Rural Realities: Designing a Social Enterprise Policy Framework for the Rural Context

Rural Realities: Designing a Social Enterprise Policy Framework for the Rural Context

This session looked at social enterprise policy development with a rural lens. This international panel of intermediaries and practitioners presented and discussed the features of a social enterprise policy framework that would meet the needs of rural communities.

This session was moderated by Catherine Lang, Principal, C. Lang Consulting and featured:

  • Paul Cabaj, Director of Co-op Development, Alberta Community and Co-operative Association
  • Mary Ferguson, Principal, Eko Nomos
  • Kevin Fong, Managing Director, Goolarri Media Enterprises

A special thanks to session sponsor Enterprising Non-Profits (enp) Canada.

Transcript of session:

Mary Ferguson: I am going to be covering four areas as quickly as I can, because I don’t have very much time. I am going to talk a little bit about what we’ve learned through and experienced while we’ve been working in rural Ontario, so what are some of the learning that’s coming out of that experience. I am going to talk about the current Ontario strategy. Then, because I am sucker for punishment, I am starting to do my PhD in rural social enterprise, and so I am going to provide a few summary points of the literature review that I have been doing and then I’ll provide some reflections.

First I am going to set the Ontario context; it’s a province in the country, and in that province the nonprofit sector generates over $50 billion, or 7% of the GDP. It is a very important economic contributor and employs above 530,000 and a bunch of part-time people. When you compare that to the agricultural sector, there are 164,000 jobs in Ontario related to agricultural sector. I think Cathy already mentioned that in Ontario, the Rural Ontario Municipalities Association says 75% of municipalities are partly or entirely rural.

Defining social enterprise, we can have a conversation for a long time about that. I like this fellow Loxley who says that it’s basically the part of the economy that’s not driven by profit nor controlled by the state. I think that that’s a fairly clear definition of the boundaries of social enterprise. I do work almost exclusively in a not-for-profit sector, so that’s sort of the niche that I am in.

I want to talk about these rural themes, because having been involved in social enterprise development for a really long time, there were national gatherings on social enterprise, and I’ve come from a rural area. In fact, I come from the village of Kimberley which has 100 buildings in it. Wherever are, you come from the region of Kimberley. So I am a rural person, but I have been working in a lot of urban environments, so there are a lot of connections there.

What we found always was there was no rural representation. They’re just not there. They weren’t part of the conversation. We started doing work in rural areas about six years ago, and through a series of opportunities, I was working fairly closely with Cathy. We were not only doing the work, but we were also thinking. Nobody is paying for any thinking; nobody is paying for any research. We’re just basically practicing and trying to make sense of what’s going on.

What was coming out in urban centers was when I work with social enterprises, I am working with a staff; in rural, I am working with volunteers who are trying to keep an organization going. Rural social enterprises are looking at social enterprises as a sustainability strategy. When I am doing consulting I always say, “Don’t do it because you are in a financial crisis or you’re in a crisis of some sort.” The nonprofit sector identity is evolving. For the most part, there are a lot of nonprofits that are operating, but they are basically invisible doing the good work that they do.

The language of social enterprise is new. There is interest and pent-up demand in looking at social enterprise supports. You can read these as easily as I am. These are going to be available for people. So there were things that were coming out that were fairly different from urban and rural. For instance, the second last point, collaboration adds complexity. I don’t know how many groups I was working with, collaborative groups, who were engaged in very amazing activity and they were doing it all on a handshake. They did not have any memorandum of understanding, so there is an informality to the things that were going on that I just wasn’t seeing in urban centers.

We developed a group. There were a number of leaders, world leaders and provincial leaders, some were involved in some of the earlier work when we formed the collaborative. We spent probably eight months negotiating, what is it we were going to do and who are we and how are we going to move forward. So we put in a developmental grant to the Ontario Trillium Foundation for two sister projects, thinking if we could get one great, if we could get the other great, but if we could get both wouldn’t that be amazing.

