Ministry Role and Services

Introduction

Ministry Overview

The Ministry underwent two realignments in 2003/04, resulting in significant changes to the Ministry's objectives and organizational structure. In June 2003, the Ministry was reorganized to put greater emphasis on improving British Columbia's competitiveness, and on marketing and promoting British Columbia's opportunities to potential investors and visitors. As a result of the realignment, the Ministry's goals, objectives, core businesses and targets were changed to reflect the revised mandate. This resulted in the Ministry developing a Revised Service Plan for the period 2003/04 to 2005/06, which was subsequently tabled in the Legislature.

In January 2004, the Ministry underwent a second change when it acquired responsibility for the Olympic Games Secretariat. These responsibilities are not reflected in this Annual Service Plan Report. Instead, those responsibilities appear in the 2003/04 Annual Service Plan report for the Ministry of Community, Aboriginal and Women's Services.

In January 2004, the Ministry changed its name from the Ministry of Competition, Science and Enterprise to the Ministry of Small Business and Economic Development.

The Ministry of Small Business and Economic Development is the primary provincial agency responsible for initiatives and programs dedicated to creating a strong provincial economy in British Columbia.

British Columbia's prosperity is dependent on the creativity and work of its citizens, entrepreneurs and businesses, as well as the competitiveness of our economy in attracting new investment and creating jobs. The Ministry's prime focus is to assist in creating a business environment that gives the private sector the confidence to invest in British Columbia. The Ministry works with the private sector, other ministries, agencies, the federal government and local governments, to respond to economic development opportunities that facilitate investment and job creation throughout the province.

The Ministry's responsibilities are:

Competitiveness:

The Ministry aims to improve British Columbia's competitiveness in the national and international economy in an effort to make our province one of the most attractive investment locations in North America. The Ministry's efforts to enhance British Columbia's competitiveness include:

• Cutting red tape and reducing the regulatory burden on businesses and consumers by one-third within three years, beginning in 2001.
• Pressing for the removal of barriers to trade, investment and labour mobility.
• Providing up to date professional analysis of British Columbia's competitive advantages and disadvantages, particularly with respect to international investment and business formation for each important industry sector and all regions.
• Increasing the amount of venture capital available in the province.

Regional Development Opportunities:

The Ministry aims to improve the economic diversification of British Columbia's Heartlands, and to ensure that all regions of the province share the benefits of a growing economy. The Ministry's efforts to enhance regional development opportunities include:

• Encouraging the development of regional economies, infrastructure and services by providing cross government leadership for the implementation of the Heartlands Economic Strategy.
• Providing strategic leadership that will facilitate economic growth and development throughout British Columbia by fast-tracking provincial regulatory approvals for significant economic projects.
• Promoting the enhancement and development of all-seasons resorts and resort municipalities.
• Administering project funding under the Canada/British Columbia Infrastructure Program and Western Economic Partnership Agreement to fund projects which support economic growth, and enhance business productivity.
• Participating in bi-monthly meetings of the Nechako-Kitamaat Development Fund Society to provide funding for economic and community development projects in northwest British Columbia.

Marketing and Promotion

Information about British Columbia's opportunities and the changes being made to ensure British Columbia is globally competitive needs to be aggressively marketed to the investment community and potential visitors. The Ministry's efforts include:

• Marketing British Columbia as an investment location, and develop and enhance national and international investment and trading relationships.

The Ministry has 122 staff positions, including staff in six regions. The Ministry delivers its services and programs through three divisions, Deregulation Office, and Deputy Minister's Office:

Competitive Economic Policy Office — the division undertakes analysis of the province's economic conditions at the provincial, regional and sector level to identify economic opportunities and challenges. The results assist in developing strategies to address the challenges and capitalize on the opportunities. In addition, the division is responsible for international and internal trade policy, film policy and competitiveness issues.

