Agenda of Employment and Economic Development Policy Committee

Employment and Economic Development Policy Committee 7 March 2017

2.1 Grow Local project update

TRIM REFERENCE: 2017/126

AUTHOR: Tony Boland, Business Projects Officer

EXECUTIVE Summary

A final update on the Grow Local program (funded through the Jobs Creation strategy) is contained within this report.

Link To Delivery/OPerational Plan

The recommendation in this report relates to the Delivery/Operational Plan strategy “11.1 Our Economy – Encourage the growth of local business, support emerging industry sectors and attract new investment to Orange”.

Financial Implications

Council has been advised that as a council included in the NSW Government’s merger proposals under consideration by the Office of Local Government since referral on 6 January 2016, Council must comply with the merger proposal period guidelines issued under S23A of the Local Government Act 1993.

The guidelines instruct Council it should expend money in accordance with the detailed budget adopted for the purposes of implementing the Delivery/Operational Plan for the 2015/16 year.

Any expenditure outside the adopted budget requires the identification of clear and compelling grounds and must be approved by Council at a meeting that is open to the public. The guidelines indicate the resolution of Council for increased expenditure must specify the reasons why the expenditure is required and warranted.

If increased expenditure is greater than $250,000 or 1% of the Council’s revenue from rates in the preceding year, whichever is the greater, Council is required to exhibit the increase to the budget and consider comments received.

Council must also avoid entering into contracts or undertakings where expenditure or revenue is greater than $250,000 or 1% of the Council’s revenue from rates in the preceding year, whichever is the greater, unless the contract or undertaking is as a result of a decision or procurement process commenced prior to the merger proposal period or where entering into a contract or undertaking is reasonably necessary for the purposes of meeting the ongoing service delivery commitments of the Council or was previously approved in the Council’s Delivery/Operational Plan.

Implications in this report

The budget for the Grow Local Tier 1 and 2 was $60,000 jointly funded by Council and NSW Department Industry.

Policy and Governance Implications

Nil

Recommendation

That the Council acknowledge the completion of the Grow Local program noting the program has supported initiatives that have identified the creation of new jobs and preserved jobs in the Orange area.

further considerations

Consideration has been given to the recommendation’s impact on Council’s service delivery; image and reputation; political; environmental; health and safety; employees; stakeholders and project management; and no further implications or risks have been identified.

SUPPORTING INFORMATION

Council has been operating the Grow Local program with the matched financial assistance for part of the program for the NSW Department of Industry. There were three tiers to financial assistance given to businesses through this program. The Department of Industry money only applied to Tiers 1 and 2.

The three tiers were:

· Tier 1: The Business Enterprise Centre (BEC) was engaged to offer services to startup businesses in Tier 1 of the program. This provided businesses with assistance in managing their businesses.

· Tier 2: Assistance is given direct to businesses following an application process. The focus is on the creation or preservation of jobs in the businesses.

· Tier 3: Is not part of the funding from Department of Industry and relates to the assessment of land sale prices Council makes. Council considers the number of jobs that a land sale will create and incentivises the sale based on the impact of those jobs and the likelihood they will eventuate.

· Tier 1 – 16 participating businesses approved

· Tier 2 – 12 participating businesses approved

· Tier 3 – 4 land related transactions to date

The program is now concluded.

Overall the following jobs outcomes were achieved:

· New Full time jobs identified in the projects supported: Between 486 and 586 (some of these are in long term projects hence the range)

· New Part time jobs identified in projects supported: 4 part time and 8 casual jobs

· Preserved existing jobs supported by the projects supported: 52 Full time, 105 part time and 18 casuals.

Details of the assistance given is provided below.

Tier 1

The Grow Local Tier One businesses were identified by Council and/or the BEC and were managed by the BEC on behalf of Council. The types of businesses that the Tier 1 funding has assisted is shown below. Jobs that are existing/new are shown as the businesses are in varying states of progression (start up or recently formed). Numbers of jobs are identified as full time (FT), part time (PT) or casual positions:

· Further development of an app to assist people in high dependency facilities (1FT).

