Economic Development Model Guidelines

Final Report

June 2015

Prepared for

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Contents

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List of tables

Table 1 –Interaction of economic development within councils ............... 10

Table 2 – Example assessment of regional capital ...................................... 14

List of figures

Figure 1 – RDA regions and local government (Source Regional

Development Australia) ........................................................................... 7

Figure 2 - Economic strategic planning model ............................................... 8

Figure 3 - 7 Capitals model ............................................................................ 13

Figure 4 – Example EDS development framework ...................................... 18

Figure 5 – Place based economic development integration ...................... 19

Figure 6 - Model guidelines summary .......................................................... 26

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Contact details

SED Advisory (Warrnambool) Wattle Range Council

118 Koroit Street, Warrnambool VIC 3280 Civic Centre, George Street, (PO Box 27) Millicent SA 5280

T: +61 3 5561 5746 T: +61 8 8733 0900

F: +61 3 5561 3111 F: +61 8 8733 4999

E: admin@sedadvisory.com E: council@wattlerange.sa.gov.au

W: www.sedadvisory.com W: www.wattlerange.sa.gov.au

Document version

Report Stage Authors Date Reviewers Review Date

Version 0.1 Fiona Davey 9 June 2015 Darren Barber 7 July 2015

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Purpose of the guidelines

The Economic Development Model Guidelines have been developed to

provide local councils, business, communities and other partners who

contribute to and can influence economic development, with a set of

principles and processes to support and enhance the delivery of strategic

economic thinking, approaches and services.

It outlines the key aims and processes of economic development from a “best

practice” viewpoint and identifies the elements that make for good economic

development services, functions and management for local government.

The guide has been developed through a partnership between the Local

Government Association of South Australia and Wattle Range Council for

distribution and use by local governments in South Australia.

1.1 Local Government Association of South Australia

The Local Government Association of South Australia (LGASA) is the peak

representative body for councils in South Australia. Its mission is to provide

leadership to councils for the benefit of the South Australian community.

On behalf of its members, LGASA endeavours to provide leadership, representation

and lobbying at all levels of government to advocate on behalf of councils and to

support improved services and capacity of local governments and the communities

they serve.

1.2 One size, one approach will not fit all

The fourth largest of the state and territories of Australia, South Australia has

borders with Western Australia, Northern Territory, Queensland, New South Wales

and Victoria. This geographic profile presents strategic challenges, opportunities

and ecoonmic management differences for local government and governing bodies.

Ranging from metro councils in Adelaide to rural and remote communities, the

nature of economic development planning, delivery and management will have

varying focus and priorities depending on the location and the characteristics of

communtiies and regions.

Issues such as transport and logistics, population change, availability of natural

resources, access to markets and supply chains, climate and productive land will all

affect the nature of economic planning and delivery that needs to occur. For

example metro councils may be experiencing population growth, have a diverse

economy and access to good infrastructure and assets and offer a range of culture

and recreation activities.

In more rural or remote areas the issues could be dispersed residents, long travel

distances to population centres, variable infrastructure and service provision and a

high importance on natural resources or agriculture for economic activity. For some

of these rural and remote communities cross border relationships and cross border

infrastructure planning and management would also almost certainly have a higher

priority than metro councils.

Furthermore, the differences in time zones across Australia and therefore trading

hours and business management processes, also presents some economic

challenge for the region.

Therefore, when considering the nature, type and focus of economic development

delivery, it is important to remember that the priorities, issues and approach will be

as diverse as the communities and regions themselves.

However, the process and principles of delivering effective economic development

have a common basis and can be applied in local government and communities

regardless of location, size and economic characteristics.

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South Australia at a glance

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Figure 1 – RDA regions and local government (Source Regional Development Australia)

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What is economic development?

The primary function of economic development is to support the

prosperity and economic opportunities for business and communities.

It requires a range of policy, strategy and actions that reflect and build

upon the economic, social and environmental assets that contribute to

economic growth for business, localities and regions.

Although the terms “economic development” and “economic growth” can be

interchangeable, there are key differences between them.

Economic development is generally the policy, strategy and supporting actions set

by governments and communities to enhance economic and social prosperity.

Economic growth is the measure of economic activity such as output, productivity,

employment and community prosperity that results from economic strategy.

3.1 Aims of economic development

Economic development is the process by which a community or region

can achieve structured and managed sustainable economic growth and

improved prosperity for business and residents.

Successful economic development activities are achieved by understanding our

economic environment, our people and the assets and resources that will support

existing businesses and attract new investment and enterprises.

It needs a holistic approach that fosters local and regional partnerships and which

is based on a view of a preferred economic future given the strengths and

advantages of our regions and recognising the challenges that exist.

3.2 Economic planning model

Successful economic development needs to have a structured basis and a clear set

of defined objectives for a community or region. A common error is to make the

definition of economic development too broad making investment in economic

assets and resources unfocussed and unwieldy. There are however five strategic

focus areas that should be common to effective economic development thinking:

1. Skills and knowledge (investment in our people);

2. Entrepreneur and innovation networks (investment in business development);

3. Quality, connected places (investment in economic assets and our places);

4. Effective branding (investment in marketing our advantages and

opportunities); and

5. Civic collaboration (investment in leadership).

We can therefore use this as a strategy planning model as shown in Figure 2.