Economic Development Division — the division, through its regional presence, identifies potential projects that support the Heartlands Economic Strategy, and uses expert business case analysis to recommend projects for fast-track designation, and monitors these projects through provincial government review and approval processes to ensure timelines are met.

The division is also the driver for expanding the tourism industry including the development of all season resorts and resort municipalities. The division also works with industry to identify and fast-track tourism projects. The division supports Heartlands communities by providing local economic development agencies and small business associations with information, education and other tools to assist with small business start-ups.

Finally, the division administers the project funding for the Canada-British Columbia Infrastructure Program, and Western Economic Partnership Agreement.

Management Services Division — provides financial, human resources, records management and information systems support to the Ministry, and the Ministry of Energy and Mines.

Deregulation Office — oversees the government-wide commitment to cut red tape and the regulatory burden by one-third within three years.

Deputy Minister's Office — a number of branches report directly to the Deputy Minister, including Investment Capital, British Columbia Film Commission, International Relations, and Corporate Investment and Location Service. Collectively, they position British Columbia as a preferred place for new and expanded investment. International Relations Branch plans and manages trade missions that provide the Premier and ministers with opportunities to increase British Columbia's profile in key markets. Investment Capital Branch manages tax policy programs to assist small and medium sized businesses throughout the province to gain access to equity capital for business start-up and expansion. Corporate Investment promotes international awareness of British Columbia's investment climate and provides potential investors with business location information and services.

In addition, the British Columbia Film Commission supports regional film commissions and coordinates marketing British Columbia to the film and television industry.

The Minister is also responsible for several Crown agencies, including:

British Columbia Securities Commission (BCSC)

The BCSC is an independent agency responsible for administering the Securities Act and regulating the securities market in British Columbia. BCSC supports the economic development of the province by maintaining a fair, competitive and efficient securities market that warrants public confidence.

Tourism British Columbia

Tourism British Columbia promotes the development and growth of the tourism industry by marketing, providing information and services to tourists, and enhancing the professionalism of the tourism industry.

Innovation and Science Council

The Innovation and Science Council promotes economic development and enhances the quality of life in British Columbia by encouraging the development and innovative application of science and advanced technology.

Vancouver Convention Centre Expansion Project

The Vancouver Convention Centre and Expansion Project was established to design and commission the development of new convention facilities at Canada Place, and so to enhance Vancouver's tourism and convention opportunities.

BC Pavilion Corporation

PavCo is mandated to generate economic benefits for the province, with its core activity being the rental of space within its facilities for conventions, trade and consumer shows, sporting and entertainment events.

The Minister is also responsible for the $15 million Northern Development Fund. The provincial government and Alcan each contributed $7.5 million to the fund, which is managed by the Nechako-Kitamaat Development Fund Society. The fund is intended to support sustainable economic activity in northern communities affected by the Kitimat-Kemano project, and by the creation of the Nechako Reservoir.

Ministry Vision, Mission and Values

1. Vision

The Ministry of Small Business and Economic Development envisions a vibrant economy where British Columbians have access to a diversity of job opportunities throughout the province, and where investors have confidence in the province's economic growth and prosperity.

2. Mission

The Ministry of Small Business and Economic Development promotes strategic leadership in government to create a strong, prosperous and diverse economy in all regions.

3. Core Values

The following values define the Ministry's management style and govern the way it makes decisions. They guide Ministry staff in interacting with each other, other government agencies, the private sector and other stakeholders.

The Ministry's Core Values play an important role in ensuring that targets identified in the 2003/04 Revised Service Plan are met. The Ministry's Executive is committed to ensuring that the Core Values are consistently applied and that they are reflected in the design and implementation of new programs and activities. Consideration of the Core Values ensures that programs and activities are aligned with and support the Ministry's goals and objectives.

