Local Government Magazine
Governance

Inclusive growth – Opening Pandora’s Box?

Peter McKinlay lays out the options now unfolding for local government and warns that other entities already see the opportunities for change.

The relative status quo of local government’s relationship with its communities has been coming under increasing challenge. The largely top-down delivery of a reasonably well understood range of local infrastructure, services and regulation – accompanied by a growing use of techniques derived from customer relationship management – is increasingly at odds with the potential benefits of taking a community governance approach.

This includes the now well-documented benefits of tapping into the knowledge and skills which communities have for finding and implementing place-based solutions to deal with their often-unique local circumstances.

Councils have long had what has effectively been a monopoly on the delivery of local government services, supported by a local tax base which only they can use. That may now be coming to an end.

The reasons? First, there’s an increasing recognition that dealing with our country’s growing problem of inequality means working in close partnership with communities. This is about to come into sharp focus with the investment now going into developing well-being indicators at a district and community level to inform local government’s new purpose of promoting community well-being.

Second, a wide range of stakeholders now have both the resource and the capability to play a major role at a community level. That is regardless of whether, or not, local government puts a priority on closer involvement with its communities.

Third, there’s a broader understanding that much of the increase in inequality has resulted from a public-sector policy focus on GDP per capita as the principal indicator of success. That has effectively ignored the distributional implications of how that growth has been achieved.

Times three

Taken together, these three reasons (and others, including the significance of the treaty partnership) are driving a search for other approaches which recognise the reality of the lived experience of inequality.

The most significant by far is the understanding that our country needs to shift to applying the practice of inclusive growth.

Different jurisdictions have different ways of describing inclusive growth. Perhaps the best short description is one adopted by the Scottish Government in 2015. That is: “growth that combines increases in prosperity with greater equity, creates opportunities for all and distributes the dividends of increased prosperity fairly”.

The challenge for local government is to see the connection between promoting community well-being and enabling inclusive growth.

Loud signal

In March this year around 100 delegates and presenters gathered at Wellington’s Te Wharewaka Tapere Function Centre for our country’s first inclusive growth summit. Participants came from local and central government, tangata whenua, economic development, the philanthropic sector, business and
major NGOs.

They had a common interest in understanding how their activities can contribute to inclusive growth. From a local government perspective, the broad range of representation was a loud signal that interest in building inclusive communities is very widespread.

It also suggested the likelihood that there will be significant initiatives in doing so whether, or not, local government is actively involved.

The summit was a joint initiative. The three parties were: the Royal Society for the Arts ANZ (the Australasian arm of a London-based think tank which has been undertaking a major programme of research on inclusive growth); Economic Development New Zealand; and the Local Government Think Tank.

The purpose was to consider the evolving policy and practice of inclusive growth, with the aim of establishing a New Zealand-based inclusive growth network.

The summit provided an excellent insight into both the potential for developing an inclusive growth agenda in this country and how that might happen. It began with sharing findings from current RSA research, and providing a snapshot of what is currently happening with inequality in this country.

A passionate presentation from economist Ganesh Nana left no doubts about the scale, immediacy and seriousness of the challenge.

Ed Cox, RSA’s London-based director of public services and communities, outlined RSA research and the organisation’s approach to thinking about the essential elements making up an inclusive growth strategy: livelihoods, wealth, voice and future. Community involvement is at the heart of delivering inclusive growth.

The RSA describes voice as “citizen participation in setting regional and local economic strategies, participatory budgeting, innovations in corporate governance, designing new models of social partnerships and innovation in delivery of
public services”.

How-to

Perhaps the greatest interest from participants was in practical examples of what can be done now to help promote inclusive growth. Two were showcased; social procurement, especially using an anchor institution approach, and participatory budgeting.

The latter is a real opportunity for public-sector entities, especially local government. US NGO the Participatory Budgeting Project has been leading support for participatory budgeting not just in the US but globally. It describes participatory budgeting as “a democratic process in which community members decide how to spend part of a public budget”. This, it says, gives “people real power over real money”.

