An Atlantic Beginning?

MARCUS GEE June 22 1987

An Atlantic Beginning?

MARCUS GEE June 22 1987

An Atlantic Beginning?


As a businessman based in the town of Springdale on the northern coast of Newfoundland, Job Halfyard is familiar with bureaucracy. Since he went into business for himself in 1972, the former high-school teacher has often been frustrated by delays and red tape. But Halfyard, 56, says that he has noticed a different attitude at the newly established Atlantic Canada Opportunities Agency (ACOA). After dealing with several other organizations, Halfyard approached the agency at its temporary St. John’s headquarters last week with a request for $30,000 to $40,000 in interest aid on a $136,000 loan he has received from the Federal Business Development Bank. The loan will help him set up a new company specializing in soil and mineral analysis for mining companies. “Things seem to be moving a lot more quickly,” said Halfyard. “My proposal has already been revamped. It’s the only break I’ve been given in the past three months.”

It is still too early to fully evaluate the effectiveness of ACOA.

Announced by Prime Minister Brian Mulroney on June 6, the agency will not begin spending its $200-million annual budget until the fall.

It still has no board of directors, and the legislation bringing it into existence has not even been introduced in Parliament. Still, the agency’s longawaited birth has already raised high expectations. All four Atlantic premiers have strongly endorsed Ottawa’s plan for boosting the region’s sluggish economy. Businessmen and economists have also praised the govern-

ment’s plan to decentralize decisionmaking on regional development and encourage entrepreneurial spirit in the region. Said Thomas Hayes, president of the Halifax-based Atlantic Ventures Trust investment group: “I feel optimistic about the ACOA. Quicker, better business decisions should result.”

But other people in Atlantic Canada are more cynical about the new agency. The ACOA, they noted, is only the latest in a long series of organizations and programs established during the past 25 years to help promote economic growth in the region. During that period, the federal government has spent an estimated $3 billion on development programs in Atlantic Canada—a figure that does not include billions more contributed to provincial governments through federal transfer payments. Despite those expenditures, incomes earned in Atlantic Canada are no closer to the national average today than they were 25 years ago.

Unemployment rates in the area

have remained alarmingly high—up to 20.4 per cent in Newfoundland. Even before Mulroney’s announcement, federal Public Works Minister Stewart Mclnnes conceded that the ACOA was Ottawa’s last “kick at the can.” “What hasn’t been tried in the Atlantic

gion?” he said. ‘‘We’ve tried just about everything.”

This time, however, the Conservative government claims that it has a fresh approach to the problem.

The key to Ottawa’s program is decentralization.

By locating the ACOA in Moncton and handing it many of the functions formerly held by the Department of Regional Industrial Expansion (DRIE), the Tories intend to take decision-making power away from civil-service mandarins in Ottawa and put it under local control. Said the agency’s newly appointed president, Donald McPhail, 56, Canada’s ambassador to West Germany: “The most important element will be the madein-Atlantic-Canada approach. We want to build the programs with the people of the region.”

A similar transfer of power will likely occur in the West. In the coming weeks the government is expected to announce new regional development programs for Western Canada. The 10th draft of the long-awaited western initiative is currently circulating in the office of Deputy Prime Minister Don Mazankowski. Said Mazankowski’s spokesman, Tom Van Dusen: “We’re looking at the same notion of regionalized decision-making, but we’re not going to transplant the Atlantic formula into the West. It’s a different region with different problems.”

Unlike some of its predecessors, which encouraged industrial megaprojects in the region, the ACOA will focus on fostering smalland mediumsized businesses. The designers of the new agency pinpointed lack of entrepreneurial vigor as one of the main weaknesses of the Atlantic economy. As Roy George, dean of management studies at Halifax’s Dalhousie University, remarked in a speech last month, “We seem to have lagged behind mainly due to a lack of enterprise, of a willingness to adapt to changing conditions, of an urge to take risks.” Added Donald Savoie, the New Brunswick

economist who wrote the report on which the agency was based: “We need a strong private sector. We either import it or we grow it. I suggest we grow it.”

To reach that goal, the ACOA will spend $1.05 billion over the next five years and will have a staff of 300 at its Moncton headquarters. Said a senior official in Ottawa: “The agency will be measured by how productive it is in terms of jobs and new enterprises. There’s going to be winners and losers. We’ve been led to believe the winners will cover off the losers.”

Exactly how the new agency will carry out its mandate is still unclear, but it will begin by taking over a variety of smaller organizations and programs. First, it will assume control of 20 ERDA (Economic. and Regional Development Agreement) pacts from DRÍE. Those agreements direct federal and provincial funds into industrial sectors. Among the agencies it will inherit are Enterprise Cape Breton, a semi-independent organization that had reported to DRIE Minister Michel Coté, and the Atlantic Enterprise Program, which of-

fered loan guarantees and interest aid.

Opposition critics claimed last week that creation of the new Atlantic agency was the first step in the partial dismantling of DRIE, an action that they said would cost the provinces hundreds of millions of dollars in regional development funds. Some reports said that Senator Lowell Murray, the federal minister responsible for ACOA, would take over a new central office that would oversee all regional development agencies. Others said that Murray would be responsible only for ACOA, leaving the proposed western agency to Indian Affairs and Northern Development Minister William McKnight.

Still, critics said that the government is pursuing a dangerous policy. Liberal MP Lloyd Axworthy of Winnipeg charged that the government’s plans could lead to the “disintegration” of Canada. Added Axworthy: “It’s just another example of how this government is creating a series of isolated agencies with less and less federal involvement and co-ordination.” For his part, Bruce Doern, a professor at Carleton University’s school of public

administration, said that the decentralization trend may not last long. “As soon as you have a few mistakes or some money misspent, the cry will go up to rein it back in,” said Doern. “I can see the auditor general going down to Moncton in three years and saying, ‘Hey, there’s no control over how this money is being spent.’ And they’ll take power back to the centre.”

But placing the source of development funds closer to its recipients has firm support in the region. Mulroney began to focus on the approach in an August meeting in St. John’s with the Atlantic premiers. Existing programs, they told him, were not helping to spread the economic boom that Central Canada was experiencing into the Atlantic provinces. That message was underlined when he met again with the premiers in Charlottetown in late October. After that meeting, Mulroney asked Savoie, a University of Moncton professor, to recommend a structure for a new development agency based in the region. Savoie reported to Ottawa in April.

In an interview, Savoie said that the agency will take much longer than its five-year mandate to achieve real results. “Nobody,” he said, “should have the illusion that there is going to be a quick fix.” Indeed, in his 1986 book, Regional Economic Development: Canada's Search for Solutions, Savoie wrote pessimistically about the prospects for eliminating the country’s regional disparities. “The economic forces that have led to existing development patterns are strong, and it would take extremely powerful and costly countervailing forces to change that pattern to abolish regional disparities,” he wrote. “The goal of alleviating regional economic disparities is unrealistic, and new objectives should be established.” Whether ACOA will be any more successful than its many predecessors depends as much on its clients as on its officials and directors. “There’s a mind-set here that the solution is always going to come from somewhere else, but it isn’t,” said David Jonah, 38, publisher of the Moncton-based Brunswick Business Journal. “Our biggest problem is our attitude and our inability to dream big dreams. We’ve got to do it ourselves.”

— MARCUS GEE with correspondents’ reports