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August 12, 2011

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We need to think outside the box on local economic growth

An edited version of this column was published in The Province – August 12, 2011 

With stock markets teetering and the doom and gloom of recession once again on the horizon, financial analysts will tell you that local economies are headed to hell in a hand basket because they depend on every twitch and turn of the global marketplace.

I disagree. There’s a lot we can and should do to boost our local economies.

But it won’t be easy, given how badly senior levels of government responded to the 2008 meltdown. Instead of seeking innovative ways to stimulate growth, our federal and provincial leaders responded with lower wages and fewer benefits for working people, more regressive consumer taxes, and corporate tax breaks. And that was after the U.S. bank bailouts.

Meanwhile, municipal governments have found that the three main revenue streams they’ve come to rely on—user fees, property taxes and government grants—have become less reliable as large corporations challenge local governments’ ability to set taxes while demanding a cut in their obligation. Instead of playing ball like good corporate citizens, some of these multinationals download their burden to other taxpayers, as well as small- and medium-sized businesses in the community, with the added threat that if they don’t get their way, they’ll take their bats and balls and go home. (Former Newfoundland premier Danny Williams had an answer to this: "Don't let the door hit your arse on the way out.")

I have no problem with business making a buck. In fact, it’s one of the factors in a healthy economy. But small-to-medium-sized, community-based businesses seem to get less attention than their larger national or international counterparts. And all levels of government have become uncritical champions of the “bigger is better” way. There’s very little noise for the small independent who pays local taxes, hires other local businesses, has a direct connection to the community, and at the end of the day contributes three times more to the local economy than its “bigger is better” counterparts.

If we’re serious about generating new revenue streams to offset costs for local development, then we need to look seriously at how to generate consumer spending that stays in the community. We need to provide more opportunities for young entrepreneurs to stay in the communities where they live, so that they can develop innovative new products at home rather than joining the brain drain. This means retooling ourselves in small regional manufacturing, and even promoting the use of capital stock: for example, by using properties now owned by municipalities and/or regional districts to offer young entrepreneurs short-term leases to get businesses off the ground. To slow down the number of dollars that leave the community—or at least allow those small- and medium-sized businesses to get their fair share before the cash goes out—we should be giving local independents the opportunity to succeed.

Three years ago, I began a tour of B.C. communities to discuss some of these issues with civic politicians, school trustees, local chambers of commerce and boards of trade. Despite some of our obvious differences, I found a lot of common ground with politicians and local business leaders of all political stripes. We agreed on the importance of developing new revenue streams, of finding ways to keep money in the local economy and develop positive economic multipliers that create more capital than seems possible.

Since the tour, CUPE BC has developed a program that promotes local economic growth at an individual, consumer level. The Ten Percent Shift encourages citizens to shift 10 percent of their household spending towards locally-produced goods and services from locally-owned businesses. Building on the success that various jurisdictions have had with similar ideas, the Ten Percent Shift is a positive step in the right direction. A recent study in Kent County, Michigan (with a population about the size of Greater Vancouver’s) showed that a ten percent shift in consumer spending to local businesses would create 1,600 new jobs and grow the economy by more than $137 million.

I continue to believe that there’s a different path we can take, one that will have a more positive impact on our economy—and, more importantly, on our environment, on our sense of place, and on our children’s and grandchildren’s future.

Barry O’Neill is president of CUPE BC.