It was all structured on the assumption that growing social enterprises in rural areas depends on the development of local capacity and investment from multiple levels from the public sector. Essentially we’re at the midpoint of a three-year project where we’re working in four regions in Ontario. The timeframe is 2012 to 2015. We’re sort of in the middle of the process and we’ve just recently got some research money to be able to complement that. What we’re going to be looking at is focusing on the systems to support for social enterprises.

There are lots of partners. I have a private sector company, but I am part of this collaborative that’s moving things forward. We also have a research partner through the University of Guelph, CCEDNet, and Ontario NonProfit Network. So we have people that are both at a strategic level and at a practical level.

The objectives are important because we’re trying to build the resilience of rural nonprofits through skill building, and we’re doing that by working with individual organizations who have ideas they are already involved in it or they are wanting to move something from an idea stage into a business. The other area we’re focusing on is emerging practitioners, so we’re working with the students and the people in communities that are either involved in business or community development, and we’re working with them to develop their skills to be able to do the hybrid kind of work that needs to be done in social enterprises that are situated in nonprofits.

We’re also building a regional system of support. What we’re finding is there was activity going on but it wasn’t networked and it wasn’t connected, so we’re connecting people across the regions. And we’re also in the strategy linking rural and urban, so the social enterprise site in Ontario that’s just about to go live is actually going to have both rural and urban examples. There’s a rural research piece there. We are really focused on trying to generate new knowledge and research in rural social enterprise.

When I did the literature review, and at this point I’ve been trying to focus specifically on rural social enterprises and their policy and sort of what’s out there. When I look at a rural policy, for the most part it’s been synonymous with agricultural policy. There is no longer a case for rural communities and regions to grapple with the kind of significant changes that are happening: decreasing significance of agriculture, growing environmental concerns, the list goes on. There are lots and lots of new things that are happening in rural areas that don’t fit into the policy context.

So this fellow Bradford, I mean, I can send everybody this, it’s an annotated bibliography that we’ll be finished probably in about a month, and basically Bradford was saying that there are three central claims:

  • national governments must engage with local networks to deal with the major challenges in economic innovation, social and cultural inclusion, and ecological sustainability;
  • national governments need a spatially-sensitive perspective to inform policies; and
  • social exclusion in smaller places threatens the viability of entire communities.

Then these other people talked about the idea of from comparative advantage to competitive advantage and the development of place-based policy. Neumeier was talking about policy intervention must increasingly work from the ground-up to generate solutions rooted in particular concerns in local communities. I think people in this room probably understand all this. The research is bearing that out.

There is a lot of work that’s going on in terms of the Social Enterprise Council of Canada, the kinds of things that they think should be moving forward. I won’t go into that detail. I do want to get to my reflections.

I would like you to pay a little bit of attention to is the work that’s going on in Québec where we’re now using the term Social Economy which came from Québec. In Québec what they’ve done is they’ve developed these rural pacts and essentially they brought together multiple levels of government – which include federal, provincial, regional, and municipal governments- and they’ve created a seven-year timeframe. They’ve got these rural laboratories that are managed by municipalities, development organizations, and social – there’s a network of people that are pulling this together. The current information that came out last year was that they had 15 of the 33 labs included, so they had 5,011 projects. This is in one province in the country. They had $80 million contributed from Québec government. They leveraged $680 million of investment from other entities, and they created 6,900 jobs.

It’s a strategy that’s working. Why is it that we’re not sort of duplicating or replicating some of these ideas?

We’re looking at an integrated collaborative multi-partner approaches in rural. I think someone was talking about that we’ve got the health people doing things, we’ve got education, we’ve got all these different groups that are working in the same areas. What we need to look at is within social enterprise is looking at it from a conceptual framework perspective is where we bring these stakeholders together and really people that are focused on community development, poverty reduction strategy, economic development, universities and the private sector and social enterprises – basically bringing people together to be able to have some kind of integrated approach. We do have poverty reduction people over here, we’ve got health people over here, and what I am seeing in rural communities is that there are social enterprises coming out of the investment that’s going to health, there’s social enterprises coming out of investment that’s going to other areas. Why aren’t we talking to each other and trying to really listen to what people want to have happen, rather than trying to fit into these funding windows that are available?

