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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 the Province.

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 Canada.

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 the Renewal 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 federal agencies.

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 development goals.
• 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 knowledge-based economy;
• $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 development.

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:

• Atlantic Canada Opportunities Agency: 2000 Atlantic Investment Partnership
• Atlantic Canada Opportunities Agency: 2005 Atlantic Investment Partnership

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