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Shared services to centre stage

Written by Peter McKinlay on March 13th, 2011.      0 comments

Shared services in local government have always looked like the idea which never quite made it. There have always been good arguments for doing it, but largely not good enough to overcome resistance, apathy, inertia and the sheer difficulty of shifting from well trodden ways of doing what we have always done.

In 2010, Deloitte was lamenting that "despite a history of tactical collaboration, shared services have really succeeded at scale". Similar comments are common throughout the research literature on local government.

Most notably, higher tiers of government, in search of the holy Grail of improved local government performance, normally reject arguments for doing so through shared services in favour of amalgamation. That's got the political attraction of looking like firm and positive action, and electoral cycles mean the fallout usually affects a different government. But it also reflects real resistance within local government. Queensland's Local Government Reform Commission was put in place to restructure local government because the state government lost patience with attempts to improve performance through a shared services strategy. One reason the Royal Commission on Auckland Governance decided not to put in place a second tier of substantial councils below a regionwide council was it believed such a tier would not be capable of agreeing on the measures needed to improve performance through a shared services approach.

But it's amazing what a bit of fiscal pressure can do. Most local governments are now facing as tough a financial outlook as ever they have seen. The New Local Government Network's just released publication Shared Necessities: The Next Generation of Shared Services makes a compelling argument that simply sharing back-office services, even if every council across the country does that to an optimal level, will come nowhere near coping with reduced revenue. The only option is to move to comprehensive shared services across the full range of what councils actually deliver.

Interest is increasing elsewhere. In New Zealand one group of councils has taken an innovative approach to how they think about shared services - for them it is very much a matter of access to and management of information, rather than the former approach of physically shifting things around, outsourcing etc. Key to this is a high-speed fibre optic cable linking all the councils together. This will enable the development of a 'centres of excellence’ approach with each council developing a different specialty, so that there is room for the large and small. Contrary to the usual fears about shared services, this approach should underpin local democracy and the continued relevance of the smaller councils.

Peter McKinlay will be presenting the findings from a case study on this initiative at the forthcoming colloquium of the Research Advisory Group of the Commonwealth Local Government Forum to be held in Cardiff 12-14 March 2011. His paper will shortly be available in the resources section of our website.
Topics: Shared services



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