Ministry Role and Services

Ministry Vision, Mission and Values

Vision

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

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.

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.

Introduction

Ministry Overview

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 B.C. through economic development, international marketing, investment attraction and trade development. Activities within the ministry are focused on building a competitive business environment that encourages the private sector to invest, generate opportunities and create jobs throughout B.C. The ministry also has responsibility for the B.C. Olympic and Paralympic Winter Games Secretariat. The Secretariat is the provincial agency responsible for overseeing B.C.'s Olympic and Paralympic financial commitments and ensuring B.C.'s vision for the 2010 Winter Games is achieved.

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.

In Fiscal year 2004/05 the responsibilities for the former Competitive Economic Policy Division merged to form an expanded Economic Development Division. The responsibility for marketing and investment was transferred from the Deputy Minister's office to the new Marketing, Investment and Trade Division. Remaining responsibilities for the Deputy Minister's Office and the Management Services Division were merged to form Executive and Support Services.

The ministry has 157 staff positions, including staff in six regions. The ministry's responsibilities are delivered through the four divisions listed below, the deregulation office and deputy minister's office:

Economic Development Division

The following two core business areas within this division are:

• Improving British Columbia's investment climate and competitiveness: This core business area focuses on undertaking analyses of economic conditions, managing policies and programs to assist small and medium-sized businesses, evaluating options for improving British Columbia's competitiveness, establishing B.C.'s positions and policies regarding domestic and international trade issues and participating in cross-government projects to improve the province's tax competitiveness. Approximately $3,891,000 and 47 full-time equivalent staff (FTE) were dedicated to this core business area.
• Enhancing economic development throughout British Columbia: This core business area focuses on identifying projects that support economic growth and diversification throughout the province, implementing the provincial Tourism Strategy, managing programs to improve urban and rural infrastructure, administering the Western Economic Partnership Agreement, the Community Development Initiative, the Olympic/Paralympic Live Sites Program and working with investors to facilitate economic development. Approximately $19,142,000 and 13 FTEs were dedicated to this core business area.

Marketing, Investment and Trade Division

• This core business area develops and executes the Province's marketing plan. The division manages programs and provides strategic advice on investment and economic issues working in partnership with the private sector, federal government and research institutions. Division operations include international relations, investment capital, corporate investment and location service and the British Columbia Film Commission, which collectively work to position British Columbia as a preferred place for new and expanded investment and for trade. Core activities include investment and trade promotion, seeking opportunities for innovation, science and technology transfer, providing strategic advice and business intelligence and monitoring the investment landscape within and outside British Columbia. Particular focus is being placed on leveraging the 2010 Olympic and Paralympic Winter Games opportunities and the Province's Asia Pacific Gateway Initiative. The division is also responsible for the ministry's financial contribution to Leading Edge B.C. Approximately $2,806,000 and 30 FTEs were dedicated to this core business area.

B.C. Olympic and Paralympic Winter Games Secretariat, Sport and Culture

• This core business area is led by the B.C. Olympic and Paralympic Winter Games Secretariat and focuses on overseeing British Columbia's Olympic and Paralympic financial commitments and ensuring that British Columbia's vision for the 2010 Winter Games is achieved. The secretariat also provides leadership to the sport branch and the cultural services branch who administer the Physical Fitness and Amateur Sports Fund and the Olympic Arts Fund, supporting the B.C. Arts Council and providing transfers in support of cultural industries, amateur sport groups and sport and recreation projects. Approximately $30,503,000 million and 36 FTEs were dedicated to this core business area.

Executive and Support Services

• This core business area consists of the management services division, the deputy minister's office and the minister's office and focuses on providing planning and legislative support to assist core business areas to achieve their goals and objectives. Approximately $86,672,000 (including $76,300,000 in transfers to the BC Pavilion Corporation and the Vancouver Convention Centre Expansion Project) and 31 FTEs were dedicated to this area.

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

• British Columbia Securities Commission (BCSC) he 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.
• British Columbia Innovation Council The recently established BC Innovation Council will foster province-wide economic development and enhance B.C.'s ability to compete on a global scale by providing one-stop access and support to high technology companies, educational institutions, technology industry awareness groups, federal science and technology agencies and university research labs.
• Vancouver Convention Centre Expansion Project The Vancouver Convention Centre Expansion Project was established to design and commission the development of new convention facilities at Canada Place. Additionally, it will serve to enhance Vancouver's tourism and convention opportunities.
• BC Pavilion Corporation PavCo is mandated to generate economic benefits for the province. Its core activity being the rental of space within its facilities for conventions, trade and consumer shows, as well as 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 supports sustainable economic activity in northern communities affected by the creation of the Nechako Reservoir.