Figure 2 - Economic strategic planning model

Innovation and

Entrepreneurs (Networks

and business development)

Civic

Collaboration

(Leadership)

Brand and positioning

(Marketing)

Skills / knowledge

21st century talent (People)

Liveable, connected places, assets

and infrastructure (Places)

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Economic regions

Conventional thinking about regions from an economic perspective has

largely focussed upon geographic boundaries.

An emerging approach is to consider more openly networked economic

regions and the growing importance of collaboration and the regional

connections with markets across geographic borders.

This is a growing adoption of a revised concept of regionalism and the importance

of developing an economic regional approach that fosters collaborative and

competitive advantages. Recognising that markets and supply chains ignore our

imposed boundaries, this economic rather than geographic-based approach

responds to the notion that business, products and markets are based on dynamic

regional, national and global inward and outward supply chains.

4.1 Thinking beyond our region

Why is this important?

Because it means we need to think beyond our region given that industry and

business are not economically fixed to their physical location. Markets and supply

chains will and do exist outside their region or location whether this be nationally

and increasingly within global markets. The same is true for businesses located

outside a region but who are trading into markets within a region.

Economic regionalism focuses on the structure and nature of economic and sector

frameworks. Access to markets through physical assets such as roads, rail and

ports, mobile human capital through skills and expertise and connection through

technologies that move and share information means that economic development

strategy and application needs to:

a) Identify and understand what exists both within and external to a region;

b) Recognise how and where a region’s economy and its businesses interact

outside its boundaries; and

c) Develop strategy and partnerships that build on broader thinking around

economic regions and value chains.

4.2 Successful regional thinking

A well established and tried and tested example of adopting an economic regional

approach can be taken from the success of regional co-operation in tourism

development and marketing.

The role and importance of tourism to an economy will vary from location and from

region to region. The economic importance of tourism is influenced by the size of

the tourism industry, the maturity of tourism product and the nature of economic

diversity in the region. In addition the level of regional collaboration and the

importance that stakeholders give to regional tourism opportunities and

partnerships is also a critical success factor for this sector.

For the majority of regions and local economies whilst individually tourism

businesses can be small, when viewed as an economic collective, they become

economically important.

Tourists and visitors are not concerned with municipal boundaries but rather plan

trips and visits based on the destination attributes and product that is marketed

and promoted.

A regional approach to tourism with local government and tourism operators

working to collectively identify, understand and promote the attractions and

features of tourism across borders, provides greater value to the regions and

businesses and helps develop the destination ‘points of difference’ that are so

important within a highly competitive and diverse tourism and visitor market.

It can therefore be argued, that adopting economic regionalism approaches to other

sectors and investment, would reap similar benefits.

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The role of local government

The basic premise of economic development is to enhance the standard

of living and economic health of communities and regions. Sustainable

economic activity is built upon the assets and capital of a locality and

region and the competitive (unique) and comparative (relative) advantages

and opportunities.

The purpose of economic development within a council is to create the environment

that supports economic activity and build capacity within businesses, networks and

communities to flourish. It should not be the role of councils to be hands on in

terms of business planning, management and operations. Rather they should

guide, advise and inform business owners and investors on local and regional

opportunities, key assets and supply chains and link businesses to sources of

business support, funding and information.

5.1 The importance of partnerships

Economic development is not the sole responsibility of councils. It requires the

participation and support of businesses, agencies, community members and

interest groups. It is largely achieved through the development and management

of these partnerships and networks and through advocacy with all levels of

government on the priority projects and initiatives for a region and locality.

5.2 Services and functions

Economic development functions can reside within a dedicated unit or business

area of council. Given the breadth of services that are involved however, these

functions will almost certainly link with many other areas of council business.

Table 1 provides some examples of these interactions within councils.

The roles of local government in economic development are varied. Economic

development needs to be viewed as an integral and integrated part of council

functions. It should be responsive to the priorities and expectations of community

and the organisation and align to the capacity and resources that can or should be

made available.

Elected members and civic representatives have a strategic leadership role in

economic development through guiding the strategic direction, building regional

partnerships, hosting delegations, communicating strategy to communities and

partners and being the public face of the organisation or region.

As can be seen from Table 1, economic development services and activity can

involve nearly all sections within local government organisations. Although some

organisations will have dedicated economic development resources, understanding

the input and contribution these other business areas make is important.

Table 1 –Interaction of economic development within councils

Council business

units

Example links with economic development

Strategic and

statutory planning

Council Community Plan

Land use planning and policy

Investment and development management

Strategic projects including infrastructure

Economic

development

Business retention and attraction

Investment need identification and investment

attraction

Infrastructure assessments and development

Facilitating industry clusters and regional collaboration

Research, analysis, strategy and policy.

Marketing and promotion of live, work and invest.

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Council business

units Example links with economic development

Community

development

Township and community action plans

Small business and community services

Local networks and organisations

Volunteer networks and capacity

Sport, recreation,

tourism and events

Asset and facility development

Events and tourism

Product and business development

Destination planning and management

Marketing and promotion of a region as a place to

visit

Environmental and

public health

Permits and compliance including public health issues

Waste systems and management

Impacts on natural resources and environment

Assets and building

services

Use of or impacts on Council assets and infrastructure

Services and infrastructure planning

Development advisory services

Development and building permits and compliance

Marketing,

communication and

media

Locality and investment promotion and advocacy

Community participation and awareness raising

Investment and new resident attraction

5.3 Key focus areas

Local governments should and can play a key role in facilitating and stimulating

economic development. In order to be effective, economic development activities

need to have a high focus on five key strategic areas.

