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Federal-Regional Development Grievances
Newfoundland & Labrador Criticisms of
Federal Policy in Regional Development
Newfoundland & Labrador has not enjoyed the same level of economic
development and prosperity as many other provinces in Canada.
Provincial political and business leaders have long drawn a connection
between this chronic underdevelopment and the regional development
policies and programs of the federal government.
See the Regional Economic Disparities & The Province section
of this article for background on the economic difficulties facing
Origins of Federal Regional Development
Beginning in the 1950s, Newfoundland & Labrador (as well as
other Atlantic provinces) began to introduce government policies
in an attempt to stimulate the provincial economy. This included
forming government development agencies, offering incentives
to local businesses, and improving provincial infrastructure.
The Province also recognized that federal participation and coordination
was necessary to ensure the success of these development programs.
The first real attempts at regional development by the federal government
came in the late 1950s under the Conservative government of John
Diefenbaker. The Conservatives made the reduction of regional
differences and the growth of regional economies an important
national policy, introducing several job creation programs to
deal with seasonal unemployment in the Atlantic Provinces. Subsequent
federal governments built upon these initial programs.
In 1969, the new Liberal government of Pierre
Trudeau consolidated and rationalized regional development
programs with the creation of the federal Department of
Regional Economic Expansion (DREE). The Trudeau government
viewed regional disparity as a source of national disunity
and believed that “have not” regions would
become increasingly discontented with their economic positioning
vis-à-vis more prosperous regions of Canada. The
DREE was given a powerful minister, deputy minister, and
a substantial budget to target industrial development in
Atlantic Canada and Eastern Quebec.
The DREE has since undergone several re-organizations. In the early
1980s its was merged with the Department of Industry to create
the Department of Regional Industrial Expansion (DRIE). In 1987,
DRIE was split into several agencies – each with its own
regional focus. This included the Atlantic
Canada Opportunities Agency (ACOA), Federal
Economic Development in Northern Ontario (FedNor), Western
Economic Diversification Canada (WD), and the Canada
Economic Development Office for Quebec Regions (CED). What
was left of DRIE became the Department of Industry, Science and
Technology, and later Industry
Grievances with Federal Policy on Regional Development
Political and business leaders in Newfoundland & Labrador have
heavily criticized federal regional development policy. While
the Province supports federal participation in its development
initiatives, it has been critical of the particular policies
and approaches taken by successive governments in Ottawa.
Three issues in particular have been a particular source of grievance:
Lack of Focus on Atlantic Canada
Originally, federal regional development had been focused on stimulating
industrial growth and job creation in the underdeveloped regions
of Atlantic Canada and Eastern Quebec. However, over the years
the federal government began to divert attention and funds to
other parts of the country; by 1980, less than 20 percent of
DREE funding went to Atlantic Canada. Critics have argued this
development handicapped any real economic development policy
success for the Atlantic Provinces.
Misconceived Development Strategies
Many federal development programs in Newfoundland & Labrador
have been costly mistakes, resulting solely in the disbursement
of public monies for temporary employment gains. Critics have
argued this is the result of “short-term thinking” on
the part of the federal government, and that there has chronically
been an absence of any broad or long-term vision for economic
development in the Province.
Insufficient Local Input and Cooperation
Historically, federal regional development has been undertaken
in a very “top-down” manner. Politicians and bureaucrats
in Ottawa directed development policy and programs with little
cooperation from the Province, or input from local residents
and business leaders. Critics have argued that federal programs
were often ineffective because they overlapped or contradicted
provincial development programs, or because they were inappropriate
to the specific communities in which they operated.
Recent Trends in Federal Regional Development Policy
Recently there have been important changes in the federal government’s
approach to regional development in Newfoundland & Labrador.
These changes constitute an attempt to address some of the grievances
expressed by the Province’s political and business leaders.
New Framework for Economic Development
In the 1990s, several government task forces were created to study
the issue of economic development in the Province. Consequently,
several key reports were released, including Change and Challenge:
A Strategic Economic Plan for Newfoundland and Labrador (1992), Community
Matters: The New Regional Economic Development (1995), and
Strategy for Jobs and Growth(2001).
These reports became the foundation for a new framework for economic
development in Newfoundland & Labrador. Recommendations included:
- Integration of social, environmental, and economic concerns
within regional development policy.
- A focus on long-term development objectives instead of short-term
economic and employment goals.
- Community-based development in which economic revitalization
is “bottom-up” and based on the collective
action of individual communities, aided by provincial and
Canada-Newfoundland Comprehensive Economic Development Agreement
In 1997, the governments of Canada and Newfoundland & Labrador
signed the Canada-Newfoundland
Comprehensive Economic Development Agreement. This five-year,
$50 million initiative was based on many of the recommendations
made in earlier government studies (see above).
Highlights of this Agreement are as follows:
- The Government of Canada and the Government of Newfoundland & Labrador
will work in partnership to advance their shared economic
- The primary objectives of the Agreement are economic diversification
and the reduction of Newfoundland & Labrador’s
dependence on natural resources for its economic success.
This involves tapping non-resource sectors of the provincial
economy that offer the best opportunity for growth (manufacturing,
tourism, advanced technology).
- Federal financial support for the Province’s Regional
Economic Development Boards is deemed as integral
to the Province’s success. These community-based
Boards have the responsibility for directing the
implementation of development policies and programs
in their respective regions.
In 2001, the federal
government announced an additional $45 million would be
injected into the 1997 Agreement, bringing its total
value to $95 million.
Atlantic Investment Partnership
The 1997 Agreement addressed several grievances cited by provincial
political and business leaders, including the absence of long-term
objectives in development planning and the lack of cooperation
between the federal and provincial governments and local communities.
Nevertheless, the $95 million committed by the federal and provincial
governments was deemed not nearly enough to impact Newfoundland & Labrador’s
economic development in any real manner.
In 2000, the federal Liberal government, helmed by Jean Chrétien,
announced the Atlantic
Investment Partnership (AIP), a five-year, $700-million
initiative for economic development in Atlantic Canada.
The principal objective of the AIP was to assist in closing the skills,
innovation and productivity gap between Atlantic Canada and other regions
of the country. This Partnership involved the federal government and regional
stakeholders, including provincial and municipal governments, businesses,
universities and colleges, and research institutes.
Among its major investments:
- $300-million for an Atlantic
Innovation Fund. The purpose of this Fund: to
strengthen innovation and competitiveness in Atlantic
Canada, while encouraging the transition to a more
- $110 million for the expansion of National
Research Council facilities in Atlantic Canada;
- $135 million for a Strategic
Community Investment Fund for community-level
economic development and job creation projects; and,
- $123.6 million for trade, investment and business skills
While the $700 million was divided among the Atlantic Provinces,
it represents a significant increase in federal funding for economic
development in the Province of Newfoundland & Labrador.
In 2005, the federal Liberal government, helmed by Paul Martin,
announced the Atlantic Investment Partnership would continue.
The new initiative (referred to as the “Second Wave”)
is a five-year, $708 million program based on many of the same
principles and objectives of the original Partnership.
For more on the Atlantic Investment Partnership: