Chapter 4 : Local Government Performance

Local government effectiveness and efficiency is affected by its structure and method of measuring performance. The first section of this chapter is about progress in 2000-01 towards structural reform in local government, followed by a discussion about the development of local government performance indicators. The chapter concludes with information on Federal Government programmes aimed at capacity building in local government.

Structural reform of local government in Australia

This section explains why structural reform of local government is still needed in some States and it provides an update on progress made in implementing structural reform in New South Wales. In Western Australia there were 147 councils in 1910 and there are still 142. In every other State the number of councils has been reduced by between a quarter and almost two-thirds.

In South Australia, the State-wide voluntary structural reform undertaken in the mid 1990s has been followed by reforms to modernise legislation. The more modern legislation provides for more effective and accountable government by:

  • assessing the scope for financial and functional reform; and
  • developing partnerships between State and local government.

In Tasmania, South Australia and Western Australia, the development of formal partnership agreements is also occurring. These agreements are a promising long-term development in whole-of- government approaches to servicing regional communities and they are assessed in more detail in chapter 7. For a comprehensive analysis of structural reform in every State, see the 1997-98, 1998-99 and 1999-2000 national reports.

Local government structural reform embraces a number of initiatives including cooperative service provision, resource sharing, joint service delivery enterprises, boundary change and amalgamations. The Federal Government has provided almost $1.3 million under the Local Government Development Programme to facilitate structural reform in South Australia, New South Wales, Western Australia and Tasmania. The Federal Government has supported structural reform initiatives of the States because:

  • it wants to build local government's capacity to serve its community. In general, larger councils have a more secure and adequate financial base, are better able to plan and to contribute to economic development, are more effective community advocates, and interact more effectively with government and business. Small rural councils in Australia's inland face a multitude of challenges including depopulation, low rates, deteriorating infrastructure and demand for better services. Merging can bring greater financial strength and stability to these rural councils.
  • it continues to pay councils about $1.375 billion per annum in untied financial assistance grants or around 9 per cent of council income. It wants councils to deliver value-for-money services to local communities. Structural reform delivers economies of scale and allows councils to employ a wider range of professionals, so they can offer a wider range and higher quality of service.
  • without change, councils face the possibility of an ever-diminishing role as individual services are contracted to the private or voluntary sectors, while other concerns, such as the environment, are addressed by special interest groups or agencies. These changes can undermine local democracy and reduce service integration.

An important advantage of structural reform is that the money stays in the community. Money that would have been spent on council depots or stores or on administration can be spent instead on service improvement or infrastructure, such as repairing local roads or providing recreational facilities to help retain young people in rural communities.

The Western Australian Structural Reform Advisory Committee developed a set of principles for councils in Western Australia to consider their options for structural reform and perhaps these principles can be used for guidance nationally. The Committee said where councils fail to meet more than one of three viability criteria, they should examine their viability, operations and options for structural reform. Those viability criteria are:

  • where administration expenditure is more than 10 per cent of expenditure;
  • where debt service is more that 33 per cent of rate income; and
  • where financial assistance grants are more than 50 per cent of total income.

Another factor to be borne in mind is the size of the council areas. Generally council amalgamations are not practical for large councils in sparsely settled areas, such as north-western New South Wales, Western Queensland, rural parts of the Northern Territory and areas east of the wheat belt in Western Australia. The distances involved in fulfilling council duties generally make such mergers uneconomic.

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The national picture

At September 2000, Australia had 726 local governing bodies eligible for financial assistance grants comprising 622 councils and 104 Aboriginal and Torres Strait Islander and other local governing bodies. Over the 80 years to 1991, the number of councils in Australia fell by 20 per cent (Sproats 1996, 5). In the ten years since, council numbers have fallen by a further 25 per cent (see table 4.1).

Table 4.1: Local government 1910-2001 by average council population per State

Local government employment reached 158,300 in February 1994, declined to a low of 139,100 in February 1999 and recovered to 145,200 in February 2001. The biggest reductions were in Victoria where the workforce fell by 13,000 from 44,500 in February 1994 to 31,500 in February 1999 but then made a modest recovery to 33,000 in February 2001. The reductions in Victoria followed reforms that led to compulsory mergers, compulsory competitive tenders and mandated rate cuts.

On average, each council employee now serves 133 people (in 2000 they served 137). The Northern Territory and Queensland have many small, scattered Aboriginal and Torres Strait Islander councils correlating with higher than average staffing levels. Staffing levels in South Australian councils appear to be significantly lower than the national average. Each council worker in South Australian must serve on average 190 people or more than 40 per cent above the average for Australia. This is not a new phenomenon. It precedes the mergers of 1996-97. Staff numbers had already fallen from 9,100 in February 1994 to 7,900 in February 1996. The population of South Australia has grown by 2 per cent since 1994 putting additional pressure on staff. These low staffing levels are corroborated in the Centre for Labour Research study below.