Core Business Areas

A key goal of government is to establish a strong and vibrant provincial economy.

To support this goal, the ministry has created five core business areas:

1. Improving British Columbia's Investment Climate and Competitiveness

2. Marketing and Promoting British Columbia

3. Enhancing Economic Development throughout British Columbia

4. B.C. Olympic Games Secretariat, Sport and Culture

5. 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:

• Managing the government-wide regulatory reform initiative to cut red tape to reduce the regulatory burden and implement the ministry's three-year regulatory reform plan.
• Ensuring all regulations are developed according to 10 specific criteria that use a results-based regulatory design. This allows increased efficiencies, flexibility and innovation in compliance and enforcement of regulations.
• Delivering tax policy programs to assist small and medium-sized businesses throughout the province to access equity capital for business startup and expansion.
• Managing significant cross-government projects to enhance the province's competitiveness.
• Resolving trade issues to remove barriers to interprovincial and international trade.
• Evaluating options for improving B.C.'s tax competitiveness.
• Providing guidance to facilitation and information services for potential investors and small business startups and expansions.

Core Business Area 2: Enhancing Economic Development Throughout British Columbia

The government is committed to developing and implementing strategies to revitalize the economy and create greater economic diversification. The main strategies of the core business for enhancing economic development throughout British Columbia are:

• Drive the government-wide implementation of the Heartlands Economic Strategy.
• Remove barriers to key economic projects by providing guidance and facilitation services for investors.
• Work with local entrepreneurs and communities to identify and expedite new business investments in British Columbia's regions.
• Manage the Western Economic Partnership Agreement to support economic development in the province. Manage the British Columbia/Canada Infrastructure Program and the Community Development Initiative to improve urban and rural local government infrastructure. 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 provincial tourism development strategy for British Columbia.
• Promote and market small business startup and growth resources available to entrepreneurs across British Columbia through Small Business BC, also known as Canada/British Columbia Business Service Society (CBCBSS).
• Lead the development and implementation of the BC Ports Strategy and multi-modal action plan with key port system partners.

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 main strategies for the core business of marketing and promoting British Columbia are:

• Implementing marketing initiatives to provide the framework for communicating British Columbia's advantages and opportunities.
• Showcasing British Columbia at important national and international trade and industry events.
• Planning and managing trade missions that provide the Premier and ministers with opportunities to profile British Columbia in key priority markets.
• Identifying marketing opportunities for British Columbia businesses and assisting the private sector to create networks, alliances and partnerships.
• Leading the marketing and promotion of British Columbia as a location for business investment and film and television production.

Core Business Area 4: B.C. Olympic Games Secretariat, Sport and Culture

The B.C. Olympic Games Secretariat leads this core business area. The secretariat's role is to provide the strategic leadership, co-ordination and oversight to ensure the province meets its financial, infrastructure and service commitments for the 2010 Winter Games. The secretariat also has a key role in ensuring that the social, economic and environmental opportunities associated with hosting an Olympic event are identified early. The secretariat plays a role in ensuring these opportunities are realized before, during and after the 2010 Winter Games and evolve into lasting legacies for communities and businesses around the province.

The primary strategies for this core business area are:

• Maximize the potential economic benefits of hosting the 2010 Vancouver Olympic and Paralympic Winter Games.
• Provide liaison and appropriate oversight of the Province's financial commitment to the 2010 Winter Games.
• Facilitate the provision of regional and provincial level training and services to athletes.
• Develop and implement components of the active sports, active communities and organized sport action plan so every community in B.C. has the opportunity to receive benefits from the 2010 Winter Games.
• Develop and administer policies that improve the competitiveness of provincial cultural industries and encourage the development of a sustainable arts and culture sector.
• Provide policy, program and administrative support for the B.C. Arts Council to contribute to the effectiveness of the council in meetings its objectives.

Core Business Area 5: 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.
• Contribute to the British Columbia Pavilion Corporation, Vancouver Convention and Exhibition Centre, B.C. Innovation Council and Leading Edge B.C.

Ministry Operating Context

The operating context is an assessment of the general economic environment that the ministry and business community faced during 2004/05. It includes an assessment of the key sectors that the ministry is responsible for, and describes some of the challenges and opportunities in 2004/05.

Business Sector Overview

In 2004, global competition among jurisdictions for foreign direct investment remained intense. Regardless, British Columbia had some notable successes in attracting new foreign investment over the fiscal year, including attracting four new contact call centres and creating over 1,600 new jobs. 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.

