Shared services in Australian local government: a case study of the Queensland Local Government Association Model.(Report)

1 Introduction

National and state-based inquiries into the finances of Australian local government have found that not only are a large number of local councils financially unsustainable, but that local infrastructure maintenance and replacement have been the worst affected area of municipal activity (Dollery et al. 2006a). At the state level, the South Australian Financial Sustainability Review Board Report (2005), the Independent Inquiry into the Financial Sustainability of NSW Local Government ('Allan Report') (2006), the abandoned Queensland Local Government Association's (LGAQ) (2006) Size, Shape and Sustainability (SSS) Program, the Western Australian Local Government Association Report (2006) Systemic Sustainability Study, and the Tasmanian Local Government Association Report (2007), all established widespread financial unsustainability and made recommendations to remedy the problem.

At the national level, similar investigations have been conducted, including the Commonwealth Grants Commission Report (2001), the Commonwealth House of Representatives Standing Committee on Economics, Finance and Public Administration ('Hawker Report') (2004) Rates and Taxes, and the recent PriceWaterhouseCoopers Report (PWC) (2006), all of which drew similar conclusions.

These inquiries also considered alternative methods of improving the operational efficiency of local councils. Amongst other possibilities, structural reform fell under the spotlight. In general, almost universal consensus was reached that compulsory council mergers had not met expectations and other types of structural reform offered greater economic gains (Dollery et al. 2007b). By contrast, shared service arrangements were seen as offering great promise.

Little is known about shared service models. Indeed, with the exception of the LGAQ (2006) Report, no inquiry presented more than passing empirical evidence on the outcomes of shared service arrangements. Moreover, even the empirical discussion on shared services presented in the LGAQ (2006) document is badly flawed (Dollery and Akimov 2007a). In addition, the embryonic scholarly literature on shared services in Australian local government, which consists of only Dollery and Akimov (2007a), Dollery and Akimov (2007b) and Dollery et al. (2007a), is restricted to shared service models involving constellations of councils in 'horizontal shared service arrangements'. (1) There is thus an urgent need to examine other models of shared services in local government concerning: (a) different levels of government; and (b) local government at the state level. This paper seeks to remedy this neglect by examining resource sharing and shared services in Queensland local government between the LGAQ and local councils.

The paper is comprised of three main parts. Section 2 provides a synoptic outline of the main characteristics of shared services in local government and presents a brief typology for classifying shared service models. Section 3 outlines the resource sharing and shared service arrangements developed by the LGAQ and provides evidence on the empirical outcomes of these arrangements. The paper ends with some brief concluding remarks in Section 4.

2 Characteristics of Shared Services