A Strong Economy
Impact Investment and Social Enterprise in creating a strong economy
The WA State Government’s Our Priorities are the whole-of-government targets set in place for the state government.
This is the second article in a series of seven articles which reflects on opportunities for engaging with impact investment and social enterprise to meet the Our Priorities targets.
This article focuses on A Strong Economy.
Create jobs
There are jobs; and then there are jobs.
Creating jobs through the development of social enterprise has a dual impact. There is a plethora of evidence[1] that suggests that social enterprise not only supports the growth of employment opportunities; but at the same time, contributes to critical social impact outcomes, in a way that the growth of employment opportunities through traditional enterprises and the corporate sector does not.
Further, social enterprises tend to offer meaningful opportunities for disadvantaged and vulnerable job-seekers, which provides an additional layer of benefit for Government and the community. As outlined by the Social Innovation, Entrepreneurship and Enterprise Alliance in their 2012 submission to Employment Services Beyond 2015, the two markets in Australia that are meant to generate and distribute employment opportunities to the Australian working age population do not work as they should:
The labour market is driven by employers looking for the most skilled and experienced people to fill their vacancies, and so it typically overlooks people not considered ready or able to work. The employment services market is driven by the same commercial reality, with providers competing to place people who they have got job-ready using fees provided by the government.
There is a significant gap in services and assistance that social enterprise fills, and it has an important contribution to make to the landscape of employment services by providing the very ‘wrap-around’ support that is required.
Repair the State’s finances
Social enterprises supported by robust financing models can effectively address social policy objectives, while limiting impact on the State’s financial position (i.e. contributing to Repairing the State’s Finances).
An example of the combined economic and jobs impact of a thriving social enterprise sector, is the Victorian economy, where more than 3,500 social enterprises are trading across metropolitan and regional Victoria employing an estimated 60,000 people and contributing $5.2 billion to the economy.[2]
A benefit of leveraging private capital into impact investment is that the State Government itself does not have to commit significant financial resources.
A Strong Economy: Opportunities
Supporting social enterprise development
In July 2018, the Victorian Government released an updated Social Enterprise Strategy. This outlined that Victoria’s 4,000 social enterprises contribute $5.2 billion to the state economy, employing an estimated 60,000 people. According to an independent evaluation conducted by PwC, the social return on the Victorian Government’s investment in market development intermediaries and social enterprises between 2009–2014 was $3.65 for every $1 invested. It was also found that for every $1 invested in market development intermediaries approximately $0.60 is leveraged from other capital providers.
Providing support for social enterprise development supports the creation of jobs, especially for those people experiencing vulnerability and disadvantage, whilst simultaneously contributing to the State’s bottom line.
Social procurement
As a major provider of public services and infrastructure, the Government can use its buying power to enter procurement contracts that make a real difference to Western Australians. Whether it be creating job opportunities or skills-based training in areas of disadvantage, addressing structural and systemic inequalities, or delivering environmental benefits for local communities, government procurement can add value that all Western Australians can share in.
Social procurement increases job opportunities for under-represented groups and provides greater support for businesses that prioritise social impact alongside the delivery of competitively priced, high-quality construction projects, goods and services.
The Victorian Government released a Social Procurement Framework in 2018, after supporting the concept for a number of years through intermediary development. Social Traders in Victoria now focuses exclusively on helping employment-generating social enterprises to win more contracts, given the extraordinary value generated for the state and for community. For every $100,000 dollars spent on social procurement, 1.5 jobs are created for vulnerable and disadvantaged job-seekers.[3]
[1] The United Kingdom and Canada; and OECD (2013), ‘Job Creation through the Social Economy and Social Entrepreneurship’ considered research from Western Sydney and Tasmania in Australia.
[2] Victorian Government Social Enterprise Strategy, 2016.
[3] See article about Social Traders in Pro Bono Australia: Job Creation Facilitated Through Social Enterprise Procurement
