Collaboration in local government can save money and improve access to services but a new survey shows most councils are not effectively engaging in shared services.
Insufficient planning, inappropriate governance and a lack of capability are among the main factors preventing more councils in NSW from efficiently and effectively engaging in shared services, according to a new report from the state’s audit office.
The report, released yesterday, also found the state’s Office of Local Government did not provide specific support or guidance to councils on how to effectively share services, despite it being a widely used delivery model across the sector.
The Auditor-General has recommended the OLG produce guidance on shared services for the local government sector by April 2019.
The auditor’s report, based on a survey completed by 67 councils, found 87 per cent were engaged in shared services, and 27 per cent negotiating or considering future shared services.
The most prevalent areas of joint delivery were waste and recycling, environmental, road services, procurement, asset management and human resources.
Barriers to excellence
However, the report identified several key factors that are preventing councils from effectively and efficiently engaging in joint services.
It found that local governments do not always analyse their existing services or build a business case before entering into shared service.
“At a minimum, councils should assess the costs of service delivery, the resources needed to deliver them, community needs and expectations, the possibility of cost savings and increased efficiency, and alternative service delivery models (e.g. outsourcing, shared services),” the report found.
Ineffective governance models were identified as another key barrier.
“For each model, councils need to determine shared services membership, decision-making processes, reporting lines, and delegations,” the report said.
Given shared services arrangements can involve complex planning and negotiations, the report found that capability was another factor preventing many councils from effectively executing collaborations.
“Councils do not always have the capability to identify which services to share, negotiate with partner councils, or plan and evaluate shared service arrangements. We found that many councils do not seek out support or guidance for their shared service arrangements.”
Sources of advice
Support for identifying, negotiating, planning and evaluating shared service arrangements is available from other councils, regional organisations, peak bodies, professional associations, universities and the private sector, the audit office said.
While part of the role of OLG is to work with the sector on policy and programs intended to strengthen local government, including councils’ service delivery, the report said the OLG did not provide specific support or guidance to councils about effectively sharing services.
“Guidance or principles to help councils decide on effective and transparent governance models would benefit the sector,” it said.
It recommended the OLG develop guidance outlining the risks and opportunities of governance models that councils can use to share services. “This should include advice on legal requirements, transparency in decisions, and accountability for effective use of public resources.”
For councils, the audit office recommended they base decisions about shared services on a “sound needs analysis”, review of service delivery models and a strong business case.
Councils should also ensure the governance models they choose are fit for purpose, ensuring clear roles, responsibilities and accountability.
Local governments should also build the capability of councillors and council staff in the areas of assessing and managing shared services, leading to better understanding of opportunities and management of risk, the report found.
OLG: welcomes report
The OLG told Government News it welcomed the auditor’s report and its observations on strengthening local government performance in shared service delivery.
“The report’s recommendation that the Office of Local Government develop guidance in the risks and opportunities of shared services will provide valuable support for councils,” a spokesperson said.
“The NSW Government has recently introduced a major initiative to support council collaboration and provide a robust governance framework for councils to undertake shared services through the establishment of 11 new joint organisations.
“The Office of Local Government looks forward to working with the NSW Auditor-General and the Audit Office to implement the findings of the report, as we continue to support local councils to deliver high quality, value for money services for their communities,” the spokesperson said.
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