There is no doubt councils are masters at partnering with communities and a huge amount of effort goes into harnessing community voices. Councils should utilise this innate ‘partnering’ capability to deliver better operational outcomes for themselves.
Turning this collaborative power around to focus on improving council services and related supplier relationships means more can be achieved for the whole industry.
In our Australasian LG Performance Excellence Program (ALGPEP) we’ve been tracking how councils spend their money for over six years. In 2018, 139 councils had all their services measured and across the councils involved, covering NSW, WA and SA, we accounted for around $10 billion of operating expenditure alone. The program’s process is by nature collaborative – this data only exists because councils have decided to work together with our association and it is a great example of what an industry can do through collaboration.
If local government came together like this more, and used their combined power to solve shared operational issues, councils would be a more united force with key supply and technology partners, ultimately for their communities’ benefit.
Corporate service is king
It’s often ‘roads’ that get all the attention, which in our Australian data accounts for 16.9 per cent of all operating expenditure. But roads are not the largest single expenditure area, even though they factor strongly especially in regional and rural areas.
In Australia, corporate services (or ‘governance and administration’) account for more than roads, more than waste services and more than parks and gardens. In fact, in our 2018 sample of data, corporate services accounted for 20 per cent of all operating expenditure … or a huge $1.9 billion. Put another way, this is an average of $17.5 million per council and growing.
Across Australia and NZ we have seen it grow by 17 per cent in the average council spend over two years.
Over the years ALGPEP has provided valuable insights into into local government. We have used the data to explore costs of services in depth, and uncovered interesting facts regarding the corporate services workforce profile. As the engine room of councils’ strategic and operational activity, it is one of only 12 service areas where our recent data shows women are dominant or equal in numbers to men (out of 32).
So corporate services offer an important career path for many working in council. Across Australia, 62.8 per cent of staff working in this area are female, however they tend to dominate in three main sub-categories of customer service (87.6 per cent), human resources (76 per cent) and finance (69.5 per cent), but not in IT (36.3 per cent).
Forty per cent of governance and administration costs are in the internal functions of human resources, IT, customer services and finance with the largest expense area of these being IT. It consistently ranks number one in NSW councils and number two in both SA and WA, behind finance. While all four of these areas are critical, it is technology that enables an organisation, staff and customers for the changing societal future.
Our 2018 Australasian LG Performance Excellence Program IT cost data shows 104 Australian councils were spending $277 million in one year alone, averaging per council, a staggering $2.6 million per annum in NSW and $2.7 million in SA and in WA. Putting this another way this equates to approximately $6,000- $7,000 per employee depending on the state. The level of investment has also increased per employee since 2016, also no doubt due to the additional investments made in amalgamations.
A big number so why the inattention?
Perhaps one of the reasons these massive IT investments have been a little under the radar is that when put amongst all the areas councils manage, it can look like a relatively small amount. In 2018 it accounted for 3-4 per cent of all Australian operating expenditure.
In Australia, the local government IT market has been traditionally dominated by few players with extremely high barriers to entry and high cost, making true competition limited or focused only on key areas. Yet modern business practices makes this perhaps one of the most essential areas for councils to be highly capable and highly strategic in.
Corporate services and IT expenditure are essential enablers of council operations and must be managed with care and the highest degree of professionalism to ensure the best solutions and leading customer service.
As most councils have many common suppliers, harnessing their collective engagement advantage in practice, would make eminent sense. For it is not just a mere three or four per cent of the cost base, what we are talking about is the significant investment and the sharing of a strongly enabled future vision and outcomes of the highest level.
So, if councils know they are good at collaboration, have already demonstrated a willingness to work together (as evidenced in the power of our program) and they are all dependent on having best in class evolving technology solutions – then it makes sense to extend this approach to engage such strategic suppliers to deliver a much higher-level service for all in this technology-led future – dealing with the sector together.
Annalisa Haskell is CEO of Local Government Professionals Australia, NSW.
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