The global restructuring of production, trade and investment, along with the development of integrated global supply chains, provides both challenges and opportunities for British Columbia producers of goods and services. China and India have cemented their positions as major economic powers, resulting in a significant re-alignment of international trade and investment and considerable opportunities for the province and Canada.

As Canada's Gateway to the Pacific Rim, British Columbia has an opportunity to benefit from the global shifts in trade and investment patterns. Improvements to transportation infrastructure will be required to meet the increasing sea and air traffic between West Coast ports and the important markets of the region.

B.C. companies face increasing global competition and a growing tendency of some trading partners to protect their producers through unjustified trade actions. British Columbia has taken a leading national role in pressing for the reform of international trade remedy rules, including reducing the unfair, protectionist application of countervailing duty and antidumping trade actions through the World Trade Organization and NAFTA.

With assertive leadership and a highly competitive economy, British Columbia is increasingly seen as an important player in ongoing efforts to improve and benefit from international trade and investment relationships. In addition to commercial relations, the approaching 2010 Winter Games will provide an important profile for the province and its attributes.

Tourism

British Columbia's tourism industry was able to regain some of the momentum it lost in 2003 because of forest fires, SARS, mad cow disease and security concerns. About 500,000 more visitors came to the province, 22.4 million in 2004 compared to 21.9 million in 2003. Tourism industry revenues increased during the period from $9.2 billion to $9.4 billion.

The provincial government has set a goal to double tourism revenues over the next ten years. To support this, government introduced the spirit of 2010 tourism strategy on May 3, 2004, which established a framework for tourism development. The objectives of the strategy are to:

• Increase the number of visitors to B.C., particularly those with high spending ability;
• Increase tourism investment;
• Increase the use of existing tourism resources; and
• Leverage tourism opportunities associated with the 2010 Olympic and Paralympic Winter Games.

Vancouver, Whistler and the provincial and federal governments continued preparations to attract and host tourists before, during and after the 2010 Winter Games. The ministry will work closely with tourism marketing bodies, the tourism industry and the Vancouver Organizing Committee to ensure British Columbia is able to take full advantage of the profile gained from hosting the 2010 Winter Games.

The Resort Task Force, appointed in 2003, concluded its work and developed an action plan to enhance B.C.'s competitive edge in resort development and lead to the creation and expansion of resorts.

The Council of Tourism Associations of British Columbia, with assistance from the ministry, designed an insurance program to help bring down the rising costs of insurance to its members.

British Columbia continues to receive favourable reviews from international travelers. Conde Nast Traveler magazine named Vancouver Island as the best North American island and Vancouver as the best city in the Americas.

The announcement that China will negotiate Approved Destination Status with Canada will result in improved access to the Chinese tourism market for British Columbia.

Small Business

In 2004, Statistics Canada identified approximately 359,600 small businesses (employing less than 50 workers) in B.C. make up 97 per cent of all businesses in the province. According to BC Stats, an estimated 972,000 people were employed by these small businesses. This represents 57 per cent of all private sector jobs in the province.

Industry surveys in 2004/05 indicated British Columbia's small and medium-sized businesses are expressing the highest levels of confidence of all the provinces about their business performance in the next 12 months. These confidence levels confirm a positive trend that began in 2003/04 and suggest businesses are recovering from the challenges of 2002/03.

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

In 2004/05, the ministry created strategies for maximizing 2010 business opportunities for small and medium-sized businesses in British Columbia. Implementation of these strategies began in 2004/05 and will continue through to 2010.

Venture Capital

Since 2000, British Columbia has consistently received 10 to 13 per cent of the venture capital invested in Canada. Over the last five years, British Columbia received an average of $305 million annually from investors, with $2.2 billion in venture capital under management by the end of 2004.

Venture capital in British Columbia still faces a number of challenges. While early-stage companies have seen an increased share of investment capital in the last three years, expansion investments still account for a significant per cent of all venture capital transactions in British Columbia. Further, the innovation financing gap continues to increase with federal research spending increasing by $11 billion since 1998, while early stage financing has declined by $1.9 billion since 2000. This statistic reflects the acute shortage of early-stage or "seed" capital for new venture startups. The programs administered under the Small Business Venture Capital Act and the Employee Investment Act seek to address the innovation financing gap. The changes introduced to the Small Business Venture Capital Act in 2003 assisting early-stage small businesses to raise capital directly from qualified investors, continue to be embraced by the technology sector resulting in a significant increase in program activity. Last year, 137 small businesses and venture capital corporations raised $67 million for early stage investment under the venture capital programs. The popularity of the program continues in the current 2005 program year.