I think one of the things we can do is we can leverage our collective assets. There are financial assets that are in communities. We can also be looking at sort of leveraging what’s happening with health, education, workforce development, economic development, poverty reduction, and bringing researchers into the picture. Then look at what have in terms of the knowledge and the skills and how can we grow our own capacities for social enterprise development and help others develop theirs. Finally, looking at the intellectual side from an asset perspective, harnessing our collective knowledge that will drive policy through evidence-based research.

This is just me talking. There is no shortage of money. There is no shortage of money in the public system. I’m concerned about what’s happening with public money. What I’m really interested in is looking at local community-based agendas. I think they are critical to effective development. There is a lack of coordination among all these different levels of government. Multi-tiered governments should be aligned and focused on place-based initiatives, listen to what’s happening to the people in the communities, what is it that they want to do. But that’s just not how it’s done.

So align, align, align, align. Basically that’s the message and focus on current and projected place-based social enterprise activity; what’s happening in communities because people are trying solve complex projects using this as a strategy. If you really start aligning everything, it’s going to make a lot better sense.

What are some of things that municipalities can do to support enterprise development in the regions? I am working with rural communities that have surplus buildings and they are wanting to know, well, what should we do with these buildings? So are there groups in the community that could transfer that asset to them. There’s lots of different things that can happen. That’s the thing that I am interested in and am passionate about.

As a final point, the practice of social enterprise development is much stronger at this point than the policy context. There people are doing the work and that work is preceding policy – so how are you going to align the policy with what’s happening to really greater influence the rural revitalization efforts and producing much more significant results? That’s one of the reasons why I’ve gone back to school just in time to pay maximum fees before I retire at 65

Paul Cabaj: We did some research on the capitalization needs of the co-op sector in this province here and in BC. We also did something on the case study of Westlock Terminals, which I’ll talk about in a little bit which is a co-op that’s done quite well. And we then developed a White Paper on co-op capitalization. That research background is really important.

It’s been about 5, 6 years in the process of us getting to where we are today. So don’t undercut research. A lot of what we talk about are the challenges that rural communities are facing. We all know this and this is happening across the world, the rural business succession crisis. I have heard figures anywhere from 75% to 80% of businesses in small rural areas are owned by people who are going to retire in the next 10 to 15 years and less than 10% of them have a succession plan in mind. Their kids are gone. There’s lots of figures around that. This is going to be a crisis that’s going to hit us very, very hard and we’re not doing a lot to work with this.

There is also, of course, the hollowing out of the middle. There is a great book on that, by the way. Talks about how migration is affecting small communities, and a key piece is the centralization and urbanization of key economic assets. That’s continuing to happen on an ongoing basis. A point we focus on a lot is the lack of interest really or access to venture capital in rural areas, capitalization and equity investment. At the same time, in Alberta in this case, $4.4 billion leaves the province every year in the form of the retirement investment funds, that’s $4.4 billion. Most of that goes out to New York, to – I don’t know – bridges in London, or condos in New York, I am not sure where. How much comes back? I’m not sure, not very much.

At the same time, we’ve been working on some very successful experiments. The one on the bottom right is that Westlock Terminals I talked to you about. This was a grain terminal that was going to be shut down because it had been bought out by a multinational. They wanted to move all the grain transportation to the city, 90 km away, and that would have really affected the farmers in that region. A group of folks got together, bought it using a co-op investment model, and it’s a wonderful story around that. The last few days before they were doing investment shares they were very worried. They were about 50% away from their target. But when they  come out the next day and they’re kind of nervous and they look and there’s a line up to two blocks for people to come in and buy the shares. And they raised $1.2 million in a six-week period. It is now the most profitable and successful grain terminal in Canada for its size and it’s doing better than the terminal that the original corporation wanted to shut down. It’s a fantastic story. And they’ve been paying 7% a year every year since they’ve been in operation – nine years.

