In the months since this year's federal election, many progressives and civil society organisations have been reassessing their assumptions, trying to work out what happened and how they got it so wrong. One thing that is clear is that whoever wants to form government must make and hold ground in regional and outer suburban Australia.
Last month, Labor's election review found that economically insecure, low-income voters in outer-metropolitan, provincial and rural Australia largely swung against the party on May 18. The importance of having a clear answer to questions of economic insecurity will be essential for any party hoping to win big in regional areas, whether it's Burnie, Bundaberg or Broome.
Jobs and the economy will be the big topic, but the real challenge will be offering a solution that busts the myth that the government is impotent when it comes to the economy. As progressives grapple for policy ideas that cut through and respond to demands from regional and outer suburban communities for economic development and employment opportunities, the practical and common-sense approach of community wealth building may be one option.
Community wealth building aims to develop a framework to develop workable solutions that tries to keep money in local communities. Instead of spending significantly more, it relies on being smarter with how money is spent, taking advantage of the benefits of local industries, which support local multiple businesses through their supply chains and employ workers that will spend back into the local economy. It sees the economy as circular and rejects the extractive model of economic development which sees money taken out of local communities, and encourages a race to the bottom on taxes, wages and conditions.
Preston's strategy relies on working with anchor institutions - large enterprises that have a presence in the community and are unlikely to leave such as hospitals or educational institutions. They are often large local employers and/or procurers of goods, as well as having control of large areas of land and/or fixed assets.
Drawing on this example, there are five principles of community wealth building which are promoting different models of ownership, including public sector insourcing, local government enterprises, co-operatives, community ownership and local private ownership to build wealth that stays in local communities; harnessing wealth that exists locally rather than trying to attract national or global investment; working with the biggest anchor institutions to stimulate the economy through decent wages and conditions; working with anchor institutions to use their procurement processes and decision making to create dense local supply chains; and using land and property in ways that generate wealth for local citizens rather than for private interests.
Preston Council both acted directly and worked with other large institutions in the community. After analysing how much was and could be spent locally on purchasing goods and developing a database of potential suppliers, the council encouraged the local hospital, university and police headquarters to procure goods and services locally whenever it could. While the amount spent by the participating anchor institutions on goods and services was cut by nearly 20 per cent due to central government-imposed austerity, they are now spending nearly four times as much locally as they did in 2013.
Importantly, the council practised what it preached by becoming a living wage employer, utilising a local firm to build a new covered market hall, refurbishing unused offices so they could be used as studios by artists, and focusing on local procurement by breaking up contracts to ensure local suppliers could compete against larger companies for the smaller parts of each project.
An antipodean version of community wealth building could see anchor institutions such as universities, local councils, hospitals, TAFEs, ports, airports, and state and federal agencies act in a similar fashion. They could focus on procuring locally to encourage local small and medium enterprises, ensure that decent wages are paid to both internal and externally contracted workers, and even provide space and resources to co-operatives or local start-ups.
It could provide an example of a more creative and local approach that people understand, regardless of any partisan allegiance. It's not just a box-ticking exercise, because it requires building relationships across communities and between local institutions. Most importantly, it provides a solution that is not divisive, is less complex and is easily explainable, making it less likely to be misrepresented.
What could that look like in practice? For the Commonwealth government, it would mean reversing the outsourcing of work done by Services Australia or the Australian Taxation Office to call centres that are run by multinational companies who artificially reduce profits and pay less than McDonald's.
It would mean keeping public sector work in-house (particularly in regional areas), where workers have secure jobs and are paid good wages, and redesigning procurement processes to enable local businesses to win contracts. Additionally, by directly investing in the public service, the wages that public service workers receive would be spent in local businesses, creating even more job opportunities.
None of this is radically new or foreign, and similar ideas are already being adopted in Australia. For example, the Gold Coast has a "buy local" procurement policy, the Victorian government has a social procurement framework, and Renew Newcastle's approach of enabling pop-ups in empty, underutilised spaces is producing a $14 return on every $4 invested in the project. What is lacking is the big picture approach, which would see a systematic rather than piecemeal approach, and could be embraced by all levels of government.
While it is not a silver bullet to the challenges of regional economic development, community wealth building might be one way to start pushing back against economic decision-making that is based on the narrow criteria of financial cost. Instead, this approach can help re-embed the community into discussions about the kind of economy, and society, that we want.
- Osmond Chiu is a research fellow at independent progressive think tank Per Capita.