Local Government plays pivotal role in business growth

Local government in Australia is close enough to the everyday lives of business operators to understand their unique challenges.

This puts Local Government in the perfect position to build trust by investing in the social capital that creates the bonds and bridges to foster long-term economic success in our communities.

Over the past ten years, the role that local government plays in business engagement activities has changed from one of process and procedure regulator, to that of facilitator and enabler of business growth.

The City of Cockburn has been working in this space for a number of years. Some recent local successes include advocacy to help local business Striker receive a $3.4m grant to bring its manufacturing operations back to WA, granting $184,000+ economic development grants to nearly 50 Cockburn businesses since June 2021, and helping Australian Medical Association WA Training Services run Cockburn-based training courses.

It’s part of a contemporary local government approach to job creation and investment attraction to counter economic changes experienced by business post COVID.

Local Government, in introducing or increasing economic representation, is now an agent of change, acting as a conduit between policy and compliance, private enterprise, entrepreneurial aspirations and commercial outcomes.

Local government helps businesses build capacity and capability through collective action and large-scale, long-term investment, promoting innovation creativity, skills generation and investment attraction to support industry clusters.

Local government can help lower transaction costs by facilitating and advocating for industrial upgrades, regulatory reform and infrastructure improvements, benefitting businesses from micro sole traders to global organisations. This expedites economic exchanges, reduces risk and red tape, and encourages patronage of the private sector.

Governments, including local government, are the only entities with a mandate to promote community wellbeing and prosperity and has the economic clout to keep its economy on course. It’s in the best position to make and direct long term investments, leading to a fundamental transformation of the local economy.

The emphasis on local government economic development processes has historically focused on traditional attraction and retention incentives.

This has often been directed at specific businesses, which can be a zero-sum game with little or no broader effects for economic development. Local government has tended to support the same policies, adding incremental changes to pre-existing strategies, rather than a wholesale reconsideration of investment strategy. This is now changing.

Creative local governments are using boutique, targeted policies that provide a more focused approach that generates real and sustainable economic rewards for their individual communities.

Collective action and at times large-scale, long-term investment to address the fundamentals of a local economy is a key ingredient of building capability and capacity. This is increasingly acknowledged as a strategic focal point and motivator for local governments' increased involvement in economic development and investment attraction.

Viewed through a capacity-building lens, this approach serves the population at large, including the private sector. By promoting capacity, the public sector's contribution extends beyond improving efficiency and equality, it bolsters the foundation upon which sustained long-term growth and development can be achieved.

Where the private sector does not find projects lucrative enough to warrant its own investment in the short term, local government can step in to assist those activities until private sector is ready. Think innovation hubs, start-ups and grant programs – these build business capacity, capability and promote opportunities for sustainability, skills development and employment self-sufficiency.

Social capital generally refers to "the links, shared values and understandings in society that enable individuals and groups to trust each other and so work together" (OECD, 2007, p. 102). This concept has been linked to improve mental and physical wellbeing as well as economic wellbeing (Pierce et al., 2002; Suseno & Pinnington, 2018).

As demands increase on business leaders to work with both their internal and external stakeholders to improve performance outcomes, there is growing pressure for leaders at all levels, including government, to build social capital and trust within governance.

Local government has a crucial role in building trust with its employees and others in the community. Given a sharp decline in trust in government in recent years (OECD, 2013), it becomes imperative for local government to focus on building social capital to deliver positive outcomes and facilitate close cooperation between public and private sectors as well as with business communities (Lewis, 2010).

Reputation has often been ignored by the public sector, seen as the domain of private industry and global companies. Trust and reputation go hand-in-hand with economic development, playing a critical role in a number of reputation drivers, including business strategy, leadership, financial performance and products and services on offer.

Local government must not only focus on the industries that already exist within its boundaries but strategise to complement, diversify and attract investment and skilled workers who want to work close to home and make decisions based as much on the safety, security, amenity and opportunity that exists within the community, as the traditional employment drivers.

Everyone is a winner in a world where local government takes on this new role with vigour. The local economy thrives, the community is supported and the broader economy benefits.