Following up on that is the Battle River Railway, taking a lead from them. It’s a small rail line in a rural area that was going to be shut down because it wasn’t being profitable enough – still profitable but not profitable enough – for the large corporation. Again, a group of farmers got together, raised $3.9 million in a very short period of time, and have now bought the railway. They’re doing so well that they’re now in year five of their growth projections in only year two of operations. They are now buying a tourist line as well too.

That’s a small meat shop in Sangudo, Alberta, a town of 350 people. Pretty much a 120 homes for the most part. It was dying. They lost their school and everything else. I was working with them as a consultant on looking at the co-op model for revitalizing local communities. We looked at various different business ideas and what we found at this place is a succession planning issue. The owner of this meat shop was 65. There had been new regulations that had come down that said that you have to increase your food safety standards. He was himself a halftime packer. He was just going to shut it down; another big hit to this community that had a big series of hits.

We rallied together, raised $240,000 amongst the small group of people and formed the Sangudo Opportunity Development Co-Op. They bought the meat shop, leased it out on a very favorable lease rate to the new entrepreneurs coming in and taking it on, which would then be supplemented by revenues as the business grew. They paid 13% return in the first 10 months on that process. This meat shop is now the second largest employer in that town, 20 employees. They’ve already done three other investments with this group. Fantastic example of rural revitalization.

Another piece I’ll just talk about is SPARK. It’s another renewable energy co-op I’m involved in. This was actually the group that I’ve worked with and we did the first issue of an RSP, a Retirement Savings Plan share investment in SPARK in its renewable energy co-op as well. That was another test case and a successful example that we’ve been using.

Presenting to government on policy is a very intricate affair. It is a lot like making sausage. You’ve got to know the right ingredients. This is the main challenges that we presented to government around what we want to do with the expanding these investment models. You will notice nowhere in there is the mention of social enterprise. Nowhere in there is the mention of cooperatives either. What is in there is the challenges that the government is facing and might feel some allegiance to beyond any of the beliefs that we have. How you present that language is extremely crucial. We had some very, very good support around this from actually one of the senior members of one of our credit unions who is a former lobbyist. He really helped us draft this message and move it through. So it talks a lot more the lack of capital in small rural communities. You have to hone your message very clearly.

We got a very good reception to that. We proposed some big solutions. One was the work we’ve done around investigating the model in Nova Scotia. At this point they’ve had over 50 funds invested down there with over $56 million invested so far, less than a 3% default rate, averaging around 6% return, which is a great, great return. We’ve asked for some very simple tools to make things move forward building on that now: we asked for a simplified offering document when you’re doing share issues. If you want to raise venture capital, if it’s of any substantial piece, you’re talking about $70,000 to $150,000 or more just for legal and accounting costs. If you need $0.5 million, it’s ridiculous. You still have to go through that process. So we wanted a Simplified Offering Document, we wanted the RSP designation, and we wanted a 30% tax credit added to that, which was what they have in Nova Scotia.

So we presented it. We didn’t get the tax credit. That’s right. Alberta has the lowest marginal rate of taxes in almost actually North America, so in some ways that wasn’t a big deal because it didn’t have the same kind of carrot. We were asking for the Securities Commission to review each of these Simplified Offering Documents to give us a little bit of level of comfort. That has not happened yet, either. But we were successful through this process, through this research, in getting some substantial funds from the Rural Alberta Development Fund which has helped us set up these legal documents and process. A lot of this is going into kind of the legal research and making sure we have the models right. We paid $30,000 to a lawyer who gave us an interpretation of what a comma meant in our tax regulation. Amazing what happens with that.

