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Operating context and key risks

Operating context and key risks

Operating context

Western Canada accounted for 38 percent of Canada’s economy in 2018 and nearly a third of the national population. After leading the country in economic growth over the last decade, the western economy has slowed considerably in the wake of weak oil and commodity prices, and converged closer to the national growth rate of 2.1 percent in 2018.

In 2018, Alberta and Saskatchewan’s economies grew at 2.3 percent and 1.6 percent respectively. i Lower oil prices and a widening price differential continued to temper growth and led to spillover effects in the labour market and consumer spending. The unemployment rate in 2018 averaged 6.6 percent in Alberta and 6.1 percent in Saskatchewan ii , the highest among provinces outside of Atlantic Canada.

Manitoba’s economy grew by 1.3 percent in 2018. The province had record high investments in the energy, manufacturing, and residential and construction sectors, and strong growth in exports of goods which grew by more than 12 percent. However, this growth was offset by a slowdown in consumer spending, mine closures, and persistent weak market conditions for base metals.

While still leading most provinces, BC’s growth rate has come down from the 2014-17 average  of 3.2 percent to 2.4 percent in 2018. As expected, the correction in BC’s housing sector continued; home sales fell by 25 percent, with consumers reacting to the tighter lending policies.

Western Canada is home to over 55 percent of Canada’s Indigenous Peoples. While they are one of the youngest and fastest-growing population in Canada, there remains a significant economic gap between the Indigenous and non-Indigenous population. Canada’s Indigenous unemployment rate is more than double the non-Indigenous rate. Saskatchewan and Alberta had a particularly high Indigenous unemployment rate.

Underrepresented groups such as women and youth, continued to face barriers. Lower relative numbers of women in higher-wage occupations such as executive and science, technology, engineering and mathematics (STEM) jobs have contributed to a higher gender wage gap in the West than nationally.

Additionally, less favourable employment conditions in the traditional sectors such as oil and gas and construction, along with the lingering effects of localized economic slowdowns have resulted in increases in youth unemployment rates in related sectors in recent years.

Throughout 2018-19, WD supported the Government of Canada’s Innovation and Skills Plan to promote economic development in western Canada. These activities included undertaking research on western Canadian industry sectors, engaging with regional stakeholders across sectors, consulting international cluster experts, investing in women-led businesses, and streamlining access to WD’s innovation program funding. Additionally, WD provided funding to support workers and communities in the West adapt to Canada’s transition to a low-carbon economy.

Key Risks

In the 2018-19 Departmental Plan, WD identified two key risks: changing economic conditions may reduce the revenues of the department’s partners, in turn leading to reduced co-investment in projects aimed at growing clusters and promoting inclusive growth; and, changing economic conditions could limit the potential for improved economic outcomes for the underrepresented groups WD supports through its inclusiveness priority.

During 2018-19, spending by WD’s partners, such as most provincial governments, was constrained. Private sector capital investment was also down. Partly in response to this context, WD made strategic investments. In support of its cluster priority, WD made investments to encourage an innovative business ecosystem in the West. WD also invested in projects that support inclusive economic participation for Indigenous peoples, women and youth.

Slower economic growth in the region did spark public debate about what governments, industry and communities can do to accelerate the economy. In September 2018, WD launched public engagement to seek the views of western Canadians about their vision for the future of economic growth in western Canada. The What We Heard Report captures the feedback from more than 450 organizations and individuals and was used to shape Grow West: The Western Canada Growth Strategy. The strategy is a call to action to position the West for success over the next ten years. The goal of the strategy is to create a more innovative, inclusive and connected economy that continues to grow and flourish.

WD will continue to engage with federal partners, provinces, communities, Indigenous organizations, industry, business leaders, academia, and other stakeholders to bring the strategy to life.

Risks Risk response strategy and effectiveness Link to department’s Core Responsibilities Link to mandate letter commitments and any government-wide or departmental priorities (as applicable)

Difficult economic conditions inhibit our partners’ ability to contribute to projects

WD'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.

WD engaged the public, governments, communities, industry, and other partners to inform the development of the Western Canada Growth Strategy. The engagement helped to set priorities for diversification, trade, skills, and communities. The strategy is a call to action not just for WD but is an invitation to form new partnerships on western opportunities. It will position the West for long-term economic growth and contribute to WD’s support of Canada’s Innovation and Skills Plan.

Over the fiscal year, policy research and analysis were conducted on major trends affecting the region. WD also prepares the West at a Glance. The report provides a better understanding of western Canada’s strengths, opportunities, and challenges, and gives WD’s partners, analysts, and other government departments in-depth intelligence and analysis.

WD responded to impacts of economic conditions by leveraging the flexibilities of its programming such as adjusting project milestones.

Economic development in western Canada

Innovation and Skills Plan

Changes in the economy undermine the growth potential of WD’s chosen clusters and inclusive groups such as Indigenous people, women, and youth

As previously stated, WD had an open engagement with Canadians to develop the Western Canada Growth Strategy. The strategy identified priorities that will lead the way towards an economy that is empowering and inclusive for groups such as Indigenous people, women, and youth. Priorities include building inclusive technology sectors and growing regional economic partnerships in resource sectors that can benefit Indigenous Peoples, and rural/remote communities.

In 2018-19, there were over 4,000 website visits to WD’s departmental publications, which includes the “Inclusiveness” and “Indigenous Economic Growth” editions of West at a Glance.

WD continues to monitor projects and assess whether to apply appropriate flexibilities in program delivery such as adjusting project duration and project activities.

In 2018-19, WD supported the delivery of business advisory and training services for over 4,000 Indigenous people, 3,700 youth, and 14,000 women entrepreneurs through the Western Canada Business Service Network.

Economic development in western Canada

Innovation and Skills Plan

WD’s Departmental Results Framework and Program Inventory of record for 2018-19 are shown below:

Departmental Results Framework

Core Responsibility: Economic development in western Canada

Internal Services

Departmental result:

Businesses are innovative and growing in western Canada

Indicator: Value of exports of goods from western Canada ($)

Indicator: Number of high-growth firms in western Canada

Indicator: Value of exports of clean technologies from western Canada ($)

Indicator: Revenue growth rate of firms supported by WD programs

Departmental result:

Communities are economically diversified in western Canada

Indicator: Percentage of SMEs that are majority-owned by women, Indigenous people, youth, visible minorities and persons with disabilities in western Canada

Indicator: Amount leveraged per dollar by WD in community projects

Departmental result:

Businesses invest in the development and commercialization of innovative technologies in western Canada

Indicator: Value of business expenditures in research and development by firm receiving WD program funding ($)

Indicator: Percentage of professional jobs (including science and technology) in western Canada

Indicator: Percentage of companies engaged in collaborations with higher education institutions in western Canada

Program Inventory

Program: Innovation

Program: Business Growth

Program: Business Services

Program: Community Initiatives

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