One of the Ministry's goals is to improve British Columbia's competitiveness. To date, the Ministry has been successful in eliminating business subsidies that offer some companies an unfair advantage over others. In addition, the Ministry has been responsible for implementing the Agreement on Internal Trade (AIT). British Columbia is one of only two provinces to implement AIT, and is now widely acknowledged as the leader in pushing for the removal of internal trade barriers in Canada. The Ministry's mandate to coordinate the one-third reduction in regulations has seen the elimination of over 113,000 regulations between May 2001 and March 2004, further enhancing the province's reputation as a competitive investment location.

The Ministry strives for continuous improvement in the delivery of its services and always seeks to deliver its programs with greater efficiency. The deployment of the Invest BC website to provide a one-stop shop for business location information services was designed to get information to potential investors more efficiently. The launch of the independent Motor Dealer Council to oversee the motor dealer industry, and the launch of Leading Edge British Columbia to help build the domestic technology sector, are examples of developing new approaches to deliver services more efficiently.

The Ministry is a learning organization that periodically reviews its goals, objectives and targets to ensure programs and services continue to address the problems or conditions they were intended for. The Ministry is a results-based organization that has performance measures and targets at the corporate, division, branch and individual level. Quarterly reviews of achievements ensure that the Ministry and its staff are accountable for results.

The Ministry strives to ensure staff achieve the highest level of professionalism in their respective fields. Staff are encouraged to attend training courses to ensure their skills are current. Senior staff are encouraged to upgrade their leadership and project management skills.

The Ministry is responsive to the needs of its stakeholders. The Ministry has implemented a number of legislative changes in response to industry needs. Changes to the Small Business Venture Capital Act have increased the supply of venture capital for small business start-ups and expansion. Also, introduction of the Vancouver Tourism Levy Enabling Act will allow Tourism Vancouver to develop a new levy to support its marketing efforts, and implementation of the "on the ground" strategy allows regional staff to work closely with communities to identify and promote business opportunities.

Ministry Operating Context

The operating context is an assessment of the general economic operating environment that the Ministry and business community faced during 2003/04. It includes an assessment of the key sectors that the Ministry is responsible for, and describes some of the challenges and opportunities in 2003/04.

Business Sector Overview

In 2003, global foreign direct investment flows fell for the third consecutive year since 2000, reflecting continuing worldwide economic uncertainty. Competition among jurisdictions for this reduced volume of investment was intense.

KPMG's latest Competitive Alternatives report showed that despite the appreciation of the Canadian dollar, British Columbia continued to enjoy a significant cost advantage over the United States and other G-7 locations in value-added manufacturing, business services, and technology-based industries. British Columbia had some notable successes in attracting new foreign investment in 2003, including a 650-person contact centre announced by eBay.

Tourism

British Columbia's tourism industry faced a multitude of unforeseen events in 2003 including the outbreak of Severe Acute Respiratory Syndrome (SARS), the scare of "Mad Cow" disease, security concerns related to the war in Iraq and forest fires that resulted in a ban on backcountry recreation.

The result was about 600,000 fewer visitors coming to the province — 21.9 million in 2003 compared to 22.6 million in 2002 — and a decline in industry revenues from $9.2 billion to $8.9 billion.

On a more positive note, the announcement on July 2, 2003 that Vancouver and Whistler will host the 2010 Winter Olympic and Paralympic Winter Games is seen as an important development for tourism throughout British Columbia. As well, our province continues to be recognized as a world class destination:

• Vancouver Island voted top island in North America, and Victoria voted best city in the Americas (outside the United States.) — Conde Nast Traveler: Readers' Choice Awards.
• 2004 Undiscovered Golf Destination of the Year — International Association of Golf Tour Operators (as selected by the Golf Travel Writers' Association).

In the May meeting of the Canadian Ministers of Tourism Conference in Victoria, a ministerial task force was struck to develop a National Tourism Strategy, and to raise the profile of Canada's $55 billion tourism industry.

Within government, in July 2003 a Tourism Branch was established by merging the Ministry's tourism policy function with tourism functions of the Ministry of Sustainable Resource Management, with more of a focus on tourism as business than tourism as part of land-use planning. In November 2003, the Tourism Branch merged with the Small Business Branch.