We’ve got eight communities on the ground developing their own funds. Falher is up north, small community doing a seniors housing project right now. Crowsnest Pass has already finished their investment. They bought a building in a dilapidated downtown and renovated beautifully. It’s already sold-out and they’re doing their second investment coming up right away, potentially in conjunction with a pension fund. Vulcan is looking at a succession plan with a bakery in their town. Didsbury wants to set up the first Arizmendi Bakery cafe in Alberta and some of you may have heard of that fantastic idea. Black Diamond is looking at buying some property downtown. Black Diamond was hit by some of the recent floods lately. They are taking a bit more time because there were some floods that kind of devastated some of the town there. But we may be looking at a flood relief investment fund for them as well, too. Three Hills is buying a restaurant and Sangudo I’ve already told you about, they’ve gone on to invest in a restaurant. They’re looking at a seniors’ housing project.

So what’s next? While we’re continuing to prove the case on the ground, the current exemptions we’re looking for co-ops in Alberta to issue $1 million worth of loans to their members. Loans are not eligible for these retirement investments but shares are. We’re pushing on that. I’ve talked about the 8 pilot communities. We’re getting calls from all over BC, Saskatchewan and Manitoba. We’re getting calls from the U.S. as well too. It’s very intriguing. I’ve never been involved in something that’s got such high interest.

We’re looking at integrating tax-free savings accounts in these, which is a new instrument in Canada, which is a very high interest to business owners. A very interesting one is we’re looking at establishing a specific securities dealer for us. It would be a specific securities dealer really for these co-op investments, which will give us a lot of leeway to look into larger investments and we’re very excited about that.

We’ve talked about on the ground research, and we continue to do that quite solidly. Some very exciting stuff is happening for us recently around this. We’re looking at the cases of fraud for securities dealings. The securities dealer is there to protect investors. They don’t want particularly seniors to be fleeced and that’s their concern, and we accept that concern. We think this model is great for a number of reasons. These are local investments, only people who reside in the community can be on the board, and only the board members can sell the shares and that investment has to take place within the community that those board members live. There is a level of scrutiny and local connection there and there is the history of the co-op model. They get a lot of fraud cases coming from the corporate model. We’ve done some research across Canada and some of the key co-op states across U.S. and guess how many cases of securities fraud there is using the co-op model? Zero.

It’s both great for our policy piece but also for the promotional piece. These are relatively safe investments, significantly more so. And in some cases and we found just recently, in Wisconsin, and it’s coming into Minnesota, the co-ops down there have zero need to report to Securities Commission if they are selling to members. It makes it significantly easier for co-ops to raise capital. So we’re going to be pushing for something similar to that if we can as well, too. You’re basically self-reporting and that securities dealer would help with that.

To wrap up, co-ops are leveraging local capacity, it’s about leveraging leadership in a very big way. When people invest in these funds, they like the idea where it’s going, they like where the investment is going, but they’re doing it as they trust the leadership of the board members that are pushing it through because they are upstanding citizens. A good example of that, one group that we find really is getting this model when we sit down with them in a fairly quick matter are the Rotary Clubs. Those are business folks who understand it and this is kind of a hybrid of their charity work and their pretty strong business experience, so much of the leadership refining is coming from that area.

We don’t talk about social enterprise. We talk about the local investment opportunity and doing good with your money. And obviously it raises local capital. It’s very clear there’s money there, there’s opportunities there. What’s the interim mechanism to do that? And in many cases it’s great to have a local intermediary who can help with some of the background stuff, particularly for the first investment. Many of these communities, in particular Nova Scotia, by the time you do your second and third fund, you get more creative, you do larger projects, you can do a lot of it yourself, but that first initial piece, a local economic development agent, a community futures, a local organization can help shepherd this along, help with the business planning and all that stuff.

