Politics Matters: Strategic Alliances of Councils -Two Case Studies and a Comparative Analysis of
Relative Success
Presentation to ACELG-CLAIR-OSIPP Forum 2012
‘Improving local government efficiency and
performance: recent experiences in Australia and
Japan’
Dr Bligh Grant
Deputy Director UNE Centre for Local Government
This research is derived from our recently released
book, Councils in Cooperation: Shared Services and
Australian Local Government (Dollery, Grant, Kortt,
2012).
Councils in Cooperation: Shared Services and
Australian Local Government:
• Part A: Local Government Reform in Australia – structural
reform has not yielded expected efficiencies and performance.
• Can shared services (i.e.: separating production from provision;
horizontal + vertical) offer ways of increasing efficiencies while
retaining ‘local voice’?
• Part B: Theoretical + Empirical Perspectives on Shared
Services (yes; economies of scope + scale are achievable in
specific areas)
• Part C: Case Studies: ROCs; Strategic Alliances; Vertical
Shared Services (Bligh principally wrote this).
Shared Services – Conceptual Foundations (x 6)
1. Local autonomy is important: ‘local voice’ and ‘local
choice’;
2. Service provision separate from service production
(councils do not have to produce all the services
they provide);
3. Methods: Joint production (e.g.: advocacy; back of
house (printing) joint provision (libraries)
intergovernmental contracting (financial services);
4. Local or ‘regional’ control must be decided at three
levels: Policy, Management, Delivery;
5. Only some services have scale/scope economies;
6. Need for local control may rule out shared services.
Alternative Models in Australia (Part C of book)
• Regional Organisations of Council (ROCS)
– Examples:
Western Sydney Regional Organisation of
Council (WSROC); Riverina East Regional
Organisation of Council (REROC): Share
advocacy and procurement (big savings);
initially imposed by C’th.
• ‘Vertical’ Shared Services
– Examples:
Queensland Local Government
Association’s ‘Mutual Liability Pool’ and
‘Local Buy’ (i.e.: insurance +
procurement);
• Regional Alliances of Council
– Examples:
New England Regional Alliance of Council
(NESAC); Wellington/Blayney/Cabonne
(WBC). ‘Born running’ (amalgamation threat)
Features of Strategic Alliances (NSW DLG, 2007)
1. Usually spatially adjacent;
2. Small revenue base leading to difficulty meeting
their service obligations;
3. Typically they form a common entity comprising
elected representatives and council
managers/senior staff;
4. They require ‘strong strategic planning focus’
and ‘robust governance arrangements’ due to
the need for commitment;
5. Utilise a range of mechanisms to achieve
objectives, including resource sharing and
business mechanisms.
Case Study 1: New England Strategic Alliance of
Councils (NESAC)
NESAC Story:
• Armidale-Dumaresq, Uralla, Walcha and Guyra
Shires are spatially adjacent. However:
• Armidale dominates in terms of size (25,000 vs
6,000 average for all the others);
• 2003: Vardon Report recommended amalgamation
• Strategic Alliance Model initiated and allowed
(eventually) by the (then) Minister;
• Justified by:
– Retaining local voice;
– A complex (technocratic?) business model;
– $1,7 million in immediate savings and $3.2 million
recurrent savings (from a budget of $50 million).
NESAC (ctd.)
• Very complex business case, including rebenchmarking plant finance, new credit
streams for smaller councils, sharing IT,
finance, HR, payroll, records, stores and a
‘soft’ approach to staff restructuring.
• NESAC was accepted by the Minister
December 2004.
NESAC (ctd.)
However: Early 2009 both Walcha + Uralla announced
they would not be renewing their memberships.
Slowly, NESAC began to dissolve...
Why? 4 broad reasons derived from qualitative
interviews (Conway, Dollery & Grant, 2009)
1. Alliance was seen as forced, ‘amalgamation by stealth’ by
State government;
2. Operational structure was problematic: lack of both
‘competence trust’ and ‘goodwill trust’; all decisions had to be
unanimous;
3. Suspicion over ‘who was really benefitting’ (Armidale the
demon);
4. No long term strategic goal, rather: knee-jerk reaction to
threat (I will return to these points in the conclusion).
Wellington-Blayney-Cabonne Strategic Alliance
WBC Alliance
• Population of 30,000; 12,000 sq km.
• However: No one council is dominant among the
three, and there had been ad hoc cooperation for
some time.
• Again, consolidation threatened after the March
2003 State Election
• By August 28 2003 WBC Alliance was formed,
with a 4-page Constitution:
WBC Alliance Constitution
• Exploiting potential economies of scale through
joint service provision;
• Increasing the range and quality of services
available to residents;
• Reducing the cost of these services to ratepayers;
• Retaining and even expanding job opportunities for
the residents of the WBC Alliance area.
WBC Governance Structure:
• Governed by a Board comprising 2 councillors from
each of the three councils (inclusive of the Mayor);
• Chair and Secretariat rotated every 12 months to
one of the 3 councils;
• Annual Review Process;
• Alliance can admit other councils;
• Constituent councils can leave with 6 months notice;
• Board served by 3 teams of specialists derived from
the 3 councils:
– Finance and corporate;
– Engineering and technical;
– Environmental.
Assessment of WBC Strategic Alliance:
• Initial assessment (Dollery + Ramsland, 2005)
concluded $1 million in savings ($80 million budget).
• Since then, an expansion of remit:
• To reduce cost to member Councils by... joint procurement;
• To reduce cost to member Councils by sharing knowledge...;
• To increase services to member Councils be accessing [more] grants...
• To Staff development and retention...
• Increase employment opportunities [ through]apprenticeships...
• To demonstrate tangible benefits of the Alliance [and]
• To increase community benefit through lobbying and advocacy.
Note: Inclusive language; Emphasis on accountability +
joint procurement; Staff onboard; Identity politics
Estimated savings 2003-04 to 2007-08: $ 3 million.
Question: Why did NESAC fail and WBC thrive?
Kibble Inquiry into NESAC (January 2010) + IKEN:
• Technical issues (failure of IT platform);
• Lack of commitment to NESAC (‘enemy within’ in
ADC);
• Governance arrangements (only met ‘as required’; all
decisions had to be unanimous);
Bligh:
Overtly technocratic (non-political) approach to Alliance
WBC’s continued success:
• Formal establishment (a Constitution);
• Better ‘institutional design’ (decisions not required to
be unanimous; exit strategy for councils; rotating
executive, etc.);
• Inclusiveness of all staff and potential staff;
• Emphasis on accountability in terms of ‘Providing an
account’;
• Appointment of ‘Project Officer’
• Development of ‘Corporate Ethos’
• POLITICS – Ideational and institutional design –
matter!!