Big idea No. 2: anchor institutions

This is part two of a series on local economic development in the Cowichan region.

Our public institutions – from municipal governments and health authorities to school districts and universities – play a critical but under-appreciated role in the economy at both a national and a local level.

In Canada, municipal governments and school districts spend $65 billion annually on purchasing goods and services, accounting for 5.4 per cent of gross domestic product.

In the Cowichan region, public institutions such as Island Health, Vancouver Island University, School District 79, the Cowichan Valley Regional District and the various municipalities are among our largest employers and annually spend millions in public funds on procurement. In 2013 alone, the CVRD spent $62.9-million on supplier payments – with the lion’s share spent on purchasing goods and services from private companies.

Across Canada a growing number of public institutions – commonly referred to as "anchor institutions," as they are unlikely to ever leave the community – are adopting local purchasing policies, often part of larger efforts to support community economic development, local food production and ethical purchasing. For example, the District of Kitimat and the City of Nelson have introduced purchasing policies that give preference to local suppliers, while the City of Toronto and the District of Saanich have adjusted their procurement processes to encourage local food production.

Do such policies benefit local economies? The evidence shows that when public institutions procure a greater percentage of goods and services from businesses close to home, more money is kept circulating in the local economy, more local jobs are created, and more tax revenue is collected.

A recent study by UBC’s Sauder School of Business, the Columbia Institute and LOCO BC examined the economic impacts of local purchasing by comparing a B.C. owned office supply company with two of its multinational competitors. The study found that the local company re-circulated 33 per cent of its revenue directly to residents and businesses in B.C., compared to between 17 per cent to 19 per cent for its multinational competitors.

In the United States, public and non-profit anchor institutions are driving community economic development in regions hurt by the loss of manufacturing jobs and growing poverty. Their tools include purchasing more of their goods and services from local small and medium-sized businesses, hiring a greater percentage of their workforce from the local population, providing workplace training to the most vulnerable members of the community, and leveraging real estate development to encourage affordable housing.

The City of Cleveland stands out as one of the more interesting examples, where a coalition of philanthropic foundations, community organizations and anchor institutions launched an initiative to create good jobs for low-income neighbourhoods in the surrounding area. The initiative involves the Cleveland University Hospital, Case Western Reserve University and the Cleveland Clinic, which collectively spend several billion dollars annually on purchasing goods and services while employing 33,000 people.

A recent evaluation found the Cleveland initiative is succeeding on a number of fronts, including increasing employment and training opportunities for low-income residents, supporting the start-up of new businesses and co-operatives, and increasing institutional purchasing from local suppliers.

In other U.S. cities such as Philadelphia and Boston, anchor institutions are leading similar initiatives to support community economic development.

Could our anchor institutions in the Cowichan region – including our local governments, health authority, school district and university – play a greater role in community economic development? Could the CVRD take the lead in bringing together these institutions to buy more of their goods and services and to hire more of their workforce from within the community? Could the CVRD set the tone by adopting its own "buy local" policy?

Even in this era of restrictive international and inter-provincial trade agreements, local governments and anchor institutions have a wide variety of tools at their disposal to increase local purchasing and to support businesses close to home.

Why not start with a task force with representatives from the CVRD, Island Health, School District 79, VIU and our local credit unions to investigate what we could learn from other models in cities such as Cleveland and what policies could be implemented at a local level?

Our anchor institutions are already among the most important economic actors in the Cowichan region. But by working together and introducing the right policies, they could do even more to create employment opportunities for regular working people and the most disadvantaged members of the community, support local farmers and businesses, and build a more resilient economy.

Rob Douglas is a councillor for the Municipality of North Cowichan and director for the CVRD. Roger Hart is a member of the CVRD’s Economic Development and Environment Commissions. The views expressed here are their own and do not necessarily reflect those of the CVRD, its Commissions or the Municipality of North Cowichan.