Kevin Fong: As is our custom, I’d like to acknowledge the First Nation’s people on the land we stand and also to all the persons all around the world. I found it very interesting that till 1929 this country did not recognize women. I also would like to say to the fellow countrymen here that we have a relationship with the Canadian First Nation’s people through best practice in cultural mapping, a range of programs, and just very recently last week one of our leaders who received the Order of Australia was talking about the fetal alcohol syndrome. So I thank you for your acceptance of us here today; me and my daughter who have traveled a long, long way, still jet lagged.

To give you some context, we the Yawuru people are the legally recognized native title holders of some 530,000 hectares of land in and around Broome in the West Kimberley region of Western Australia. Broome is located in the heart of this country. Broome was sort of gazetted in 1883 and it began to attract thousands of people throughout Asia to work in the pearling industry and today many of Yawuru people have Chinese, Malay, Indonesian and Japanese Filipino heritage. I am one those products.

Despite decades of government policies designed to assimilate Yawuru people into European society, Yawuru people have maintained, practiced their culture. In 2006, the federal court recognized Yawuru people as the native title holders of our country. What gives Yawuru traditional law its human force is the concept of Liyan. Liyan embodies Yawuru’s people’s connection to their country, ancestors’ way of life, and a sense of belonging to Yawuru society. It also describes the social and economic values of Yawuru society and protocols that guides people’s conduct or behavior and personal relationships. In essence, Liyan explains Yawuru people’s individual and collective sense of spiritual and emotional well-being. These values have to be central to any framework.

The determination of Yawuru native title rights in Australian law and the subsequent negotiation of the comprehensive agreement between Yawuru people, the state of Western Australia, and the Shire of Broome have created the basis for reconciling Broome’s history and taking the best of it into the new era of inclusive and sustainable economic development. There is now a potential for Broome’s unique history of multiculturalism and continued Yawuru cultural vibrancy to enliven an expanding room for regional society characterized by tourism, resource, and commercial development and a Broome-branded cultural and creative economy.

The Yawuru native title agreement is fundamentally a settlement of aboriginal rights whereby Yawuru had allowed commercial and residential expansion in Broome in return for lands transferred to Yawuru ownership, for cultural protection, jointly manage conservations of states, and freehold and leasehold land for development. This will enable Yawuru to leverage external investment for social and economic development, whilst building its revenue platform from land development use.

The global agreement is the first such native tribal settlement of its kind in Australia. There is no personal or collective royalty payments associated with this agreement. The principles underpinning the global agreement relate to self-sufficiency, self-reliance, cultural survival, capacity development and capital growth, wealth generation. Conceptually this can be referred to as Yawuru equity or buying in the opportunity.

These are my observations as a born and bred multicultural Broome boy who has been given the gift of thinking seven different ways in just as many seconds. Broome highlights the failures and the structural deficiencies that frame the relationship between the Australia nation and the indigenous people. The Australian nation fails to deal effectively with indigenous marginalization because it falls over at the first hurdle. At the outset it defines the problems wrongly, and, therefore, its analysis and policy responses are also wrong.

Successive Australian governments, informed by public discourse, defined the problems facing indigenous people as one of disadvantage. The term ‘disadvantage’ overwhelmingly distorts the scale of the problems that indigenous people in our nation face. The acceptance of the indigenous economic and social condition as one of disadvantage leads to policy settings designed to include indigenous people and the benefits of western economic expansion. Australia’s indigenous public policy initiatives focus on employment, home ownership, and education, all framed around western concepts of individual responsibility.

This is all fine if one accepts that assimilating indigenous people into the western society is the way to go. Accepting the imposition of western standards on people who have endured domination and colonialization for more than a century remains a trickle-down down and incremental approach. This approach fails to achieve its objective to close the gap between indigenous and mainstream Australian living standards, because it disregards two fundamental planks that are central to contemporary indigenous life.

One, it actually fails to recognize, respect and celebrate indigenous culture and social and economic values; and two, it fails to recognize the destructive legacy of colonialization and western domination on indigenous society and on the minds of indigenous people. Despite the overwhelming weight of evidence in the Australian nation, it persists with the failed incremental and trickle-down approach and investment to indigenous development.