Small Business

The 2003 Small Business Profile identified that there are approximately 355,200 small businesses in British Columbia — comprising almost 98 per cent of all British Columbia businesses. An estimated 952,900 people were employed by small businesses. This represents 58 per cent of all private sector jobs in the Province. Small businesses comprised 95 per cent of employers in high technology, the sector experiencing the fastest growth in new small businesses.

Among the provinces, British Columbia ranked second in Canada in terms of the proportion of Gross Domestic Product (30 per cent) attributed to the small business sector.

Industry surveys in 2003/04 indicated that British Columbia small and medium-sized businesses are expressing high levels of confidence and optimism about their business performance over the next 12 months. These confidence levels indicate a rebound from the previous year, when small business owners were affected by multiple shocks in the domestic and international economy.

Working closely with small business stakeholders and creating a competitive business environment through the removal of barriers to growth continue to drive the Ministry's small business agenda.

In 2003/04, the Ministry also worked closely with the Olympic Games Secretariat, creating strategies for maximizing 2010 business opportunities for small and medium-sized businesses in British Columbia. Implementation of these strategies will begin in 2004/05 and continue through to 2010.

Venture Capital

Since 2000, British Columbia has consistently received 10 per cent to 13 per cent of the venture capital invested in Canada. In each of the last three years — 2000 to 2003 — British Columbia received approximately $500 million, and the cumulative amount invested by the end of 2002 was $1.8 billion.

However, venture capital in British Columbia faces a number of challenges. For the past five years, "expansion" investments accounted for approximately 82 per cent of all venture capital transactions in British Columbia. Further, the "innovation financing gap" continues to increase with federal research spending increasing by $6 billion over the past five years, while early stage financing has declined by $1.3 billion. This statistic reflects the acute shortage of early-stage or "seed" capital for new venture start-ups. It is the "innovation financing gap" that the programs administered under the Small Business Venture Capital Act and the Employee Investment Act seek to address. Recent changes introduced to the Small Business Venture Capital Act have been embraced by the technology sector leading to a six-fold increase in program activity. Last year, 180 small businesses and venture capital corporations raised $80 million for early stage investment under the venture capital programs — an all time record. This trend continues in the current 2004-program year.

Regional economic development remains a priority. Currently, 98 per cent of all venture capital investment occurs within the boundaries of the Greater Vancouver Regional District and the Capital Regional District. The primary challenge is to balance the need for attractive shareholder returns with the start-up and expansion capital needs of emerging businesses in the Heartlands. Again, the changes to the Small Business Venture Capital Act have lead to a record increase of venture capital in the Heartlands with 30 per cent of the overall program activity taking place outside of the traditional locale of venture capital in the Lower Mainland.

Another challenge is to address the relative scarcity of experienced capital managers. However, recent amendments to the Small Business Venture Capital Act to enable eligible small businesses greater access to capital and the resultant dramatic upswing in venture capital company registrations (i.e., from 30 registrations in all of 2002/03 to 180 registrations in 2003/04, alone), combined with the launch of three new Venture Capital Corporations raising capital through prospectus offerings, have been hailed as positive steps towards increasing the supply of managed venture capital. This increased activity is expected to ultimately increase the pool of experienced capital managers in British Columbia. The Ministry will continue to explore other models such as the "fund of funds" model widely used in the United States as a means of attracting foreign and institutional capital to British Columbia.

Film and Television

In calendar 2003, a total of 169 motion picture productions resulted in $1.4 billion being spent in the province. This is an impressive figure representing a 19 per cent increase over the previous best year of 2000 where production spending achieved a value of $1.18 billion. Though expenditures in the industry were at an all-time high in 2003, the number of productions has dropped. A drop of 97 to 54 domestic film television projects accounted for a significant portion of the fall in numbers. However, the foreign film category remained strong. Five major foreign productions each spent over $100 million in British Columbia, with others coming close to this mark.

