Two significant opportunities exist to build on the local goals and objectives of the small business sector to retain wealth in their local communities. These are the advancement of the “Think Local First” concepts now proving to be successful in many regions across the world and the related encouragement and support for those activities that lead to successful import replacement.

Just as it is appropriate to encourage Tasmanians to holiday at home it is equally relevant to encourage our community to consider the option of purchasing locally made goods and services.

The Tasmanian Small Business Council’s proposal to promote the concept of “think local first’ has three elements

• Community awareness, and promotion of the economic benefits of buying locally made or supplied goods and services
• A policy focus on local acquisition directed at government and local government
• Encouragement for local entrepreneurs to actively pursue opportunities for import replacement

These simple actions can multiply both the economic wealth and the social cohesion of communities many times over.

Such concepts are more about mindset than compulsion. Clearly no one should or could be required to pay more or to purchase inferior products. Nor should such concepts be seen as subverting international free trade agreements or the provisions of the Australian Constitution.

“Think local first” is, or can become a reflex habit when residents of any area understand the benefits of sourcing their needs from local suppliers as a first preference. It is about reciprocity where locals trade with each other, thus ensuring that the wherever possible the flow on from a purchase remains in the local community. The economic multiplier from such transactions can be up to four times greater than that which would arise from purchase of the same goods or services from non-local sources. Payments made to suppliers generally pass through three or four hands and in each case a little is retained by successive suppliers and their staff. If these people are themselves local then the flow-on value from the original purchase remains local and helps to fund further employment in the local community.

The UK-based New Economics Foundation has captured this idea clearly in the phrase “help stop the leaks” Clearly, keeping as much of this flow-on dollar value local will benefit the community. Similar concepts are being actively promoted in the USA by the Business Alliance for Local Living Economies (BALLE) an organisation headed by Mr. Michael Schuman who visited Tasmania early in 2009 and presented a strong array of empirical evidence during a number of well attended workshops on this topic.

There are also significant opportunities in a policy sense when government, local government or major corporations are seeking tenders for goods or services. There is a tendency to determine lowest cost on price alone without considering best value for the people or community which the purchasing authority represents. This is especially so where local government is spending funds sourced in its own community.

There is no great difficulty in requiring a potential supplier to estimate what proportion of the tender price would be spent in the customer’s community. Armed with this information it is then possible to make a best value for the community judgement when choosing a supplier. Such practices are becoming common as the effects of the Global Financial Crisis are causing people and governments to review past practices. Indeed it can be argued that failing to apply a best value for the community test is almost at the cusp of dereliction of duty.

Import replacement also provides opportunities to generate and retain wealth in local communities. While there is strong encouragement to holiday at home in the clear recognition that a local dollar spent locally is at least twice as valuable as the local dollar spent away, such concepts are rarely applied to other commercial opportunities. Add to this the benefits of reducing carbon miles and the concept gains even greater credence.

The Tasmanian Small Business Council believes that state and federal governments should be actively encouraging and supporting such opportunities.

Tasmanian Small Business Council

Updated Nov 2011