Let me expose the contemporary indigenous reality based on the social and economic environment that I know. Beyond the beautiful beaches and magical cultural richness that attracts people to visit from all over the world, Broome is a remote urban center whose social fabric is being eroded by the horrific circumstances that more and more aboriginal people are trapped in. Broome has a population of 17,000 people. When I was a boy growing up in the ‘60s, the population was less than a quarter of what it is now and indigenous people were the overwhelming majority. We were also the majority of the workforce, both in the private and public sector. But what has happened over the last 40 years reveals the hopeless failure of government in dealing with indigenous recognition and inclusion in remote Australia.

Broome’s indigenous population is now a quarter of the total population, a situation that is completely reversed from my childhood. Broome’s population is growing at twice Australia’s natural rate. According to official projections, in 17 years’ time the population of Broome will have doubled. That population increase is coming from two sources; on the one hand non-indigenous settlers from distant places are attracted to live in Broome by the environment, climate, and economic opportunities. On the other hand, the indigenous population is growing very rapidly, fueled by high birth rates and migration from the region of Kimberley hinterland.

What have we have in Broome is a rapidly expanding wealthy urban non-indigenous population, spreading northward along the white sands that are recognized as some of the greatest beaches in the world; and an expanding aboriginal population, most of whom live in ghettos with no room to move. 60% of Broome’s indigenous population reside in two urban ghettos, locally referred to as the Bronx and the New Bronx. In these areas the population is dynamic. In any one day, half of the aboriginal people in Broome are visiting the town from all over the region for all sorts of reasons. Many are there for medical reasons as Broome has the region’s main hospital and other health services; many are there because of their own communities are saying their services and their infrastructure defunded and eroding.

Throughout the Kimberley independent indigenous communities are experiencing immense stress, which threatens their continued existence. Within this regional dynamic, Broome has become the Kimberley’s capital city, if you like; a place for support and a magnet for social connectedness. The place, or the linju as we would say, will tell you that the overwhelming majority of police criminal response work is targeted at these two ghettos. The hospital and health services will tell you that an overwhelming disproportionate amount of hospital and clinic admissions come from these two ghettos. The child protection authorities will tell you that the overwhelming majority of their casework comes from these ghettos. The mental health authorities will also say that an overwhelming amount of Broome’s mental health interventions come from these ghettos. And what are the government’s responses to these crises? An expansion of the health institutions, a new prison built 200 km away in Derby, more child protection workers, more police officers in the town that is already over-policed, and that’s just part of it.

There’s also public investment and a host of non-government organizations to deal with the negative feedback loops of the social crisis, suicides, family and community violence, mental health and addiction. These are all hugely expensive and wasteful and cost is rising exponentially. There is no strategic proactive community development response to this overwhelming social tragedy within the heart of Broome and it’s getting worse. Year after year this human tragedy, which I know so well but which also exists in countless other towns throughout Australia, continues to grow and become normalized as part of remote Australia.

One might ask ‘when is the tipping point reached?’ When does government recognize that this massive and wasteful public spending in response to this social crisis is simply not working? I would argue that the tipping point has been well and truly reached. The time has come, in my view, to redefine the scale of the problem. The time has come to rename the problem. This is not economic and social disadvantage. This is a result of more than a century of domination by western powers over indigenous people’s lives that have left almost no generational wealth from which indigenous people can buy equity into the contemporary economy.

It has left an unfathomable sense of trauma, grief, unresolved anger, which contemporary social commentators and government policy planners have the audacity to describe as social dysfunction; dysfunction and a breakdown of social norms which can be dealt with by punitive measures of government intervention. It has left a legacy of appalling living conditions, inhabited by people who do not have the capacity and the power to escape this entrapment. When we use new and more accurate language to describe this crisis, we begin to take the first steps to develop real and lasting solutions and those solutions are self-evident, supported by science and a wealth of historical experience about how people react in their lives when they are respected, when they have power, when they have hope, and when they have purpose.