Production days for the first quarter of 2004 are down approximately 30 per cent over 2003 and production starts down approximately 20 per cent. As in 2002/03, the industry may be challenged to exceed one billion dollars in provincial spending in 2004/05.

Key Challenges

• Local Events: many local events caused key challenges this year, including: "Mad Cow" disease, SARS, forest fires and avian flu. These events, combined with on-going concerns about air travel, contributed to a weaker tourism market in 2003, with 600,000 fewer visitors to the province.
• Strengthening Canadian Dollar: the dollar rose 21 per cent last year and impacted some of British Columbia's export-dependent industries such as forestry and high-tech sectors.
• United States Security Restrictions: some export dependent industries have been negatively impacted by new United States anti-terrorism rules, and heightened security at borders.
• Forest Industry Challenges: the on-going softwood lumber dispute has caused economic challenges for British Columbia's forestry industry. The pine beetle has also spread at an alarming rate.

Key Opportunities

• 2010 Olympic and Paralympic Winter Games: the 2010 Winter Games will open up new opportunities for tourism through increased visitation and international profile. The Vancouver Organizing Committee will purchase almost $2 billion in goods and services to stage the games. In addition, infrastructure investments leading up to the games will create approximately 228,000 direct and indirect person years of employment and inject billions of dollars into the economy.
• Cost Advantages: British Columbia enjoys significant cost advantages over the United States and other G7 locations, according to a KPMG's latest Competitive Alternatives report, making the province a competitive location for new business and investment.
• Tourism and Resorts: British Columbia has some of the most temperate and dramatic topography in the Pacific Northwest offering significant investment opportunities for the further development and enhancement of British Columbia's tourism and all-season resort industries.
• Small Business Sector: British Columbia's small business sector comprises almost 98 per cent of British Columbia's businesses and is the primary source of job creation in the province. The development of the small business sector boosts local economies and provides diverse employment opportunities.
• Competitive Tax Environment: British Columbia offers one of the lowest business corporate income tax rates in the country and the threshold for this rate was increased to $300,000 in the 2003/04 budget. Personal income tax cuts averaging 25 per cent to provide the lowest rates of personal income tax in Canada on the first $60,000 of income.
• Human Resources: central to the Ministry reaching its objectives are its employees. The development of performance measures and targets at the corporate, division, branch and individual level support the Ministry as a results based organization.
• Deregulation: a commitment to cutting red-tape and eliminating unnecessary regulation makes British Columbia an increasingly desirable location for businesses.
• Eliminating Trade Barriers: British Columbia is pushing ahead with eliminating barriers to internal trade. The province is viewed as a national leader in this area.

Core Business Areas

A key goal of government is to establish a strong and vibrant provincial economy. In order to support this goal, the Ministry created four core business areas for the provision of programs and services:

1. Improving British Columbia's Investment Climate and Competitiveness;

2. Enhancing Economic Development Throughout British Columbia;

3. Marketing and Promoting British Columbia; and

4. Executive and Support Services.

Core Business Area 1: Improving British Columbia's Investment Climate and Competitiveness

British Columbia competes with other jurisdictions for investment dollars, trade and jobs. The Ministry delivers programs that help establish a business climate conducive to attracting investment and creating a prosperous economy. These include:

• Oversee the government-wide deregulation initiative to cut red tape to reduce the regulatory burden by one-third within three years and implement the Ministry's three year deregulation plan.
• Manage tax policy programs to assist small and medium sized businesses throughout the province to access equity capital for business startup and expansion.
• Complete strengths, weaknesses, opportunities and threats (SWOT) analyses of the province, and each region and sector in British Columbia. The purpose of the analyses is to provide ongoing strategic economic and business information on business sectors, regions and trends.
• Manage trade issues to remove barriers to inter-provincial and international trade.

Core Business Area 2: Enhancing Economic Development Throughout British Columbia

The government is committed to revitalizing the economy and creating greater economic diversification. The development of sector specific strategies are key to fostering investment and job creation throughout the province.