Regional economic development remains a priority. Approximately 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 startup and expansion capital needs of emerging businesses in the regions. Again, the changes to the Small Business Venture Capital Act have lead to a record increase of venture capital in the regions with 34 per cent of the overall program activity taking place outside of the traditional locale of venture capital in the Lower Mainland.

Film and Television

In calendar 2004, a total of 194 motion picture productions resulted in approximately $801.2 million being spent in the province. This is a similar level of production to that of 2002, reinforcing that 2003 was an anomaly in terms of production value in British Columbia due to a few very large budget feature films. Though expenditures in the industry decreased in 2004, the number of productions increased in both domestic and foreign categories.

Production days for the first quarter of 2005 are up over the same period 2004 and production starts are up substantially when compared to the same period in 2004, which is an indication that the recently enhanced tax incentives have maintained and attracted film and television production to the province.

The competitiveness of the film industry remains a priority. The ministry has launched reviews of the provincial funding policy for regional film commissions, as well as of tax credits for the film industry as part of the government's strategy to improve this industry's ability to grow and compete globally.

Key Challenges

• Local Events: The economic impacts of mad-cow disease and avian flu continue to challenge the agriculture industry. However, despite ongoing concerns world-wide about air travel, visitor entries to Canada via B.C. borders were up 1.1 per cent in 2004, the first annual increase since 2000.
• Strong Canadian Dollar: The dollar rose 11 per cent in 2003 and a further eight per cent in 2004, forcing British Columbia's export-dependent industries to become even more competitive.
• Mountain Pine Beetle Infestation: British Columbia is currently experiencing the largest recorded mountain pine beetle outbreak in North America. This forest health epidemic is causing widespread mortality of lodgepole pine, the interior's most abundant commercial tree species.
• United States Security and Trade Restrictions: Some export dependent industries face market access risks from new and proposed United States anti-terrorism rules and heightened security at borders.
• Forest Industry Challenges: The ongoing softwood lumber dispute has caused economic challenges for British Columbia's forestry industry. The pulp and paper sector, particularly on the coast will continue to face competitive pressures from low-cost producers.

Key Opportunities

• 2010 Olympic and Paralympic Winter Games: The 2010 Winter Games will open up new opportunities for investment attraction, trade development and awareness building along with increases in tourism. The Vancouver Organizing Committee will purchase almost $2 billion in goods and services to stage the games. In addition, an independent consulting firm estimates the games combined with the Vancouver Convention and Exhibition Centre could create up to 244,000 direct/indirect/induced person years of employment and result in an increase of billions of dollars in GDP.
• British Columbia as a Gateway: This refers to expanding ports and improving transportation infrastructure. British Columbia has achieved strong national support for improving its infrastructure, expanding capacity, increasing competitiveness and marketing services.
• Asia Pacific emerging markets and trade: The Province has long advocated for greater national attention on the importance of Asia as a trade, investment and cultural partner. B.C.'s efforts have resulted in recent federal government commitments and actions focusing on the goal of expanding trade, investment relations and tourism opportunities with the Asia Pacific economies, which also strengthens British Columbia's role as Canada's gateway to Asia.
• Cost Advantages: British Columbia enjoys significant cost advantages over the United States and other G7 locations, according to KPMG's 2003/04 latest competitive alternatives report, indicating the province's continuing attractiveness as a location for new business and investment.
• Tourism and Resorts: British Columbia's tourism industry continues to grow. The completion of the BC Resort Strategy and Action Plan will result in significant investment opportunities for the further development and enhancement of British Columbia's tourism and all-season resort industries. Increased funding for tourism marketing will increase British Columbia's profile in the lead up to the 2010 Olympic and Paralympic Winter Games. The Spirit of 2010 Tourism Strategy lays out actions aimed at doubling British Columbia's tourism industry over the next 10 years.
• Small Business Sector: British Columbia's small business sector (establishments under 50 employees) continues to grow and comprises almost 97 per cent of British Columbia's businesses. The small business sector is a key agent of job creation in the province.
• Competitive Tax Environment: British Columbia offers one of the lowest general business corporate income tax rates and small business rates in the country at 13.5 per cent, and 4.5 per cent respectively. The personal income tax regime results in the lowest rate of personal income tax on the first $80,000 of income of all the Canadian provinces.
• Regulatory Reform and Deregulation: A commitment to smart regulation and eliminating unnecessary red tape is making British Columbia an increasingly desirable location for businesses.
• Eliminating Trade Barriers: British Columbia is pushing ahead with eliminating barriers to internal and international trade. The province is viewed as a national leader in this area.

Update on New Era Commitments

The following table identifies the government's priorities for which the ministry is responsible and describes the current status of each priority.