The process involves some considerable expertise, including a focus on capability building to enable effective community involvement. It’s also an ideal way of putting a toe in the water of genuine community governance.

As well as being a theme of the summit itself, social procurement was also the subject of two post-conference workshops, one in Wellington and one in Auckland.

Presenter Matthew Baqueriza-Jackson is based in Manchester. For the past 12 or so years he has been advising on the development of the city’s social procurement strategy. He now works internationally including as an advisor to the European Union. Currently he is working with a group of European cities including Preston, in Lancashire, the UK, developing a comprehensive anchor institution approach. This offers great promise and attracted very strong interest at his presentations in New Zealand.

Typically, anchor institutions are public entities that have very strong connection to a particular place. Examples might include a local authority, hospital or an educational institution.

This understanding is shifting to include any major entity wanting to demonstrate a place-based commitment. In our country, the Akina Foundation is actively working with a number of businesses, implementing a social procurement strategy to support the creation of social enterprises.

Over in the UK, the city of Preston has built on its anchor institution strategy. It is moving beyond social procurement to a community wealth-building strategy which includes support for locally-based financial services and the encouragement of worker cooperatives.

It has done this in partnership with a number of local institutions with a common concern to ensure that their own expenditures and investment result in an improved quality of life across the city.

This is the real message for local government. Interest in promoting inclusive growth is widespread and is bringing together a number of quite disparate but very innovative sectors and stakeholders. Some examples make the point.

Datacom

Datacom is well known as a major business at the cutting-edge of providing technology-based solutions for central and local government, and for the business community. In local government it’s becoming a market leader in providing technology-based business solutions and in facilitating technology-enabled communication between councils and the people they serve utilising an innovative and user-friendly app.

Datacom recognises that although technology can be important in facilitating engagement, truly effective relationships between councils and their communities also rely on ongoing face-to-face relationship building and engagement.

There is an opportunity for Datacom to extend its engagement support so it covers both technology-based and face-to-face relationship-based approaches. One option would be for Datacom to support the development of a social enterprise specialising in relationship-based engagement with the two then partnering in providing services to councils and others wanting to work more closely with communities.

It’s conceivable that, over time, an initiative such as this could facilitate direct community governance positioning communities to take control of their own governance and deal with councils and others on their terms.

Banks, major professional consultancies and national retailers are other examples of businesses which could make a huge difference in the communities in which they operate by taking a social procurement approach whilst at the same time supporting their own business success.

Philanthropy

Another example comes from our country’s philanthropic sector. This is unique internationally in being dominated by major trusts and others whose capital came not from individual philanthropic donors, but as a consequence of public sector restructuring some 25 or 30 years ago of groups such as trustee savings banks, electric power boards and harbour boards.

One result has been the lack of the founder mandate typical of privately-established philanthropic trusts.

Collectively, these trusts hold billions of dollars in capital typically invested either through professionally-managed portfolios or in holding legacy assets. There are signs the sector is starting to realise the positive impact they could create in the communities they serve if they took an impact approach to investment focused on seeking inclusive growth outcomes.

To conclude, two things are clear. First, the case for the importance of inclusive growth is now widely accepted. Second, the initiative currently lies not with local government but with a number of different sectors and entities which understand the benefits of inclusive growth and have the flexibility and innovative capability to make it happen.

The challenge for local government is to see the connection between promoting community well-being and enabling inclusive growth and treat this as core business.

• To access presentations from the Inclusive Growth Summit, go to rsaanz.org/igsummit2019/

• A recent RSA report showcases eight global examples of inclusive growth initiatives. Go to bit.ly/RSA_InclusiveGrowth

• Peter McKinlay is director of the Local Government Think Tank. peter@mdl.co.nz


This article was first published in the May 2019 issue of NZ Local Government Magazine.

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