• Lead the development of plans to promote economic development and diversification, including the development of the Heartlands Economic Strategy;
• Remove barriers to key economic projects by implementing a project fast-track process to give eligible projects priority treatment;
• Manage the Western Economic Partnership Agreement to support economic development in the province. Manage the British Columbia/Canada Infrastructure Program to improve urban and rural local government infrastructure; and participate in board meetings of the Nechako-Kitamaat Development Fund Society to approve funding projects that enhance economic and community development in northwest British Columbia.
• Develop and implement a tourism development strategy and all-seasons resorts strategy for British Columbia.

Core Business Area 3: Marketing and Promoting British Columbia

For national and international investors, or for those wanting to visit the province, British Columbia offers tremendous opportunities. The primary role of Marketing and Investment is to facilitate trade and investment by:

• Leading the marketing and promotion of British Columbia as a film and television production location; and
• Planning and managing trade and investment missions that provide the Premier and Ministers with opportunities to profile British Columbia in key markets, and host incoming missions and trade delegations.

Core Business Area 4: Executive and Support Services

The primary role of this core business is to:

• Provide financial, human resources, records management and information systems support to the Ministry;
• Support the offices of the Minister, Deputy Minister, and Deputy Minister responsible for Deregulation and All-seasons Resorts Strategy; and
• Provide contributions to the British Columbia Pavilion Corporation and Vancouver Convention and Exhibition Centre.

Strategic Shifts and Significant Changes in Policy Direction

The Ministry refocused its activities between April and July 2003 resulting in significant changes to both the Ministry's operational structure, goals and objectives. These changes resulted in the development of a Revised Service Plan.

The table below identifies the shift in focus as the Revised Service Plan goals put greater emphasis on improving British Columbia's competitiveness relative to key competing jurisdictions and fostering economic growth in all regions and sectors. They also reflect an increased focus on marketing and promoting British Columbia's advantages and opportunities.

Two goals that appeared in the previous Service Plan have been removed from the current plan. The goal for innovation, science and technology transfer has been dropped. Instead, Leading Edge British Columbia was established and has assumed responsibility for science and technology issues. Also, the goal for efficient and effective management and regulation has been dropped as its corresponding objectives have either been incorporated within other goals or have been largely completed. For example, the objective of cutting regulations by one-third in three years is a competitiveness issue and is retained under the goal of improving our competitive position. The former objective relating to moving the Ministry to a shared services model is now complete as implementation of the government's shared services model is well underway in the Ministry of Management Services.

The Ministry's refocused mandate has also resulted in the establishment of new program areas:

• Ministry will lead the development and implementation of a tourism development strategy to maximize the advantages and expand the opportunities of British Columbia's second largest industry. As well, the Ministry has been tasked with facilitating the development and expansion of all-season resorts and resort municipalities.
• Ministry established a new project fast-track process. This will be a key tool for the Ministry to facilitate regional growth and diversification. Through this process, the Ministry will identify regional economic projects, make recommendations on projects selected for fast-track designation and make sure all approved projects proceed through government's regulatory approval processes in a timely fashion.

The realignment also resulted in the Ministry redeploying a number of functions that are no longer core to achieving the Ministry's mandate.

• Immigrant Investor program was consolidated in the Ministry of Community, Aboriginal and Women's Services.
• Following the Ministry's completion of the government-wide fee and licenses review, responsibilities for ongoing management of requests for fee changes has been transferred to the Ministry of Finance.
• The loan portfolio was transferred to the Ministry of Provincial Revenue.
• The youth employment strategy was transferred to the Ministry of Skills Development and Labour.

As a result of these program changes, the Ministry's FTE count is 122, including staff in six regional offices in Cranbrook, Kamloops, Nanaimo, Prince George, Smithers and Williams Lake. The Ministry transferred in 15 FTEs from the Ministry of Sustainable Resource Management to undertake tourism functions, including the development of the tourism strategy, and all seasons resort strategy.