How your dollar spent locally enriches our community so much

Support local and compete globally to help us recover, says Tony Ibbott

THE impact of the coronavirus crisis on the Tasmanian economy will be felt for a long time to come.

However, we can all contribute to the recovery — starting from today — by “supporting local first”, according to a Tasmanian Small Business Council information paper which recommends three areas for action: community awareness, and promotion of the economic benefits of buying locally made or supplied goods and services; a policy focus on local acquisition adopted by state and local government; and encouragement for local entrepreneurs to actively pursue opportunities for import replacement.

These simple actions can multiply both the economic value and social cohesion of our Tasmanian community many times over. Competing globally will bring wealth to our island state, and supporting local will share wealth around and multiply the value many times over.

How many times over? According to Civic Economics, in a report for Liveable City in Austin (US), for every $100 in consumer spending at a national chain, the local economic impact was $13.

The same amount spent with local businesses yielded $45, or more than three times the local economic impact.

Estimates of economic multipliers vary depending on what is being measured. The UK-based New Economics Foundation captured the idea of import replacement in the phrase “help stop the leaks”. Clearly, keeping as much of this flow-on dollar value local will benefit the community. The economic multiplier from buying local can be up to four times greater than that which would arise from purchase of the same goods or services from non-local sources.

These results are supported by the Business Alliance for Local Living Economies, an organisation headed by Michael Schuman, who visited

Tasmania a few years ago and presented strong empirical evidence during a number of well attended workshops.

How are economic multipliers achieved?

According to Civic Economics, “Locally owned and operated businesses generally have greater impacts on local economies than outlets of global and national chains due to three primary classes of expenditure”.

First, spending on local

labour typically comprises a greater share of operating costs to run the enterprise and sell the merchandise for a locally owned establishment.

Next, local businesses keep their modest profits in the local economy, while large global and national chains purchase fewer goods and services in the local economy.

Their products, advertising and supplies are usually procured at national level.

Finally, a larger portion of profits earned by owners of local businesses remains in the local economy rather than going to head office.

In addition, local merchants often provide strong support for local community and sporting clubs, artists and authors, creating further local economic impact.

So, this is the case for supporting our local businesses. During these difficult times we can all help reduce the economic impact of the coronavirus pandemic and hasten our economic recovery by buying local.

Historically, Tasmanians have been at their most innovative in times of crisis and collaboration (Incat when the Bridge went down, Tas Quality Wool when the wool price was down, salmon, wine and cherries all had their origins in the economic downturn of the 1980s and 1990s). So now is the time to be creative, innovative, and plan to compete globally. In addition, now is the time to buy local and keep as many businesses afloat and as many people in work as possible, to position us ready to take advantage when the recovery comes. In the meantime, stay home, wash your hands, social distance, be creative, collaborate and buy local.