Understanding the economic environment

Local and regional policy and

planning

Investment attraction and

facilitation

Supporting business

development

Marketing and promoting

opportunities and

advantages

Although the financial capacity to deliver economic development services will vary

from council to council, organisations that invest in economic development

resources are more likely to realise sustainable and well informed economic

opportunities for their communities and businesses.

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Understanding our economic environment

Economic development practitioners need to have a solid understanding

of the composition, structure, products, services, and trends of their local

and regional economy, population, workforce and assets.

This provides the basis upon which local policy and strategy can be

developed and allows for the identification of investment that will

complement existing economic activities and address infrastructure and

resource gaps that may constrain or inhibit economic growth

and prosperity.

6.1 Data collection

This process will include the collation and analysis of historical and forecast trends

and scenarios. There are a range of data sources that can be used to develop this

economic and social profile of a region. These include:

ABS Census data that provides information from national to state to regional

to local levels covering population, industry, workforce, income, households

and business data;

Industry and economic trend data including Australian Bureau of Agricultural

and Resource Economics and Sciences, Australian Industry Group, REMPlan,

Tourism Research Australia, Bureau of Infrastructure, Transport and Regional

Economics, Department of Employment and a host of government and agency

information sources;

State, regional and local government data and information including

Department of State Development, Department of Planning, Transport and

Infrastructure, South Australian Tourism Commission, Department of Primary

Industries and Regions, Regional Development Australia, LGASA, South

Australian Centre for Economic Studies, Department for Education and Child

Development, Department of Health and Ageing and Department of

Environment, Water and Natural Resources.

Regional and rural areas will often be served by specialist or regionally

focussed agencies and organisations that are important sources of

information advice and provide connection to primarily metro-based

government departments and corporate agencies.

Using local sources of data and information such as planning and building

approvals, rates databases, funding approvals and local business knowledge.

It is important to remember that much of this data will provide indicators

of what is currently happening and what could potentially happen.

Although data and statistics can be highly informative and allow for

assessment and comparison of trends in economic activity, demographic

profiles and key issues that may affect economic strategy and outcomes,

they are only part of the story.

6.2 The social license

Of increasing importance is also understanding the social and economic values and

characteristics of communities and regions. Sometimes called the social license, it is

essential to understand what residents and businesses value about a region and

what development or investment may or may not be welcomed and supported.

These values may include environmental, landscape, sustainability, cultural, historic,

and political. They will also include the anticipated or perceived benefits that may

(or may not) accrue back to the community and the value the community apply to

those benefits.

In effect, the social license can be an important factor in identifying and determining

what’s ‘acceptable’ to a community in relation to a new business, investment,

industry change or major infrastructure projects. Understanding the nature of what

a community values is an important part of economic development planning and

communication.

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6.3 Working with our communities

Local councils themselves and their communities and businesses are a wealth of

local information given the range of data and information that councils collect and

monitor (such as planning and building permits, rates, use of Council assets) and

the knowledge of local communities about their communities and businesses about

their business environment.

Therefore gathering information as part of the analysis of the economic

environment should not just focus on quantitative data and analysis but be

supported and complemented by direct discussion and engagement with local

communities and business.

This will not only help to build those important relationships with local residents and

constituents but also enable discussion and sharing of information and ideas that

can be highly valuable to developing collaborative economic priorities.

6.4 Competitive strengths and comparative advantage

There are a range of models and approaches that can be used to collate and present

this information. One process that has gained traction in strategic economic and

development thinking is the 7 Capitals model of collecting and sorting information

under seven key resource areas (capital) that exist within regions or communities

as shown in Figure 3.

Figure 3 - 7 Capitals model

This model allows for the identification of the primary existing strategic assets under

the 7 themes and how they contribute, constrain or detract from economic

opportunity – normally described as competitive strengths and comparative

advantages.

This process goes some way to the early development responses and actions to

leverage opportunities and mitigate or minimise weaknesses or threats in an

economic context. Using this model can then be used to further inform a SWOT or

similar analysis of the economic environment.

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6.5 Identifying our strategic assets

What should be considered when assessing the capital (strategic assets and

capabilities) that exist within a region?

Table 2 – Example assessment of regional capital

Capital What should be considered?

Natural capital

National and regional parks, landscapes and open

space

Productive agricultural land

Location and nature of natural resources

Climatic and weather patterns and water and bio

security

Cultural capital

Arts and culture, tourism and events

Indigenous and historical

Patterns and profile of migration

Community values and liveability characteristics

Human and social

capital

Population growth patterns and demographic

profiles

Education attainment and skills access

Community participation and volunteering

Regional health and wellbeing including

disadvantage

Economic capital

Business and community networks

Leadership and entrepreneurship

Industry clusters and supply chains

Innovation and research and development

Political capital

Local and regional leadership

Government and agency relationships and

partnerships

Access to political leadership

Industry and business networks

Capital What should be considered?

Financial capital

Levels and nature business and industry

investment

Attraction of government and other external

funding

Financing and investment capacity

Land and property values

Built capital

Road, rail, port and transports assets

Community services assets including education and

health

Telecommunications, water and other utilities

Land availability and land use

Industrial, commercial and retail assets and

precincts

6.6 Monitoring change factors

Although data analysis is important to understand what is trending with a

community or region, the real power of data is to prompt questions and thinking

around what the data means for economic, social and infrastructure planning. What

questions should we be asking from our data and information analysis?