· A local cleaning business about to experience growth (1 FT 6 Casual)

· Cleaning business in need of marketing strategy (2FT)

· Household installations – assisting with quoting and marketing (1FT)

· Cooking and Cleaning business – marketing and IT training (1FT)

· Niche/boutique retail – financial management (1FT 1PT)

· Makeup artist – support, mentoring, ongoing assistance (1FT)

· Personal training business - support, mentoring, ongoing assistance(1FT 2 Casual)

· Hospitality – support, mentoring, ongoing assistance (1FT 1 Casual)

· Pet Assistance Service – planning, marketing and operations (1FT)

· Domestic cleaning - support, mentoring, ongoing assistance (1FT)

· Property maintenance – business and marketing planning (1FT)

· Lawn care service – financial management and planning (1FT)

· Furniture construction – financial management and marketing activity (1FT)

· Retail food – Marketing advice and activities (1FT 1 Casual)

· Homecare - support, mentoring, ongoing assistance (1FT)

The Tier 1 assistance has therefore helped with 16 businesses in Orange, offering job opportunities for 17 fulltime, 1 part-time and 10 casual positions.

Tier 2

There have been 12 businesses approved for assistance under Tier 2. This funding has a co-approval process between Council and NSW Department of Industry.

The types of assistance provided so far include:

· Essential oil extraction – capital equipment purchase - new jobs 1 FT 2PT

· Fibre mill – training and marketing/promotional activity - new jobs (6 casuals equating to 3-4 FT)

· Disability Service – marketing strategy and campaign – maintenance of existing jobs – 38FT, 128 PT and 9 casuals

· Sports aid – testing, industrial design and manufacturing - new 1 FT

· Packaging supplies (company withdrew)

· Electrical services for carbon credits scheme – capital equipment lease– 2FT

· Food Production business – product testing– 4 FT

· Construction manufacturing & projects – website and marketing enhancements – 6FT

· Disability Service – further marketing – maintain 52 FT, 105 PT and 8 casuals

· Tourism and on-lines sales business – website enhancement – 1FT and 2 casuals

· Fibre mill – marketing and promotional activity – 2 FT

· Primary production – export connections – 2FT and 3PT

Total proposed new jobs in Tier 2 businesses assisted: 19 FT, 5 PT and 8 casuals.

Total preserved jobs existing in Tier 2 businesses: 52 FT, 105 PT and 8 casuals.

Two businesses within Tier 2 were able to take advantage of the program twice as the program stipulated assistance only once per financial year. In both cases it was deemed by the assessment panel that the assistance being sought was for new and different reasons to their first application, making them eligible to receive a second grant.

Tier 3

Throughout the program, land transactions where Tier 3 criteria were applied were for projects that predicted 440 – 540 jobs as their target if the developments are fully realised. These transactions relate to major projects that take time to mature.

Attachments

1 Grow Local Program - Information sheet, D15/9880 ⇩

Employment and Economic Development Policy Committee 7 March 2017

2.1 Grow Local project update

Attachment 1 Grow Local Program - Information sheet

D15/9880

TI logo colour rgb

Orange City Council Jobs Creation Strategy

Grow Local Program

PRIMARY GOAL

Orange City Council has created a ten year program entitled Jobs Creation Strategy which offers a range of programs to drive the ongoing growth of the jobs offered in the Orange region.

One of the initiatives in the Strategy is the Grow Local program.

The program is co-funded and jointly administered by NSW Trade and Investment and Orange City Council.

The primary goal of the Grow Local program is to support business endeavours that deliver jobs creation or protect existing jobs in the Orange area. The program offers financial assistance to businesses to enable new business development or support to enable existing businesses to grow.

All successful applicants will be required to specify the number of jobs their project will create or retain and report against the creation of those jobs and against other agreed deliverables tailored for each project. A funding agreement will detail the deliverables, reporting requirements and acquittal processes.

ASSESSMENT

Applications will be assessed by officers from NSW Trade and Investment and Orange City Council and assessment will be on a merit basis.

Prior to the lodgement of an application form, interested parties will be required to meet with a Council representative to determine if the program suits their needs.

If a suitable part of the program is identified, an application form will be provided for the applicant to complete.

ESSENTIAL CRITERIA

Essential criteria for the assessment of applications will be based on:

· Jobs creation (or retention) - the identification of the number of new or retained jobs and the evidence of the sustainability of those positions as long term jobs

· Financial viability of the business/proposal.

