The Atlantic Canada Opportunities Agency is eliminating its funding to regional economic development groups in the Atlantic provinces, effective next year.
The federal agency has decided to discontinue annual operational funding to the regional development authorities in Nova Scotia, regional development boards in Newfoundland and Labrador, community economic development agencies in New Brunswick, and similar community-based organizations in Prince Edward Island, a memo to all organizations states.
"The Government of Canada's agenda is focused on strengthening business growth and eliminating overlap and duplication," the letter states.
The core funding that ACOA has provided to regional economic development organizations (REDOs) will instead be invested directly in small- and medium-sized businesses and communities in support of initiatives that deliver economic growth and job creation throughout the region.
“Given the length and nature of the funding relationship ACOA has had with REDOs in the Atlantic region, ACOA is providing all REDOs and their associations a one-year notice of this policy decision,” the memo states.
ACOA currently provides the lion's share of the core funding to zonal boards, while the respective provincial governments provide the difference.
Doug Motty, the chief executive officer of Enterprise Fredericton, declined to comment on the funding cut until he meets with the organization's board.
However, ACOA Minister Bernard Valcourt confirmed Tuesday in Fredericton that the funding for local economic development agencies will be eliminated as part of the $18 million being shaved from his department over three years.
Valcourt said that businesses can access ACOA funding directly, without needing to contact local agencies.
"So this is a layer of intervention that I believe adds no value to the end product, which is job creation and wealth creation, which are the objectives of those programs," he told CBC News.
"Atlantic entrepreneurs need to spend less time navigating through various organizations and more time pursuing new trade opportunities, developing competitive technologies, diversifying their products and services, and acquiring the tools and skills to realize productivity gains," Valcourt wrote in a letter addressed to the agencies' board members.
"I want to assure you that eliminating core funding to REDOs will not impact our government's commitment to building a strong, sustainable economy in Atlantic Canada," he wrote.
"Through ACOA, we will continue to take a direct and proactive approach to support the efforts of our businesses and our communities to innovate, attract investment, enhance growth, compete and exploit new opportunities for economic development and diversification."
ACOA will also continue to work with provincial governments, municipal leaders and economic partners to explore alternate, more effective ways to work together for the benefit of small and medium enterprises and communities across Atlantic Canada, Valcourt said.
'Significant' job losses
Newfoundland and Labrador Liberal MP Gerry Byrne criticized the the funding decision made by Valcourt.
"The federal government is abandoning every corner of Atlantic Canada," Byrne said in a statement.
"There will not only be significant job direct losses as a result of this decision, but as a former minister of state responsible for the Atlantic Canada Opportunities Agency, I can tell you with first-hand knowledge the serious, negative consequences to the province will be hard felt on many levels.”
For example, REDOs offer an advocacy service on behalf of the communities and regions they represent and encourage federal and provincial involvement in issues and opportunities within each zone, he said.
But Kevin Lacey, a spokesperson for the Canadian Taxpayers Federation, is applauding the move.
"All these regional development authorities just fall over one another. ACOA did the right thing here," he posted on Twitter.
The 2012-13 contribution agreement will contain a series of new terms to allow the REDOs to carry out a transition plan, the memo from ACOA states.
The ACOA funding will end on May 21, 2013.
It's unclear if the respective provincial governments will step up to provide the full funding.
But New Brunswick's economic development plan talks about "streamlining" its program and doesn't even mention the economic development agencies.