March, 2008
Executive Summary
This report provides a comprehensive assessment of the impact of ECBC’s Federal Development Programs over the seven year fiscal period 2000/01 to 2006/07. Our impact assessment includes, by year, an economic impact (employment, income, gross domestic product), a fiscal impact (revenue as cost savings by level of government), a review of changing structure of the Cape Breton economy and a county level assessment.
Our approach to this assessment involved collecting data from secondary sources, conducting client interviews and a desktop evaluation of ECBC files. We estimated ECBC’s impacts using the Canmac economic impact model for Cape Breton.
Our report results show the significant role that ECBC plays in the Cape Breton economy. Over the period 2000/01 to 2006/07 ECBC provided grants and repayable loans to projects with eligible capital cost of $252.1 million. This leveraged additional project expenditures so that total expenditures over the period amounted to $929.1 million. Some of the major economic impacts associated with these expenditures are:
1. By the 2006/07 fiscal period, ECBC’s overall annual employment creation had grown to 7,496.4 (full-time equivalents). This total employment is comprised of:
• 5,059.5 (FTE) direct employment from short term and sustainable activity;
• 2,436.9 indirect and induced spinoff employment.
2. A total of $207.6 million of labour income was provided to Cape Breton by 2006/07.
3. Total GDP creation of $289.6 million by 2006/07.
Some of the major fiscal impacts are:
1. An increase of $31.9 million in Provincial Revenues by 2006/07.
2. Increase of $35.3 million in Federal Revenues by 2006/07.
3. Increase of $6.4 million in Municipal Revenues by 2006/07.
Our analysis shows a significant contribution to the Cape Breton economy for the Canadian taxpayer.
• For every dollar spent by the taxpayer, household income increased by $3.84.
• For every dollar spent by the taxpayer, fiscal revenues increased by $1.20.
The Cape Breton economy, as a direct result of ECBC development efforts is restructuring away from traditional industrial sectors to a more diversified base. With the closure of the coal industry and steel industry in the 1990s, the Cape Breton economy lost its key economic drivers. ECBC development efforts resulted in a restructuring of the economy:
• in 2000, ECBC clients had 60.3% of their sales off Island;
• in 2007, ECBC clients had 70.7% of their sales off Island;
• 62.7% of ECBC clients stated they would increase sales in new markets.
Based on key macro indicators we find that ECBC development efforts have maintained the Island economy at historic levels despite the closures of its two major industries.
Over the 2000-2007 period we find that:
• total employment grew from 50.6 thousand in 2000 to 55.0 thousand in 2007; and
• the unemployment rate decreased from 17.6 in 2000 to 13.1 in 2007.
Moving forward, survey results indicate that 89% of surveyed clients believe ECBC funding will be required into the future to achieve future growth. However, one can expect that development efforts will be more focused on finding quality jobs in the future rather than the quantity of jobs. Cape Breton, as well as other regions in the country will face a declining labour force that, all else being equal, will result in a dramatic lowering of unemployment rates in the future.