Northern Ontario development agency delays cited

The conclusions are from a newly released analysis by Prairie Research Associates, a Winnipeg-based company hired by Industry Canada to scrutinize its Northern Ontario Development Program.

A federal development agency for northern Ontario is slow to approve projects and fails to measure its long-term effectiveness, according to a study by an independent consultant.

Those are among findings from an evaluation of an Industry Canada program that has spent at least $150 million in the province's troubled north since 2006.

"The main issue impeding program delivery is the time required for project approval," says the study by an independent consultant, noting it takes an average of six months to get a green light.

That's more than twice as long as approval times at comparable agencies in the West and Quebec.

The FedNor agency that administers the program has also neglected to track how effectively taxpayers' money is being spent, producing "little quantitative evidence of the achievement of long-term outcomes."

The conclusions are from a newly released analysis by Prairie Research Associates, a Winnipeg-based company hired by Industry Canada to scrutinize its Northern Ontario Development Program.

The firm investigated 858 projects between 2006 and 2010 that received a total of $148 million. The money is supposed to create jobs and diversify the economy of the north, which relies heavily on the fickle natural-resource sector.

Projects have included dock refurbishing on Manitoulin Island, water-and-sewage system improvements in Dryden, Ont., and help for a New Liskeard, Ont., office furniture company.

Prairie Research Associates found that every job created or maintained under the program cost taxpayers about $5,200.

Investigators could not say whether that price was reasonable, partly because they were not provided with enough information.

High administrative costs

The analysis also showed that the administration of the program eats up more than one of every five dollars spent, or about 22 per cent.

That's higher than the administration costs of a parallel agency in Quebec, at 16 per cent, but less than another much larger development fund, the Atlantic Canada Opportunities Agency, at 26 per cent.

The study says given the "vast geographic area" of northern Ontario, administration costs are expected to be high, with seven offices and 121 program staff spread across more than 800,000 square kilometres — almost 90 per cent of the province's land mass.

Most program money is earmarked for non-profit organizations that develop infrastructure, with just three per cent going to private-sector businesses.

"Consideration should ... be given to how to increase program impacts on for-profit business," says a key study recommendation.

A spokeswoman for FedNor in Sudbury, Ont., referred questions about the evaluation to Ottawa. An Industry Canada official said FedNor is working to speed the project-approval process.

"FedNor has implemented a number of improvements to help decrease project approval times," media-relations officer Stefanie Power said in an email, including better tracking and clearer guidelines for applicants. 

The department is also taking steps to better measure long-term impacts, with improved data collection beginning in April next year.

Industry Canada will also research options for more investments in for-profit businesses, with decisions also expected next April.

Power noted that the Prairie Research Associates report found the program still serves a vital role in diversifying the economy of northern Ontario, which has long relied on forestry and mining.

FedNor, the agency responsible for the program, was created by the Conservative government of Brian Mulroney in 1987.

Critics have long called for an overhaul, saying FedNor is overly bureaucratic, lacks transparency and should be independent of Industry Canada to help remove politics from decision making.

The agency, which spends about $50 million annually, is the direct responsibility of Industry Minister Tony Clement, whose own Parry Sound-Muskoka riding has benefited from FedNor grants. Both the Liberals and NDP say they would make it a stand-alone agency.