· Market condition assessment- applies to category 2 applicants – competitive neutrality is a key consideration – this means each applicant will be asked to demonstrate they have a point of difference in their operations that they can identify to warrant them receiving funding. The concept is a matter of equity – a business that demonstrates a uniqueness can be assisted as there aren’t other businesses who would equally be eligible for funding if they applied. Examples of points of difference that could be identified include:

o A business may be able to identify how it adds value to a product or service that creates a unique end product within the local or external markets.

o A business may offer a product or service that no other business is trading locally, regionally or state or interstate.

One application per business/person per financial year only is permitted.

Funding is not available retrospectively.

CATEGORIES OF FUNDING

There are 3 Grow Local program categories:

1. Start up/small business advisory service

2. Structural adjustment assistance

3. Medium/large business assistance – purchase of council properties

Eligible applicants for each category and the funds available per application are as follows:

Category	Business/applicant types	Allocation
1	Startup/small business advisory service: Applicants based in the Orange LGA (can be individuals) planning to create a business or who are already a registered businesses and who are eligible to undertake the Business Health Check delivered by the Central NSW Business Enterprise Centre.	One application of up to $100 per individual/business per financial year to fund business development consultations delivered by the Central NSW BEC after the completion of the Business Health Check. Note the Business Health Check is a free service offered by the Central NSW BEC. In 2014/15 funding of $100 per business for 10 businesses will be available. In 2015/16 funding of $100 per business for 10 businesses will be available.
2	Structural adjustment assistance: Primary Target Group Registered business operating and/or employing staff in the Orange LGA who are directly impacted by the closure/downsizing of other businesses. Secondary Target Group Registered business operating and/or employing staff in the Orange LGA who are indirectly impacted by the closure/downsizing of other businesses or businesses who want to expand.	One application per business per financial year up to a value of $5,000 (ex GST) per application subject to a matching $ for $ commitment from the business. An allocation of $45,000 has been identified in 2014/15. An allocation of $15,000 has been identified in 2015/16.
3	Medium/large business assistance – purchase of council properties: Registered businesses who have their head office/primary operations or new businesses relocating to the Orange LGA who are purchasing council property to enable their expansion.	One application per business per financial year. The $ amount is determined upon application based on the number of jobs to be created.

DETAILS OF THE PROGRAM CATEGORIES

Start up/small business advisory service

This category is designed to assist those seeking to start a business, or a small business looking to improve business efficiencies, expand processes or diversify.

Assistance of up to $100 per small business venture per financial year is available. A total of $1,000 is available in this category in each of 2014/15 and 2015/16.

Funding can only be used to access services from the Central NSW Business Enterprise Centre (BEC).

Each applicant must undertake a Business Health Check under the Small Biz Connect program in consultation with the Central NSW BEC. The funding will allow for up to 4 additional one-on-one sessions with a business advisor from the BEC after the Health Check process has been completed. The BEC advisors can assist in the successful implementation of the action plan that is developed in the Health Check.

Eligibility will be as per the requirements of the Central NSW BEC for their package of assistance programs.

One allocation per business/person per financial year of $100 is available for up to 10 businesses/persons.

Structural adjustment assistance

This category applies to existing businesses operating in the Orange LGA who can demonstrate a negative impact on their business associated with the closure/contraction of another business(es), or a business who wishes to expand in the Orange LGA

To initiate this funding, an interview with Council officers is required. Applicants will need to identify the following:

· The applicant will be required to identify their loss of sales/potential growth opportunities and the potential number of jobs to be lost in their business arising from the closure/reducing trading conditions of the other business(es).

· The applicant is also required to identify how their strategies will create a specified number of new long term permanent jobs in the Orange region as well as deliver long term financial sustainability in their business.

· Applicants must provide matching dollar for dollar funding. In-kind contributions can not be included. A maximum of $5,000 per business per financial year is available under the program. Firms applying for repeat funding in subsequent years would need to make a strong case to secure additional funding.

All applicants will be required to complete a funding agreement that specifies how many jobs will be created or retained, when the jobs will be created and financial targets. Reports are required on progress and the funding agreement will specify the reporting timeframes and contents.

Strategies and plans will be funded only if prepared by an independent external party to the applicant who is approved in the assessment process by NSW Trade and Investment and Orange City Council. The use of local firms to be appointed as the independent external party will be favourably considered.

Activities that will be funded under this category are:

· Preparation and implementation of business, marketing, operational or similar plans for new products or new markets to deliver expansion of current operations via diversification. The plans must be prepared by an external suitably qualified party (note the program won’t fund compliance work by the firm’s accountant or nor by an employee).