How will the changes in the size or profile of the population impact on the

nature and type of future service provision for our communities?

Where will we need to direct investment in infrastructure and services to

support business and residents?

What will our land supply, demand and use look like given changes to

economic and industry activity?

What type of workforce will we need for our business and industry and what

skills will we need?

What opportunities exist to facilitate industry clusters, supply chain and

increase value-add within our economy?

How should we support small business and entrepreneurs?

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The data collected and analysed can provide very useful information for potential

investors and businesses and enable local governments and other agencies to

report on and monitor economic activity and the broad impacts of the effectiveness

of local or regional strategy and economic development projects on the local and

regional economy.

6.7 What makes the economy work?

Business and industry do not operate in isolation from their markets, communities

and supply chains. Gaining an understanding of the nature of business structures,

networks and clusters in region will help to directly inform:

The profile of the economy based on the importance (scale and output) of

specific sectors and how these are changing over time;

Competitive advantages such as industry clusters and business collaboration

that can be leveraged and what drives our economy;

Supply chain connections that support local economic opportunities including

import replacement of goods and services by existing or new enterprises;

Opportunities for increasing the value of goods and services produced within

a region before they are exported or sold – value chain maximisation – through

innovation and research and development;

Specialisations within the workforce, skills gaps and the level of innovation

within businesses;

Improving regional partnerships and looking outside of our borders;

Location of markets including value, access and how to improve export

performance of companies through export development planning.

6.8 The importance of strategic assets

Analysis of the economic, social, infrastructure and natural assets and features of a

region provides a context for setting future economic opportunities. Although these

will primarily have an investment objective, there should also be a focus on building

local and regional capacity and support efficient use of existing resources.

When considering the term investment it is useful to broaden an understanding of

the nature of the assets that can be invested in and/or created. Assets relate to the

7 capital types identified previously and include such things as the role and function

of advocacy, planning, partnerships and social capital.

Assets represent the critical and strategic advantages of a region. In order to achieve

economic outcomes it is necessary to ensure actions and investments are

consistent, focussed and coordinated over short and longer terms.

The importance of working with neighbouring councils and linking like

regions is a key component to the success of economic prosperity.

Regional leadership should be encouraged to act in unison and have a shared

understanding of the economic direction adopted. For this to occur, two concepts

are essential:

1. Alignment - leaders must be aligned, have common understanding, act and

think cooperatively and collaboratively to address the competitive challenges

and opportunities within their communities and regions; and

2. Linking and leveraging - this ensures investments are coordinated,

integrated and maximise economic outcomes and opportunities. Linking is

undertaken through formal and informal partnerships, whereas leveraging

assets requires making investment commitments that mutually reinforce each

other. Such investments have the potential to generate higher economic

returns than investments made in an uncoordinated manner.

Therefore to maximise economic outcomes for a region:

As a priority, focus on the assets and capital the region already has at its

disposal to deliver economic outcomes; and

Where investment is made in these asset classes ensure there is alignment,

leveraging and linking of and between them.

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6.9 Sustainable communities

Sustainable communities are built around a long term approach to broad based

community well-being, which encompasses aspects of economic, social and

environmental considerations. This includes maintaining a quality of life by

responding to internal and external factors that impact on communities such as

demographic or economic change. Community sustainability builds upon the

strengths and characteristics of a community given its location, services,

participation rates in community life and its external connections.

Recognising community features that have commonalities and which contribute to

successful communities need to be considered. These include:

Provision of social and economic infrastructure that can support liveable and

cohesive communities and partnering with communities on priorities and

funding strategies;

Fostering an environment that supports local business and services that fulfil

local and wider regional and external needs;

Being responsive to changing populations within communities by future

planning and future proofing services and assets that sustainably meet the

needs of residents; and

Providing pragmatic opportunities for residents to access services including

health, education and recreation given that some populations will be small

and/or widely dispersed in rural areas.

Attention therefore should be given to strengths of local commitment and the social

networks and community capital that can provide the basis upon which to develop

community self-sufficiency and economic opportunity.

6.10 The value of data and knowledge

In summary, an environmental analysis should provide:

Sufficient information, evidence and rigour to help identify and

describe the competitive strengths and comparative advantages of a

region including overall trends and rates of growth.

Key indicators of economic activity including the value of the economy

by sector and industry indicators such as level of exports, Gross

Regional Product and output.

Type and sources of natural resources, availability and productivity of

agricultural land, business land supply and supporting infrastructure

Tourism and visitation data including daytrip and overnight visitation,

average spend and stay and yield.

Population and demographic profiling such as average annual growth

rates, changes in age structures and migration patterns.

Workforce trends including employment by industry, occupations,

skills and education attainment and the use of place of work data that

provides a robust and accurate indication of changes in local

employment by industry and business.

Nature and types of business by business size, business entry and exits

and number of businesses per sector.

The linkages between businesses, supply chains and markets.

The existence (or gaps) in economic and social infrastructure that

support economic growth or that may require investment or

development facilitation.

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Local and regional policy and planning

Successful economic development needs to consider and as much as

possible, align to policy and strategy that drives and influences economic

activity. This will include the economic and fiscal agendas set by Federal,

State, regional and local governments and partner agencies

and organisations.

Understanding the policy environment should be undertaken as part of establishing

the principles and function of local economic development activities. It will help to

identify what is impacting on economic activity today, and as importantly, what will

influence and affect future growth and economic opportunities.

