As Renew PEI moves through the various stages, it’s not enough to simply open the doors of businesses again and hope everything turns out just right. Island owned businesses now need local support more than ever. An important way to help save local businesses during this crisis is through creating a local procurement strategy. Governments on PEI have the largest buying power in the province. The provincial government alone spends millions of dollars in procurement. Now is the time to use that buying power to support our local businesses.
Benefits of government buying local
An immediate benefit of local procurement is something called an economic multiplier. In economics, a multiplier measures benefits using more than just the best price or fastest delivery. In a local procurement strategy, it gives credit for the improved social benefits for members of our community, like an increase in local jobs and wealth. Did you know that when we spend our money locally, 48% of that spending is recirculated locally? Compare this to only 14% staying in our communities when that same money is spent at big box and chain stores. When we spend locally, we generate better outcomes in employment and income inside our communities.
In addition to the local business benefits, the government benefits from a multiplier because the increased local wealth is spent locally generating greater property, income, and sales taxes.
Supply chains need protection
Through urbanization, Islanders are increasingly removed from the farm to the point that a shocking 90% of food consumed is actually from off Island. COVID-19 has put a spotlight on the insecurity of our supply chains for products we import from off Island. Through this crisis, we’ve seen an incredible increase in consumer demand for local food. Given the uncertainty around the globe during this pandemic, it would serve us well to reconsider our strategy of importing so much of our supplies from off Island.
Procurement needs both private and public support
An increase in demand by private citizens is important, but it is public purchasing that will help provide a constant stream of demand that will help local businesses thrive.
Currently, on PEI, there is no publicly accessible strategic plan between our institutional purchasers (schools, hospitals and Long Term Care facilities) and our agriculture industry. This is a shortcoming in our economic planning. For example, if a strategic plan existed for our school lunch program, we could develop recipes and menus that are based on in season, locally grown nutritious food. A similar strategy could also be used in our hospitals and long term care facilities.
Realigning goals for local benefit
It is true, this type of planning may shift some industries. On PEI, for example, 70% of our main crop – potatoes – is being processed as french fries. To implement a local procurement strategy will require vision and commitment as farm plans are completed 3-4 years in advance. Farmers will need a commitment that contracts will be honoured.
Instead of looking for the rock bottom price on a tender, the government needs to consider these other forms of revenue. Local procurement within agriculture, as you can see, is in the best interest of Island farmers, rural communities, and the health and well-being of all Islanders.
The time to act is now
It’s time for the government to take procurement seriously. PEI does not currently have legislation that properly addresses the advantages of local procurement.
It is the responsibility of the government to ensure that the right boxes are being used so we are recognizing the quality and talent right here in our own province. Now is the time to change the boxes that need to be checked in the tendering process. We need to identify how much of the millions spent on procurement is currently in local businesses so we have a benchmark. Then we must set a target and timeline to achieve it. This must also be all supported by transparent reporting that will hold the government accountable. It will take private and public support to make sure our local small and medium businesses pull through.
Michele Beaton, MLA for District 5 Mermaid-Stratford, is the Official Opposition Critic for Finance.