The BC government has been heavily promoting its “jobs plan” over the last week on television, radio and on the internet. On twitter they invited people to come on line to give their ideas about what could be done to promote more jobs in communities.
But there is one idea to promote jobs in communities we won’t be hearing about from the province. It is an idea that is creating thousands of jobs in communities across the United States. The idea is simple. Local governments should support small businesses in their communities by giving them an advantage when bidding on government work.
Here in BC, thanks to interprovincial trade agreements, it is forbidden for local governments and school boards to give a price advantage to local businesses. And if Canada signs the Canada European Union Trade Agreement (CETA) with support from BC, the situation will get worse.
One example of how a local preference program works is in the City of Los Angeles. The City instructed its lawyers to create a bylaw that would give local businesses an eight percent advantage when it came to bidding on projects. According to a study by Charles Swenson of the University Of Southern California Marshall School Of Business, this move by itself will create 10,000 jobs locally.
According to news reports:
When Mayor Antonio Villaraigosa unveiled the proposed ordinance in September, he said the city “spends approximately 84 percent of its procurement dollars with businesses that are located outside of the city of Los Angeles; therefore, out of $1 billion allocated for governmental contracts, only $180 million goes back to local businesses.”
The City also allows a bidding advantage for local businesses that are certified as minority, women, disabled veteran or disadvantaged-owned business.
This idea is not unique to Los Angeles. In the US dozens of cities and states have local preference programs for local business. According to the Institute for Local Self Reliance:
A 2007 survey by the National Association of State Purchasing Officials, found that 26 states have preferences for in-state bidders or products grown or manufactured in-state. These policies may apply broadly or only to certain types of goods and services or in certain situations. They may be absolute preferences or, more commonly, percentage preferences (i.e., if a bid from a local business is within a certain percentage of the lowest non-local bid, usually 5 percent but as high as 15 percent, then the contract goes to the local business).
Ironically, the government has acknowledged the value of local purchasing at the same time it has prevented local governments from doing it. In December 2006 the then Minister for Small Business Rick Thorpe expressed the idea eloquently in the Fort Nelson News when he said:
I’d like all British Columbians to consider the direct, positive impact you can have, on your neighbours, your local businesses, and your community’s growth – simply by supporting local small businesses. By shopping at home, you show that you value your friends and neighbours and the investment they’ve made to keep your community vibrant and growing. Most retailers I know are interested in meeting your needs and earning your business. However, one retailer summed up his dilemma this way:
“I’d love to expand my selection – but if it’s not going to leave the shelves, it just becomes a liability for my business.”
When you buy from sellers outside British Columbia, you just help retailers elsewhere to keep their stores well-stocked at the expense of local businesses. Shopping at home also supports local hospitals, schools and important public services. Provincial sales tax revenues totalled almost $4.2 billion last year. When you choose to shop locally and pay the provincial sales tax on your purchases, you know you’re helping to pay for services of importance to patients, students, seniors, people in need and, in fact, all British Columbians. I’d like all British Columbians to consider the direct, positive impact you can have, on your neighbours, your local businesses, and your community’s growth – simply by supporting local small businesses. By shopping at home, you show that you value your friends and neighbours and the investment they’ve made to keep your community vibrant and growing.
If this is such a good idea for individuals you would think it would be a good idea for our local governments. However, BC’s Trade Investment and Mobility Agreement and the New West Partnership Trade agreement specifically forbid measures that provide for any “preferential treatment of a province’s people, investments and goods, except for justified actual cost-of-service differences.”
Canada is now in the process of negotiating an international agreement with the European Union and one thing the Europeans are pushing hard for is access to local government procurement. Because local governments fall under provincial jurisdiction, however, the provinces get a say in this. But British Columbia refuses to say what they are putting on the table. If past agreements are any example, BC will give up far more than anyone else will.
What are the arguments against this? Some people argue that taxes will be higher but the investment in the community will create far more economic value than it will take out in taxes. The government argues we need to give up these rights to get access to trade deals, but the US has managed both to get trade deals and to leave their states and cities with the right to local procurement policies. And yes there are no communities in BC the size of Los Angeles but surely the program could work at a regional or provincial level and in many less urban communities as well.
We now have a situation where American cities and states can give preferential treatment to their local businesses and we cannot. Soon, under CETA, the Europeans may have access to our local procurement.
Perhaps we should be asking the premier just how that builds jobs in British Columbia.
In the United States Michael Shuman has written extensively on buy local campaigns.
Here in BC this website discusses the value of shifting some of our consumer spending to local businesses.