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Consolidation in Local Government: a Fresh Look 1

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Consolidation in Local Government: a Fresh Look 1 Chris Aulich, Melissa Gibbs, Alex Gooding, Peter McKinlay, Stefanie Pillora and Graham Sansom VOLUME 2: BACKGROUND PAPERS MAY 2011 CONTENTS Part A: Literature Review 2 A1 Introduction 2 A2 Governance 5 A3 Representation and local democracy 8 A4 Economies of scale in service delivery 12 A5 Economies of scope 15 A6 Strategic capacity 18 A7 The contrasting roles of provider and producer 19 A8 Shared services 21 A9 Arms-length entities 24 A10 References 25 Part B: Case Studies 30 B1 Bay of Plenty and Waikato Local Authority Shared Services 30 B2 Eastern Health Authority (EHA), South Australia 39 B3 North-East Councils, South Australia 45 B4 Sharing a CEO (WA) 49 B5 New England Strategic Alliance of Councils (NSW) 52 B6 NSW Regional Organisation of Councils 57 B7 Water and Sewerage Services in Tasmania 70 B8 Local Government Association of South Australia 75 B9 Break O’Day and Glamorgan-Spring Bay (Tasmania) 85 B10 City of Onkaparinga (SA) 88 B11 Geraldton-Greenough (WA) 95 B12 City of Mount Gambier and District Council of Grant (SA) 101 B13 Central Highlands and Sunshine Coast, Queensland 104 B14 Delatite (Victoria) 121 Volume 2 – Background Papers Consolidation in Local Government: A Fresh Look 1 PART A: LITERATURE REVIEW A1. Introduction Efficiency has remained a primary theme for higher tiers of government within Australasia when addressing issues of local government performance, notwithstanding a substantial body of research both internationally and increasingly within Australasia which casts doubt on the standard arguments that larger councils will be inherently more efficient because of presumed economies of scale. It is a theme embedded in the view that the principal purpose of local government is the delivery of local public goods and services. It is a view that has persisted notwithstanding the almost universal practice in empowering legislation across Australasia, which envisages a much broader role for local government, extending beyond service delivery as such to the governance of its communities1. It can be seen as emphasising one side of the duality of local government variously described as both service delivery and democracy or, as Copus (2006) expresses it, two competing sets of requirements, technocracy and democracy. The dilemma is well expressed by him in the following quotation: Local government is a dual-purpose institution. First, it provides for an additional layer of democracy, political representation, engagement and public accountability to that available to 1 A selection of statutory provisions demonstrates the extent to which the legislation supports the role of councils in areas such as community well-being and quality of life rather than simply efficient service delivery: In South Australia the principal role of a council includes: • To encourage and develop initiatives within its community for improving the quality of life of the community; and • To represent the interests of its community to the wider community. Even its service delivery role is not focused solely on efficiency but has a much wider perspective: To provide and co-ordinate various public services and facilities and to develop its community and resources in a socially just and ecologically sustainable manner. In New Zealand, the purpose of local government is to enable Democratic local decision-making in action by and on behalf of communities and to promote the social, economic, environmental and cultural well being of communities in the present and for the future. In Victoria ‘the primary objective of a Council is to endeavour to achieve the best outcomes for the local community having regard to the long term and cumulative effects of decisions’. In doing so it is amongst other things to ‘promote the social, economic and environmental viability and sustainability of the municipal district’ and ‘ improve the overall quality of life of people in the local community’. In Queensland local government principles include: (a) transparent and effective processes, and decision-making in the public interest; and (b) sustainable development and management of assets and infrastructure, and delivery of effective services; and (c) democratic representation, social inclusion and meaningful community engagement; and (d) good governance of, and by, local government; and (e) ethical and legal behaviour of councillors and local government employees. Volume 2 – Background Papers Consolidation in Local Government: A Fresh Look 2 the citizen in relation to central government. Secondly, it is responsible for the provision of a wide range of public services vital to nations where the state has taken the major responsibility for welfare and social cohesion. Yet, that very dual role generates its own tension for local government, as it can not be assumed that the roles are either mutually compatible or that they respond to the same stimuli, in the same way, or that they are motivated by the same factors. Nor can it be assumed that political representation and decision-making, or the expression of local values and views can be achieved though a set of institutions designed, primarily to run and provide public services. It is the assumption that local government is about the provision of services, almost to the exclusion of its wider political role and that the latter is less important than, or indeed only possible because of, the former, that is itself the cause of a deeper public malaise about local government. Moreover, it is such assumptions that are responsible for hindering the development of politically powerful local centres of government that are meaningful to local communities, rather, than is the case, a local government that is remote and lacking in salience and relevance. A further theme which has influenced thinking in Australia about the role of local government is the extent to which ‘local government’ is seen as comprising a single set of functions which generally all local government entities should be able to undertake or whether there is a distinction which should be drawn between inherently regional and inherently local functions, and the institutions of local government which are responsible for them. A recent example of Australian thinking can be seen in the report of the Queensland Local Government Reform Commission (2007). It had received a number of submissions concerned at the loss of identity and responded by observing that: the Commission has separated the issue of identification with a particular locality, from that of a broader regional community of interest. It does so having regard to the objectives set for it, namely to provide for strong and sustainable local governments that can better manage economic, environmental and social planning consistent with regional communities of interest. The Commission had received a number of submissions on the theme of community of interest, many of them centred around local identity but also emphasising what was seen to be the absence of any single and widely accepted definition. Other material suggests that the Reform Commission may have been extending the application of the term ‘communities of interest’ beyond its normal usage by adopting the expression ‘regional communities of interest’ as a principal guideline for the boundary decisions that it took. It is common for the term 'community of interest' to be employed in local government legislation as a primary consideration when establishing boundary and representation arrangements. The issue with using the term, rather than being the absence of ‘any single and widely accepted definition’ is usually more that it is used to describe a number of different interests and communities - for example, communities of interest, and communities of place. New Zealand's Local Government Commission in the guidelines it has prepared for local authorities for undertaking representation reviews (Local Government Commission 2008) notes that ‘the term “community of interest” is not defined in the [Local Government] Act. It is a term that can mean different things to different people’, and goes on to observe that giving proper consideration to defining local communities of interest is, however, an essential part of the representation review process. It is a necessary precursor to determining effective representation. Communities of interest may alter over time. Local authorities need, therefore, Volume 2 – Background Papers Consolidation in Local Government: A Fresh Look 3 to give careful attention to identifying current communities of interest within their district or region when undertaking representation reviews. The Local Government Commission drew substantially on a research paper prepared for the South Australian Department of Local Government (Fulcher 1989) that defined community of interest as a three-dimensional concept as follows: . perceptual: a sense of belonging to an area or locality that can be clearly identified . functional: the ability to meet with reasonable economy the community’s requirements for comprehensive physical and human services . political: the ability of the elected body to represent the interests and reconcile the conflicts of all its members. The Local Government Commission also noted that the concept of community of interest, for any given local authority, could apply both at the level of the whole district of the local authority, and for specific sub-districts and identified a number of characteristics which should be used in defining particular communities of interest.2 The recent report 'State of Australian Cities
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