process, and the establishment of communication protocols.

5.  The funded projects leveraged significant funds from other sources. The budgeted costs associated with the 65 projects approved as of March 31, 2011 total $374 million, of which departmental assistance represented 22%. In other words, WEPA III leveraged $3.48 from other sources for every dollar contributed by the department which is significantly higher than $2.24 leveraged under the previous WEPA II. Project proponents noted that departmental funding of projects signals government support, which helps to provide market credibility as well as attract additional private sector funding and participation.

6.  Key informants provided a variety of suggestions for improvement. Key informants suggested that consideration should be given to improving the application and review process, reducing the time required for approval of applications or at least providing a better indication of how long a decision may take, streamlining the reporting requirements, encouraging the provincial governments to establish a dedicated source of funding, and developing mechanisms to communicate success stories and better share lessons learned as well as best practices across projects and provinces.

In conclusion, the projects funded under WEPA align with the department’s priorities, they are demonstrating early positive results, and there is an ongoing need for economic development funding. The department has the existing program authorities to make similar investments in the future. WEPA, as a decision-making model, has some strengths and weaknesses. The department has some options as to what decision-making model it will choose to make its economic development project decisions in the future. Regardless of what model the department chooses, this report offers up some suggestions for improvement.