There may also be strains in representation levels emerging in Victoria. Australia has about 5,900 local government councillors each representing on average about 3,300 people. But there are wide variations across each State, with each councillor in Victoria representing on average at least twice as many people (about 8,100) as councillors do in other States (some people might instead argue that the other States are over-governed).

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South Australian study of council mergers

A study by the Centre for Labour Research at Adelaide University has examined changes in South Australian local government over recent years. Some of the changes include council amalgamations, national competition policy, contracting out, unfunded mandates from the State Government and funding freezes, essentially 'doing more with less'.

The study was based on a survey, focus groups and interviews of employees, councillors and managers. It appears to be most negative about the impact of contracting out (there is corroboration of this in other studies) and about a two-year mandated rate freeze. The study says of amalgamations 'in some cases it is hard to separate the impact of amalgamation from the impact of other changes occurring in local government at the same time'. It says 'the impact has varied considerably from council to council. There appears a clear strong difference in views about the benefits or otherwise between managers and elected councillors on the one hand and the staff of councils on the other' (p.39).

The benefits ...

Bearing these reservations in mind, the study finds the benefits include:

  • better planning of council activities;
  • more services;
  • better use of capital equipment;
  • better technology;
  • economies of scale;
  • more expertise; and
  • customer service focus.

One mayor said:

We've been able to rationalise resources. We can better manage our coast, be more specialised ... for example, get more specialised equipment ... the beach cleaning machine ... the rapid response team doing repairs, graffiti, tree cutting. We've been able to rationalise the equipment and more gainfully employ people. We have a larger staff so we can multi-skill and cover absences and have backup for leave. We can negotiate prices, for example, our contract waste management and purchasing ... (p.41).

The study says 'amalgamation is seen as a positive change in some councils which, in combination with other changes in the industry, means more modern accountable and better planned local governments' (p.39). Customers were the major beneficiaries. One urban council executive said 'there has been a huge impact in terms of our service delivery. The district as a whole has benefited.' More than half of the respondents (54 per cent) to the survey agreed that 'the public gets a better service from their councils than in previous years' (p.80).

Not surprisingly the mergers worked best where management and councillors were most effective at consulting and communicating with staff. In the summary newsletter, Doing more, with less, released at the same time as the report, the researchers indicate:

In those councils where amalgamation had either proceeded relatively smoothly or where recovery by the organisation had been achieved best, all concerned tended to stress the positive impacts of amalgamation, particularly the issues of planning and customer focus (emphasis added).

In short, well-managed mergers can be very good for residents. In the 1998-99 National Report, sustainable annual savings from the South Australian mergers were estimated to be between $19 million and $33 million or about 3 per cent to 5 per cent of council expenditure. The emergence of State-local government partnership agreements is also a positive step for communities and is more practical when the State needs to negotiate with 68 councils instead of 118 councils.

... and the drawbacks

The study identified the negative effects of mergers, some of which were:

  • loss of experience and expertise through staff loss;
  • job insecurity;
  • some confusion about job role;
  • an 'us and them' mentality between pre-amalgamation entities;
  • a drop in capital expenditure;
  • big cuts to road construction (where it applies) and road maintenance; and
  • drop in outside staff numbers yet greater areas to deal with (p.42).

The obligations created in pre-amalgamation agreements, which usually involve staff retention, maintaining service centre presence and rate equalisation put pressure on the newly merged councils and their staff.

We had commitments due to the previous council's amalgamation agreement document. It underpinned what would happen with staff, what would happen with buildings, rate equalisation. It was put together in a hurry ... It identified savings that were not realistic, not achievable (p.40).

One rural Chief Executive Officer remarked:

... we were not to raise rates by more than the CPI, plus we needed to align three different rates. That reduces rate income. We're trying to reduce debt. That creates difficulty maintaining services and capital expenditure is decreasing ... spending on tourism and waste management is increasing, spending on roads is decreasing (p.40).

South Australian councils and communities did have the opportunity (unlike Victorian councils and communities) to choose their merger partners. That was important because councils were reluctant to merge with another council with high debt levels. One urban mayor said:

Our communities have a traditional conservative base, a lot of old families who did not want amalgamation ... We had a consultative process. Another council was rejected due to debt levels. The two to amalgamate were financially sound, the communities perceived us as being accessible. That's what they wanted us to be (p.41).

Amalgamations were one of a number of reforms that contributed to staff stress and work intensification as organisations were implementing change as well as carrying out daily duties. However, claims of job shedding made in the study are not supported by the Australian Bureau of Statistics statistics. There were no net reductions in staff - there were 7,900 staff employed in February 1996 and 7,900 staff employed in February 2001.

