[HALIFAX, NS] — The Atlantic Canada Opportunities Agency is slashing $5 million in annual funding to some 50 economic development organizations in the region as part of a move its minister says will help eliminate red tape.
The organizations were notified Tuesday that the federal portion of their operational funding will be cut next May, the agency said.
Bernard Valcourt, minister of state for ACOA, said the federal government is keen to find more cost-effective ways to create jobs and grow the economy.
He said the regional development organizations aren't the answer.
"What is important here is to spend and invest hard-earned taxpayers' dollars wisely," Valcourt said in an interview from Miramichi, N.B. "We can achieve this by eliminating all of that duplication and overlap between organizations and programs that sometimes, you know, I think do not serve the interests of entrepreneurs well."
The organizations are responsible for developing and driving economic development at a local level while working with all levels of government, according to ACOA's website. They also receive funding from provincial and municipal governments.
Valcourt said the organizations serve as conduits for entrepreneurs and businesses to access federal and provincial programs, but they do not create or administer these programs.
He said it's easier to contact ACOA directly through one of its 36 offices, but stopped short of calling the organizations redundant.
"I don't want to dismiss all of their initiatives as being useless," he said. "I think that's why we want to be able to consult and engage with provincial governments, with the municipalities and other economic partners to explore alternate, more effective ways to work together."
Kevin Lacey, Atlantic Canadian director of the Canadian Taxpayers Federation, said there are simply too many regional development agencies each with their own administrative costs.
"What we've seen with regional development over and over and over again is taxpayers' dollars being spent and wasted on corporations and grants that simply don't do anything to improve the economy," he said. "We have for years tried this approach with regional development ... and it simply hasn't worked. We're no further along economically, we're not better off than we were before, so why have them at all?"
Paul Kent, president and CEO of the Greater Halifax Partnership, said the annual ACOA funding for his organization amounts to about $165,000 of its roughly $3-million budget.
The federal cuts didn't come as a surprise, Kent said.
"The ACOA organization has been pretty upfront with the regional development authorities for a number of months now, certainly not specifics but they were talking about the changing tides of funding," said Kent. "We knew something was up. We certainly weren't expecting the status quo to be preserved."
Kent said he's hopeful there will be no cuts among his 20-member staff, but added smaller organizations that rely more heavily on federal funding may find themselves in different situations.
He also said it may be time to revisit the organizational structure for effective economic development in the province.
Eileen Lannon Oldford, CEO of the Cape Breton County Economic Development Authority, said her organization has been careful not to duplicate services offered by other agencies.
"We really act as a navigator," she said from Glace Bay, N.S. "There's a very collective and collaborative partnership that we represent in the region."
Lannon Oldford said federal funding accounts for about $185,000 of the organization's $600,000 budget. She said the next year will be spent determining how to manage the loss of federal dollars without cutting any of her seven employees.
In Newfoundland and Labrador, the decision prompted criticism and concern from the opposition parties about whether the organizations would be forced to wind up their operations.
Valcourt said government services need to become more efficient and less costly. He pointed out that ACOA is looking at cuts totalling more than $17 million over the next three years.
He said he "absolutely" agreed it's time to revisit how economic development is managed in the region.
"We've been doing this for decades in some provinces and when you look at the results, you know, that's where my concern is."