The ‘push and pull’ of policy settings may not always be even or always one way. But

when developing local economic strategy and functions, there needs to be a strong

account taken of primary policy settings as this will help with:

Setting robust economic direction;

Be more likely to attract government support to economic projects in the areas

of investment, marketing, economic planning and addressing local or regional

economic disadvantage; and

Create a more integrated response and better utilisation of resources across

government and partner organisations.

7.1 Federal and State policy

There are a number of Federal and State policy frameworks that inform and

influence regional development activity and investment priorities for governments.

These include:

Regional strategic growth or development plans;

Industry and sector development plans and priorities;

Regional and national infrastructure projects;

State and local land use planning policy;

Education, workforce and skills development policy;

Free trade agreements and international relations;

Transport, infrastructure, food and fire, health and tourism economic policy at

local, state and federal levels; and

Funding and investment programs and their stated criteria and anticipated

outcomes and benefits.

The services and knowledge that can be provided to local government from state

government departments, regional agencies, utility authorities, environmental

agencies and RDA offices should be harnessed by economic development officers.

This is particularly important when larger private or public sector investments are

being investigated and where State government and RDA support and endorsement

may lead to successful co-funding and realisation of investment opportunities.

7.2 Local policy and strategy

The development of local policy and strategy needs to reflect and consider broader

State and Federal policy but also the needs and priorities of local communities. The

Council Community Plan is largely developed and informed through consultation

and engagement with communities and the incorporation of local projects and

priorities. Other departments within council may have development specific

strategic plans, master plans or asset development plans that contribute to the

strategic and financial direction of the organisation.

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7.3 Economic development strategy

Economic development strategy (EDS) should be a cornerstone of local government

policy and strategy. The purpose of an EDS is to provide a development and

investment framework that responds to key economic and social challenges and

opportunities for a locality and the wider region.

An EDS should concentrate on existing strengths to drive economic opportunities.

It should be a high level strategy that informs local and regional initiatives and

supports investment and business development that fosters local prosperity and

regional partnerships.

It also needs to recognise that there are economic, social and political conditions

that local government and communities can have some influence over (where they

can effect change) and other conditions or circumstances that may require

mitigation or risk limitation strategies. The strategy should also provide a tangible

link from local economic conditions and priorities through to regional, state and

national policy settings.

Figure 4 – Example EDS development framework

An EDS should help to stimulate business and investment activity and

provide a clear plan of action that responds to the current and future

needs of a community.

It should articulate strategic priority areas that build on the region’s

competitive advantages and that integrate and add value to existing

strategic assets. Action and outcomes need to be practical, measurable

and identify the partnerships and roles needed to support its longer term

implementation and promotion.

7.4 Economic land use planning

Ensuring that there is sufficient and appropriate supply of greenfield and existing

development land and premises to support economic activity is key to facilitating

economic opportunity. The integration of land use planning and economic

development is increasingly seen as a prerequisite for stimulating economic growth.

The development of asset masterplans, community and township precinct plans,

auditing supply of industrial, commercial and residential land and ensuring that

growth and land use is well planned and serviced will provide governments and

investors with:

Greater clarity of where development can occur;

Overview and mapping of where our infrastructure is situated and what

infrastructure we need;

Mapping of utilities including capacity and shortfall;

The services and assets needed to support that development; and

Greater surety of an acceptable and informed process for economic growth

and investment outcomes.

4. Detailed EDS

Strategic investment themes Investment and action

3. Develop EDS Framework

Principles Scope of EDS

2. Analysis

7 Capitals Economic drivers

1. Data gathering

Research Consultations

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Place-based strategy

Sometimes described as ‘place-based’ economic development, integrating land use

planning with economic strategy has a number of benefits including:

Ensuring economic thinking from ‘ideas through to delivery’;

Identifying local infrastructure gaps and requirements;

Enabling people to tap into an economic and development vision when maybe

they haven’t been part of developing it and simplifying vision and strategies;

Identifying and supporting local place based advocates; and

Leveraging funding through engagement and fostering a commitment to

integrated delivery for projects that may have multiple outcomes.

The key components of this place-based approach are presented in Figure 5.

Figure 5 – Place based economic development integration

Investment attraction and facilitation

Successful investment attraction is based upon knowing and understanding

what economic and infrastructure opportunities and gaps exist.

Investment can take many forms including:

Government funding and investment in assets, infrastructure, strategy

development and business development support;

Investment by existing or new business and industries in new

enterprises, plant, assets, workforce or infrastructure; and

Community investment in local projects and initiatives and support

community sustainability and liveability.

Given the financial constraints of government and the competitive nature of both

the public and private sector investment environment, it is critical that local

government and communities work together to identify local and regional priorities

and present robust and evidenced business cases to support investment.

It should also be remembered that existing businesses are an integral part of the

investment business foundation in terms of providing the case for competitive

strengths and that these existing businesses may also benefit from the

establishment of new enterprises in a region.

8.1 Investment logic

The process of establishing the investment need and imperative can appear

complex, but applying an investment logic process can deliver a number of benefits

and enhanced outcomes including:

Place based economic

development

Economic and business

development

Strategic land use planning

Social capital and human

services

Implementation and governance

Employment, skills and training

Investment and infrastructure

Regional stakeholders

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Establishing the rationale for the investment based on underlying and critical

economic, social and/or environmental issues or opportunities;

Identifying the benefits that will be delivered by the investment to the

community and more importantly to the investor;

Describing the strategic options that would best deliver the benefits; and

Presenting the strategic and/or asset investment options.