What is required fundamentally in Broome is that we rebuild and transform the ghettos so that they are no longer ghettos. Instead, they become places where people can live happy lives, where people have space and amenities to reach their potential and nurture the bonds of love, friendship that should be the basis of any civil society. You may say that this vision could only be an unfulfilled fantasy. Where would one find the money to invest in such a massive reconstruction program? Who would engineer and lead such a program? And why would you assume such a program would bring about transformative social and economic improvement?

These questions can be answered and solutions can be found if we as a society and a nation grow maturity of intent and political will. What is required is the capacity to imagine a different future based on a different political relationship between the Australian nation and indigenous people based on a radical different fiscal relationship. I argue that the fiscal relation designed to change indigenous people’s economic and social marginalization should be based and not continuation on dysfunctional public funding to deliver services through an unwieldy bureaucratic maze. A system of social impact bonds or social benefit bonds, whatever you want to describe it, has a potential I believe to transform the economic and social position of indigenous people in discrete locations such as Broome. Social investment bonds where dividends are paid to investors based on the actual and projected public savings that would normally be spent on government interventions in health and justice areas is more than simply a new fiscal model.

It also changes the political relationship between indigenous people and the dominant society. It provides the opportunity for a genuine partnership between community, government, and the corporate sector, and transfers responsibility to the community to own the problems and find the solutions to these problems. Under this approach government will play a critical role of enabler, institutional guarantor, and a private investor.

The principles and practical applications in this proposal are transferable to other locations where similar dynamics exist. At the outset there would need to be negotiated a commonwealth state agreement and a community compact which establishes the principles, objectives, and framework for Broome’s urban renewal project. Under this compact, the community and government would agree on the areas of public spending that would be targeted to measure the effectiveness of social economic improvement. I would argue that Broome proposal should identify the broad justice and health expenditure outlaid in this market.

We require upfront investment to start the project and agree. A localized government authority agreed by the communities and government to create and administer the project including assess the cost of project, issue investment bonds, manage the development funds, and allocate resources in accordance with the strategic objectives as well as an independent accountability process. Such a scheme is ambitious because it requires a community and government to reimagine their relationship. The challenge of change is overwhelmingly difficult because people feel safe and content with incrementally reforming like they always have done.

I believe the market-based social investment is an approach that can work to transform local impoverished indigenous communities and should seriously be explored. With the new government currently in Australia with indigenous affairs being placed on the Prime Minister and Cabinet in only the second time in our political history and a track record in advancing indigenous economic development, there is an opportunity in my view to build on the initiatives already being done by the New South Wales government and translating it directly into Australia. I believe Broome presents an ideal parlor to implement this approach. We are ready and we have been for a long time. Are you? Thank you.

More About SEWF

sewfThe Trico Charitable Foundation was honoured to host SEWF 2013. It made history in a number of ways – it was a first for Canada and attracted a record number of speakers and attendees (1,000 individuals from more than 30 countries and over 100 speakers from 20 countries) – but we are most proud of the quality of the discussions on Skills Building, Social Finance, Indigenous Social Enterprise, Collaboration, Policy and Research, and Social Innovation.

A special  thanks to Photos With Finesse by Suzan McEvoy for the pictures, BizBOXTV for producing the videos, and Employment and Social Development Canada for helping to make this post-event coverage possible.

We would also like to thank the following partners for making SEWF 2013 possible:

Organizing Partners:

Lead Sponsors:

Presenting Partners:

Supporting Partners:

Friends of SEWF:

Media Partners:

Each year SEWF gives a different host country an incredible opportunity to celebrate and nurture its own social enterprise movement. The inaugural SEWF met in Edinburgh, Scotland. Since then it has been to Melbourne, Australia; San Francisco, U.S.A; Johannesburg, Africa; and Rio de Janeiro, Brazil. Learn more about SEWF’s history here.

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