· Preparation/implementation of projects that offer opportunities through:

o financial restructuring

o credit/risk management

o cost control management

o business process efficiency/improvements designed by an approved external party - the program must be prepared by an external suitably qualified party (note the program won’t fund compliance work by the firm’s accountant or nor by an employee).

· Training for business owners in business improvement skills

· Marketing/business promotional materials to enter new specified target markets – including marketing campaigns, packaging/labelling initiatives

· e-commerce trading solutions to specified target markets

· other growth strategies that satisfy NSW Trade and Investment and Orange City Council

· upgrade capital equipment – 3 quotes are required (unless unique processing equipment is required). The use of a local supplier will be favourably considered.

An initial interview with Council staff is required to ensure the program offers a suitable assistance opportunity.

The assistance package offered is subject to the completion of an application form which will be evaluated by NSW Trade and Investment and Orange City Council.

Eligibility and assessment criteria include:

· Priority will be given to businesses who can show evidence of a direct impact upon the applicant’s workforce resulting from a reduction in an associated business – confirmed through the provision of documentary evidence of the relationship (contracts, letters of engagement, financial information showing payments etc)

· Demonstrated significant reduction in the applicant’s actual or projected sales growth

· Provision of financial records – 2 years of audited financial statements are required

· Demonstrated long term financial sustainability under normal trading conditions (via a project or cash flow plan or similar)

· Evidence that the applicant’s business operates in the Orange LGA. The applicant must employ at least 2 full time equivalents (can include the owner)

Applicants will be required to provide information to update Council’s supply chain directory. This directory lists imports and exports on a business by business basis so that a business can identify who they may be able to cooperatively trade with inside the Orange region with a view of saving costs and improving efficiencies. More detail on the Directory is provided below.

Each funding agreement will have an action plan attached to it outlining the reporting and agreed deliverables for the project. The action plan will identify timeframes and clearly defined deliverables that the applicant will be required to report against. All projects will be required to report on the number of jobs created/retained plus other deliverables specifically developed on a case by case basis. All info treated as commercial in confidence.

Medium/large business assistance – purchase of Council properties

Where a business wishes to purchase council property to expand their business/create a new business and can demonstrate it will create at least 5 additional long term jobs the following assistance will be available:

· Advisory assistance from NSW Trade and Investment and/or Orange City Council

· Introduction to local suppliers/ potential customers as identified in the Council’s supply chain directory

· Advice on grants available from the NSW and Federal government

· Assistance in completing grant application forms and submissions

· Council introduction to relevant members of NSW and Federal government if needed

· Subject to demonstration of the creation and maintenance of at least 5 long term jobs as proposed in the application three (3) years post occupation certificate, and subject to advertising under the provisions for financial assistance from councils (s356 Local Government Act (1993)) a rebate on the land purchase price equivalent of up to 10% of the purchase price of the land (ex GST) may be offered

· Consideration of price per m2 can be negotiated subject to the consideration of the number of full time equivalents that will be created.

Businesses will remain responsible for all costs associated with their relocation/expansion.

Supply chain directory

Orange City Council will prepare an annual supply chain directory which will include import and export products on a business by business basis trading in the Orange region.

The aims of the Directory are to:

· Profile the Orange region supply chain

· Assist in local data to inform the Council’s economic model of the region

· Identify where local businesses could buy/sell their products more cost effectively locally or in a cooperative manner with other local businesses

· Identity transport and barriers to trade

· Identify where there are opportunities to fill supply chain deficiencies

All businesses receiving funding under the Grow Local program will be required to complete a survey outlining operational and trading information. A free copy of the Directory will be provided to the participants and will enable them to identify potential customers or other businesses that they may be able to work with to reduce costs in areas such as transportation.

Confidentiality will be maintained to protect business intelligence. Information sought for the directory will include:

· Name of the business

· Contact details

· Current products sold

· Value of products sold

· % products sold in Orange region, in Central West region, in NSW, interstate and internationally

· Current products purchased

· Value of products purchased

· % current products purchased in Orange region, in Central West region, in NSW, interstate and internationally

To develop a monitor of trading conditions to assist businesses in their planning processes, and to identify future expansion/trading plans, information to be collected from individual firms but collated to an industry levels on information including :

· Staffing levels – current full time equivalents (FTEs)

· Predicted future staffing levels - FTEs

· Sales/turnover – current

· Sales/turnover – projected