This process is best captured under an investment feasibility and business case that

can clearly demonstrate the process for working towards the investment solution,

the anticipated benefits including:

Job creation and local skills development;

Improved infrastructure including upgrades to existing and development of

new assets;

Better access to services and improved service delivery and efficiencies;

Greater local and regional collaboration and investment partnerships; and

Business and market development opportunities including strengthening or

enhancing the value chain.

8.2 Investment attraction business case

Preparation of an investment attraction business case has become

embedded into the process of securing public and private sector

investment. Local governments, regions and states are having to compete

for funding and investment and therefore need to have determined the

opportunities, established the economic environment and built the

partnerships to support investment attraction.

The investment business can be seen as:

a) The rationale and roadmap for enterprise and business attraction;

b) An opportunity to identify value-add businesses and products to support an

investment or enterprise;

c) Demonstrated and evidenced argument for government funding; and

d) Part of the resources that locations and regions use to take to market for

attracting investment into their region.

Whilst the scale and breadth of a business case will vary depending on the scale and

nature of anticipated investment opportunity they should clearly present the

following information to help aid investment decisions by private and public

investors:

Overall description and nature of the investment opportunity or issue to be

addressed;

Details of the benefits to the investor including supporting evidence of need

and/or benefit and critical investment interdependencies;

Inclusion of investment planning such as masterplans, feasibility studies,

options reports and other background analysis and research;

Description of the economic, social and environmental issues, impacts and

considerations in relation to the investment over the short to longer term;

Financial modelling, investment costings or forecast economic impact

(benefits) statements;

Implementation and project management plans including any ongoing project

or investment governance arrangements;

Details of any specific incentives, investment facilitation services and the

inclusion of investment support partners; and

Any procurement, reporting, monitoring or further key strategic work required

to progress the investment. This may include items such as additional funding,

securing planning permits, land acquisition or stages of development.

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8.3 Investment readiness

For governments and the private sector, the provision of the investment case when

presented by evidence of a supportive investment environment and ongoing

investment facilitation services not only better positions a community or region for

investment outcomes, but also helps to identify where further work may be

required to address investment or development gaps.

It therefore provides an assessment of the investment readiness of a region or

locality and what needs to be done to become investment ready.

The business case can also be a very useful component of community engagement

and discussion regarding potential investment strategies and opportunities and

form the basis of investment attraction marketing and promotion campaigns.

8.4 International investment

Opportunities to build trade, business and investment links with overseas

economies is becoming of greater importance for local governments and regional

leaders. The demand for foods, quality produce, services and products by growing

populations create significant opportunities for regions to work together on export

and inward investment activities.

Free trade agreements and economic international relations through partnership

agreements and memoranda of understanding between governments, institutions

and enterprises provide strategic processes for building international economic

links. The approach should be based on:

Areas of commonality including existing or potential for collaboration and

industry clusters;

Understanding of local and regional economic supply and demand;

Relationships that may already exist; and

The export and trade objectives of regional businesses.

Opportunities with China, India and South East Asia are being actively pursued by

Federal, State and local governments. Organisations and communities who want to

be active within this economic realm will find that there is a range of support and

trade facilitation services available to them.

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Local business retention and development

A key role of economic development is to support the retention and

growth of existing business and enterprises. They represent the

foundation of economic opportunity within any locality and region and will

have invested significant resources into business development.

The nature of support that local government and other agencies can provide to

existing businesses will depend on:

The resources available to support business development activities;

The strength of existing business networks and the role and capabilities of

those networks to facilitate self-managed business development;

The partnerships and relationships that local government has with its business

community and how well businesses understand the role that local

government can (or should) play in business development; and

Understanding the primary or critical issues affecting business performance

within a community or region.

Local government should not take on nor can have responsibility for the success or

failure of a particular business or sector. It can however, work with its business

community to identify what would assist them to be successful and where possible

address critical issues that may be constraining business activity.

9.1 What do we mean by ‘business’

The are a number of categorisations for business and industry that can be used to

research, analyse and understand an economy. Industry sectors under the ANZSIC

codes provide a breakdown of the 19 key sectors and multiple sub-sectors.

Business can also be described by the size of enterprise, generally based on the

nubmer of employees including:

Micro – employing less than 5 including non-employing businesses;

Small business employing 5-19 people;

Medium businesses employing 20-199 employees; and

Large businesses empoying +200 people.

A range of other definitions can applied to business activity and business types

including primary producers, service industries, exporters, knowledge industries,

tourism, not-for-profits, leisure industries, start-ups, owner-operators, sole traders,

contractors, corporations and multinationals.

It can be seen that there is no one definition that will appropriately describe the

make-up of businesses and therefore an economy. However, when assessing the

nature of an economy or region, it is important to know what information we want

and why and therefore what data we need to gather.

9.2 Home-based businesses

The South Australian government estimate that there are over 60,000 home-based

business operating in SA. Ranging from accountants, cabinet makers, market

gardens, mechanics, hairdressers, garden services to graphic designers, this largely

unseen but important part of an economy can be difficult to analyse or quantify and

awareness and understanding of these businesses is generally based on local

knowledge.

With the uptake of technology and changes in workforce tenure to greater

casualization and contract work, the growth of home business enterprises will

probably continue. There are opportunities for local government to tap into this

market for economic development activities.

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Including these businesses in overall marketing of the region, encouraging

businesses to move into start-up or commercial premises and capturing the value

(output, services and products) of their business to the local economy may take

time, but should be considered within economic development services.

