Insights

The right time for community wealth building reform in Australia

Posted May 05, 2020

SGS Economics and Planning Pat Fensham

SGS Principal & Partner Patrick Fensham recently completed a three-week knowledge development sabbatical with the Centre for Local Economic Strategies in the UK.

The purpose of this sabbatical was to understand the leading community wealth building work of the Centre for Local Economic Strategies (CLES), participate in working sessions with their partner councils, including Preston, Manchester, Gateshead, and Lewisham - and apply this knowledge to develop community wealth building in regional Australia.

In the last ten years or so community wealth building has been particularly embraced in the USA, UK and beyond by local authorities with responsibility for communities and sections of the population ‘left behind’ by the economy, with a legacy of high rates of disadvantage and unemployment, and with diminished local economic self-determination and capacity.

— Patrick Fensham

For many communities, the business as usual economic development option will no longer be tenable. The wait for external investment and new export activity to achieve economic salvation and address economic disadvantage may be a long one. While calls for a radical economic re-shaping community wealth building are intensifying, ‘baby-steps’, at least, are also possible and desirable.

The time, and opportunity, for community wealth building to be adopted and applied in Australia has come – particularly given the need to rebuild after the 2019-20 bushfires and COVID-19 related economic impacts.

The community wealth building initiatives discussed in my paper offer practical measures to achieve fairer, more environmentally sustainable and more democratic economic development. The current COVID-19 related economic downturn simply reinforces the need for more widespread adoption of such measures.

— Patrick Fensham

Steps towards a fairer and more sustainable economy

SGS Economics and Planning community wealth building1

A people-centred approach

Community wealth building is about creating a fairer and more sustainable economy. It is a people-centred approach to local economic development, which aims to place control into the hands of local people and redirect wealth back into local economies.

In their community wealth building work CLES focus on five linked pillars:

  1. socially virtuous procurement of goods and services by so-called ‘anchor institutions’ which are the major entities such as councils, hospitals and universities in towns, cities and regions
  2. ensuring the employment practices and wages paid by anchor institutions and their suppliers are fair and provide opportunities for disadvantaged workers and communities
  3. using the land and property of anchor institutions for positive community outcomes
  4. harnessing wealth and savings for local community and economic benefits
  5. encouraging plural and democratic models of business ownership to build wealth that stays in local communities.

The Preston Model

The ‘Preston Model’ has been a flagship for the community wealth building agenda and is now being implemented in regions and cities across the UK, led by CLES. Patrick Fensham reconnected with Preston Council leaders and procurement officers during his recent sabbatical, following a previous visit in March 2018.

My time with Preston Council was very fruitful. Among other things, we discussed the ways anchor institutions have significantly increased the amount of money spent on goods and services within the local economy to support local communities and small business development.

— Patrick Fensham

CLES & SGS: a natural alignment of values

SGS has a Memorandum of Understanding with CLES to work together for local and community economic transformation in Australia, applying the principles of community wealth building and related policy initiatives. The Memorandum is a natural alignment of values explains Neil McInroy Chief Executive for CLES:

The community wealth building movement grows across the world, and in post crisis economic recovery there is significant opportunity to develop community wealth building in Australia and the wider Asia Pacific. We are excited to have established a Memorandum of Understanding with SGS to work with CLES where possible. There is a natural alignment of values with a community-centred, social justice approach to local economic development.

— Neil McInroy, Chief Executive Centre for Local Economic Strategies

A new focus for regional economic development in Australia

SGS Economics and Planning community wealth building3

Authored by Patrick Fensham, the paper Community Wealth Building in Australia: A New Focus for Economic Development summarises the origins of community wealth building and the key pillars as defined by CLES. It identifies how community wealth building ‘fits’ given models and theories of regional development, with particular reference to anticipated critiques of the concept from neo-liberal economic perspectives. It further highlights how community wealth building represents practical action in favour of fairer economic outcomes, where the alternative accepts continued uneven development and socially and politically destructive disadvantage.

The paper proposes a community wealth building agenda for Australia based on the five pillars, plus complementary ideas or initiatives including:

  • guaranteeing minimum standards for community infrastructure and services in recognition of the essential role of functioning communities in successful economic development
  • increased devolution of policy making powers and responsibilities to local communities
  • vesting ownership of land development rights with the community as a source of value to fund investment in beneficial community infrastructure.

The need for this reform agenda is even more urgently required following the 2019-20 bushfires and the economic devastation caused by the response to the COVID 19 global pandemic.

— Patrick Fensham

Download the paper

SGS Economics and Planning community wealth building paper
An important thank you

The City of Greater Bendigo is interested in the community wealth building agenda and applying it more comprehensively for the benefit of residents and the economy in Central Victoria. The Council provided minor funding to support Patrick’s sabbatical research and establish connections for a closer relationship between Greater Bendigo and UK partners.

The SGS partner sabbatical explained

SGS Economics and Planning invests in self-funded research and development. SGS partners are committed to their professional development and that of the wider partner group. The SGS Partner Sabbatical Program supports partners to pursue non-project based professional and knowledge development which aligns with SGS' values, including research into urban issues in an international setting and presenting at international conferences.