The pressure may be on as Australian councils are forced to penny-pinch across the board, but some out-of-the-box thinking could help get councils out of financial strife.
As State Local Government Ministers across Australia continually eye down the prospect of forced amalgamations, there is increasing pressure on many councils to consider different financial paths.
Two groups of councils in North West Tasmania have managed to achieve significant savings as a result of resource sharing, which is the subject of recent research by University of Technology Sydney: Centre for Local Government (UTS:CLG).
Tasmania’s Local Government Minister Peter Gutwein threw down a cost-saving ultimatum to councils last year (with wistful echoes of ‘Fit for the Future’), the message: cut costs or pay the price.
As discussed in the UTS analysis, the councils have been “quietly providing” improved service as a result of resource sharing. Kentish and Latrobe Councils share and equipment; Circular Head and Waratah-Wynyard Councils share staff, projects and procurement.
Embracing economies of scale by joining together is paying off, with both sets of councils delivering savings over $750,000 per annum. (You can read more about the resource-sharing situation on page 12.)
If we look to international examples, too, there are interesting instances of municipalities responding in creative ways when state and federal governments slash funding which local governments had previously relied on.
In the UK – which has undergone a process of government shrinkage – local councils have also had to fight for grant funding from higher levels of government. There have been some notable upsides, though.
As reported by New Zealand Local Government Magazine, Birmingham City Council had grant funding sliced by close to 45 percent, but that revenue is being replaced by a central government plan to allow business rates to flow back to council.
The council already received a proportion of these rates, but in a few years, the entirety will be delivered to the council, easing the burden created by the reduced funding. The rationale is to foster more local government independence.
The City has also joined a combined authority involving six other nearby councils to effectively negotiate to the central government on behalf of the whole region.
The situation has clear parallels back on Australian turf: if reducing reliance on state and federal coffers is the key to warding off the threat of amalgamations, it may be possible if councils are willing to build trust and ongoing relationships with their closest neighbours.
Strength in numbers, after all.