Whilst most home business have minimal management or oversight issues, there

are occasions when the nature, scale or compliance of these businesses can become

problematic. Local government do not want to be seen to constrain economic and

entrepreneurial activity. So the development of appropriate policies and support

services provided to home business should be considered as an important function

of economic development.

9.3 Social enterprise

Social enterprise are generally defined as organisations that 1

Are led by an economic, social, cultural, or environmental mission consistent with

a public or community benefit;

Trade as businesses to fulfil their mission;

Derive a substantial portion of their income from trade; and

Reinvest the majority of their profit/surplus in the fulfilment of their mission.

Particularly in rural and remote areas or communities with a level of economic

disadvantage and challenge, the importance of social enterprise should be not be

forgotten. Social enterprises can be the fledgling start for future business and

provide important employment and work experience opportunities in communities.

These employment opportunities have often involved young people, migrants, and

community members or marginalised or disadvantaged in some way.

1 http://www.socialtraders.com.au/learn/dsp-default.cfm?loadref=209

With over 20,000 social enterprises estimated to be operating in Australia, the

contribution they make to local communities and economies should form part of

business development activities for local government. This can include funding and

governance facilitation, identification of premises or support partners and

promotion of their services or products.

9.4 What can local government do?

There are a range of roles for local government in supporting business development

in their communities. This can include:

Development of an economic development strategy that sets an agreed vision

and direction for economic activity that can help inform businesses about

economic opportunities and how they can participate;

Providing support and guidance to local business and trader groups and

advocate for projects on their behalf;

Be a source of current information on economic conditions, trends,

government business support and professional development programs and

trade and export development opportunities;

Ensuring that business owners and operators are able to participate and have

input in local development plans and economic strategy to build mutual

understanding of the challenges and opportunities for economic growth;

Utilise the skills and knowledge of business and industry when developing

investment attraction strategies and identifying areas where local businesses

can add value and support an investment or where a new investment can add

value to them;

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Working with businesses and industry on identifying and advocating for the

infrastructure and assets that are needed to sustain and grow businesses;

Fostering partnerships and relationships between businesses, industry

clusters, education and training providers and government departments and

agencies;

Reducing where possible the impediments to business growth such as

unnecessary red tape, timely management in processing permits and

regulatory responsibilities and being responsive to business inquiries; and

Developing marketing and promotion collateral and initiatives that highlight

the services, products and capabilities of their businesses.

9.5 How local policy can help?

Development of local policies for business development by local government can

be a positive way of establishing and managing mutual obligations and expectations

between business and local government. Policies may include:

Operation of home-based businesses;

Percentage of local supply for contracts and services;

Provision of grants for businesses development, events and community

projects;

Retail policies including signage, street furniture and road closures;

Health and regulation policy for food premises and vendors;

Business attraction incentives; and

Special fees, charges or levies.

Local government themselves can also be an important ‘customer’ of local

businesses. Inviting local companies to be part of preferred supplier panels through

an equitable and transparent tender or submission process, incorporating local

supply assessments into procurement processes and being active advocates for buy

local initiatives can be important and successful ways for local governments to be

seen as directly supporting their local businesses.

Ensuring that township and land use planning reflects the operational and growth

needs of businesses and informs investment and development plans of business

and industry is also be an important function of local government in supporting

their businesses and providing the environment in which they can flourish.

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Marketing and promotion

Local government can be a critical part of marketing and promoting

economic opportunities and businesses. Although it is important for local

government to actively support and promote its own locality, there is

significant power and efficiencies through the development and

participation in regional brands and promotional campaigns.

As mentioned previously, regional co-operative marketing of tourism and events

has been a highly successful mechanism for local and state governments for

establishing brand, building product and destinations and gaining traction in highly

competitive markets.

10.1 Active investment attraction

Investment by business and corporations is highly competitive and increasingly

mobile. Therefore, it is important for local governments to ensure that they are

appropriately positioned and active in the environments where investment

decisions are made. State government can be a major conduit for local

governments to use to gain access to investors and to build the important

relationships that underpin investment attraction.

The development of information and motivational investment prospectus

documents and collateral based on the investment attraction business case is a

highly effective process as it enables local government and partners to:

Clarify and describe the investment opportunities and benefits to investors;

Identify where there may be strategic planning or asset gaps that should be

addressed to support investment attraction;

Foster the local and regional partnerships that are increasingly intrinsic to the

success of investment attraction activities; and

Provide an avenue for promoting the capabilities and service and products of

their existing businesses into wider market place.

Councils and other agencies need to take a proactive approach to investment

attraction. Promotion of investment opportunities need to be supported by

marketing strategies that identify who local government and regional partners want

to target, what they want to tell them and how they are going to reach them. This

can include inward and outward trade missions, business and living expos, council

and agency websites, social media and probably the most effective of all, direct

contact and liaison with government investment agencies and businesses.

10.2 The investment prospectus

An investment prospectus should be straightforward and realistic and provide:

A clear picture of the region or locality including location, attributes,

competitive advantages, key assets and economic and social indicators,

Details on the nature of the opportunity (general or opportunity specific) and

the investment benefits of the region or locality;

Profiles of workforce and skills availability to support business operations;

Summary details of processes and outcomes from any background analysis

and feasibility work that has been undertaken;

Demonstrate the investment readiness of a region or opportunity; and

Describe nature of support that will or can be provided and where to access

more information.

