Helicopter View

Helicopter View

18.3.2016 Promotion or Protection. Where should Councils stand? Weekender Column 102

Lock the gates! I am not talking about a form of anti-CSG protest but economic development. There are some in any given community (mainly existing businesses) that would be quite happy if their Council froze all existing business development and accepted no new developments. Unfortunately for those businesses, the last Council election proved beyond any shadow of a doubt that residents like to see new businesses open up in a city. Residents like the additional businesses as they offer choice, competition (which should drive down prices) and I also suspect there is an element of pride there where residents are impressed that a big-name business wants to be in their city.

So the tricky challenge for all Councils across the state is their position on promotion versus protection. Residents want to see new businesses so a Council may advertise the benefits of being in a particular city and they may even offer enticements (although I think that is fraught with danger). If a business is attracted to a city by the great work of a Council and the economic development arm, that surely is a positive outcome and a positive tick for that Council. Promotion is the winner!

Hold on one step though.

Where does that leave existing businesses? These businesses are already in a city and employing people and generally adding to the local economy. They may even be locally owned businesses where the profits are going to a local person who spends money in the city. What if the new business that is brought to the city is owned by people external to the city or is a public company? Suddenly all of the profits are being drained out of the local economy. Would protection work better in this scenario? What about an economic development arm that simply said that we already have a local business in a certain sector therefore we don’t need a certain new business? Block any business development that competes with existing businesses and see those businesses flourish! That sounds better – now protection is the winner.

Then we hit the first snag. A little problem of legality. Councils do not exist to determine the competitiveness of a business. That is for the entrepreneur to make decisions on how they want to risk their money and what business ideas they have. Council has to determine the legality of an application in relation to zoning and conforming to applicable building laws and the like but Councils are certainly not in the business of determining the success of a particular business in relation to market forces. Businesses have so many variables it would be dangerous for anyone to make predictions on the success – or otherwise – of any business. Items that are impossible to measure – such as the attitude and work ethic of a business owner – are often the items that determine the success of a business. Go a step further. What if a Councillor owned a small independent supermarket and a major supermarket chain wanted to open in a certain city. Council refused the application because the city already has a supermarket. Good luck arguing that the Council made the decision for the good of the existing businesses when a Councillor owned a business in that sector.

Now that we have determined that protectionism isn’t really an option, it comes down to the level of promotion. Should an economic development arm chase new businesses or just respond to enquiries? Should the red carpet be rolled out when a potential new business turns up or should Council staff throw a few brochures at the entrepreneur and tell them to ‘knock themselves out’?

I have two overall factors that I judge the success of a Council on. Population growth and economic growth. If a city is achieving both (and preferably above the State average) then a city is progressing. Can Council take credit for all of the growth in both factors? Obviously not – but I learnt a long time ago that enthusiasm covers up many gaps and a business that is enthusiastically welcomed by the staff – and Mayor – of a Council will look at the city much closer. There are often many cities that are line-ball and that enthusiasm can be enough to get a business over the line. Is that good for existing businesses in the city? Well I am a believer that competition is good and it helps to make everyone better. There is also the potential to grow the overall market with more visitors looking for that product or service coming to that city. The reality is that if a business thinks competitors are only those businesses with bricks and mortar in their same locality then they probably have a short lifespan anyway.

Tell me if you think Council has a role to play in protection or promotion or if Councils should stay completely out of economic development at mayor@dubbo.nsw.gov.au.