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10.3 Supporting new resident and workforce attraction

Many regions and communities are experiencing population and demographic

change that will over time, have impacts on sustainability, growth and economic

prosperity. The attraction of new residents, families and workers into a region is

integral to the economic marketing activities of local government and regions.

Resident attraction marketing can be more complex than business investment

attractive given the geographic dispersal of possible new residents, their

motivations for relocation and for smaller communities, the general migration

preference of new residents to move into larger centres and cities.

Visitors and tourists to a region can be a source of new residents for a region

(particularly the Visiting Friends and Relatives market segment) as it provides an

opportunity for localities to showcase their communities, lifestyle and employment

and business opportunities. Local businesses who are looking for workers or new

investment that may bring workers into a community are also avenues for

promoting a region as a place to live.

Key messages and information that are important considerations for new residents

looking at relocation include:

Access to services including education, health, sport and recreation;

Childcare and ethnic or multicultural services;

Housing purchase or rental costs and the choice of housing available;

Training or employment opportunities including for relocating partners;

The range and nature of business and social networks that they can participate

in and be welcomed into; and

Business investment or growth opportunities for business owners and

entrepreneurs.

The provision of welcome packs for new residents and business are a good way of

providing information on services, businesses and community groups and some

councils and communities organise welcome events for new residents.

Communities and local government also need to look beyond the marketing and

attraction stage and ensure that they provide a robust ‘welcome mat’ to new

residents and in the case of international or multi-cultural migration, that practical

and effective settlement programs and support services are provided to enable

positive and long term integration.

Model guidelines summary

Figure 6 - Model guidelines summary

Economic Development

Function

1. Define existing

capabilities

2. Broadly determine role

and policy approach

3. Develop strategy and

framework for priority projects

4. Refine policy and investment

strategy

5. Activate business

development services

6. Activate investment attraction strategies

7. Operationalise

into Council operations

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Economic development checklist

The following forms and checklists have been developed to assist economic

development practitioners, local government and business owners and operators

with a system to:

Guide and inform investment and business development discussions;

Ensure that appropriate information is shared and provided to assist with

investment and business facilitation;

Identify the type and nature of future assistance or planning that may be

required to support or facilitate business development;

Identify who else can provide support or partner with council or the business

on their business opportunity;

Report and monitor business and development activities; and

Foster continuous improvement in the provision of economic development

services.

The checklist system is also available as an excel-based system to local governments

in South Australia as part of this project.

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Information sources

Agency Website

AusTrade https://www.austrade.gov.au/

Australian Bureau of Agricultural and

Resource Economics and Sciences http://www.agriculture.gov.au/abares

Australian Business Register https://abr.gov.au/

Australian Securities and Investment

Commission http://asic.gov.au/

Australian Taxation Office https://www.ato.gov.au/

Bureau of Infrastructure, Transport and

Regional Economics https://bitre.gov.au/

Dept of Agriculture (Federal) http://www.agriculture.gov.au/

Dept of Communications (Federal) https://www.communications.gov.au/

Dept of Communities and Social Inclusion

(SA) http://www.dcsi.sa.gov.au/

Dept of Education and Child Development http://www.decd.sa.gov.au/

Dept of Employment (Federal) https://www.employment.gov.au/

Dept of Environment, Water and Natural

Resources http://www.environment.sa.gov.au/Home

Dept of Foreign Affairs and Trade (Federal) http://dfat.gov.au/pages/default.aspx

Dept of Health http://www.health.gov.au/

Dept of Human Services (Federal) http://www.humanservices.gov.au/

Dept of Immigration and Border Protection

(Federal) http://www.border.gov.au/

Dept of Industry and Science (Federal) http://www.industry.gov.au/Pages/default

.aspx

Dept of Infrastructure and Regional

Development (Federal) https://infrastructure.gov.au/

Dept of Planning, Transport and

Infrastructure http://www.dpti.sa.gov.au/

Dept of Primary Industries and Resources of

South Australia http://www.pir.sa.gov.au/

Agency Website

Dept of Social Services (Federal) https://www.dss.gov.au/

Dept of State Development http://www.statedevelopment.sa.gov.au/

Dept of the Environment (Federal) http://www.environment.gov.au/

Dept of the Premier and Cabinet http://www.dpc.sa.gov.au/

Dept of Education and Training (Federal) http://www.education.gov.au/

Environment Protection Authority SA http://www.epa.sa.gov.au/

Fair Work Ombudsman http://www.fairwork.gov.au/

Flinders University http://www.flinders.edu.au/

Industry Capability Network South Australia http://www.icn.org.au/sa_home

IP Australia http://www.ipaustralia.gov.au/

Local Government Association of South

Australia http://www.lga.sa.gov.au/page.aspx

Organisation for Economic Co-operation and

Development http://www.oecd.org/

Regional Development Australia (South

Australia) https://rda.gov.au/my-rda/sa.aspx

Reserve Bank of Australia http://www.rba.gov.au/

SA Health http://www.sahealth.sa.gov.au

SA Power Networks http://www.sapowernetworks.com.au/cen

tric/home.jsp

SA Water https://www.sawater.com.au/

SafeWork SA http://www.safework.sa.gov.au/

Single Business Service (Federal

Government) http://www.business.gov.au/

South Australian State Government http://www.sa.gov.au/

TAFE SA http://www.tafesa.edu.au/

University of Adelaide http://www.adelaide.edu.au/

University of South Australia https://www.unisa.edu.au/