This compares with the reduction in council employment in Victoria where, mandated rate cuts of 20 per cent, council mergers reducing them 210 to 79 and contracting out of 50 per cent of functions decreased staff numbers from 44,500 in February 1994 to 33,000 in February 2001. This was a massive change. Nevertheless, there is evidence that South Australian council workers are under pressure. As indicated in table 4.1, each council staff member must serve an average of 190 people, or more than 40 per cent more in other Australian States.

Lessons from this and other mergers include:

  • achievable pre-amalgamation agreements;
  • addressing up-front the budget tension between debt level and service delivery;
  • greater staff involvement and consultation;
  • combined meetings of all staff at the time of the amalgamation and other strategies to dissolve the 'us and them' feelings; and
  • addressing the roles of elected councillors and the divisions between them in the amalgamated council.

The study noted that almost every focus group of outside staff stressed the value of visits from the CEO or other senior management pre- and post-amalgamation to their knowledge of the issues and their feelings of inclusion.

As a result of the study, the Centre for Labour Studies issued Guidelines for managing workplace change in local government.

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Structural reform in New South Wales

New South Wales has almost halved council numbers, from 324 councils in 1910 to 172 now. This included major changes in the 1970s, when 34 rural councils were amalgamated into 15 larger bodies.

The Federal Government has provided up to $400,000 to the New South Wales Local Government and Shires' Associations, to enable groups of councils to assess the costs and benefits of further structural reform. Details of projects funded appear in the 1997-98 National Report. The New South Wales Local Government and Shires' Associations has prepared an excellent structural reform manual called Models for voluntary structural reform to guide the reforms, assisted by Federal funding.

In July 1999, changes were introduced within the New South Wales Local Government Amendment (Amalgamations and Boundary Changes) Act 1999 to streamline voluntary council mergers. Councils could defer elections to submit merger proposals for voluntary amalgamation by 30 June 1999. Table 4.2 shows the councils that have amalgamated this year.

Table 4.2: Council amalgamations in New South Wales

For the purposes of calculating the new councils' eligibility for local government financial assistance grants, the New South Wales Grants Commission has treated the former councils as separate entities and aggregated the results to obtain allocations for the new councils.

Sproats Inquiry into local government structure in inner and eastern Sydney

On 11 October 2000, Professor Kevin Sproats was appointed as Commissioner of an Inquiry to review the structure of local government in the inner Sydney areas of Botany Bay, Leichhardt, Marrickville, South Sydney, Sydney, Waverley and Woollahra. The Inquiry concluded on 20 April 2001.

Inquiry recommendations

The Inquiry recommended that reform be rejuvenated through a partnership between the State Government and the community. Councils in New South Wales had supported a policy of 'no forced amalgamations' and Leichhardt, South Sydney and Woollahra Councils had called for plebiscites and referenda. However, the Commissioner considered these inherently favoured the status quo and impeded reform. Councils had shown they were unable, through voluntary mergers, to sufficiently advance reform.

The Inquiry recommended that the eight existing councils be replaced with four new councils:

  • Council 1 - an enhanced City of Sydney,
  • Council 2 - a mixed residential-industrial city,
  • Council 3 - a beachside-harbourside residential city, and
  • Council 4 - an inner west residential gateway city.

Reform required more than just mergers. The Sproats Inquiry found that people had a strong allegiance to suburbs rather than to their council area. It recommended that 'the suburb be recognised both for its expression of community identity and its potential as a unit for local democracy and place management' and that 'council strategic and management plans identify specific provision for service delivery and governance within each suburb' (p.8).

The Inquiry found that councils need to take a more strategic view of their responsibilities and prepare strategic plans to guide their communities addressing such things as intergovernmental relations, infrastructure and environmental management, local democracy, traffic management, affordable housing, homelessness and drug addiction and service delivery. Councils also need to establish partnerships with State and Federal governments and the private sector on such things as infrastructure management, sustainability, affordable housing and appropriate transport systems. Larger councils would be more influential in this regard. The Inquiry recommended:

That the Department of Local Government examines appropriate mechanisms - including a Regional Forum of Mayors - for intergovernmental relationships at both the local and State level, regional leadership, strategic planning and delivery of region-wide services (p.9).

The Inquiry found that some of the eight councils could be under some financial pressure due to limited revenue-raising capacity, infrastructure requirements and the need to provide a broader range of services. Nevertheless, the councils did not appear to plan to make savings from existing operations to help fund these needs. The Inquiry observed that:

any reconfiguration or reshaping of local government within the area ... should create the potential to achieve efficiencies [and] savings ... there is potential to reduce the cost of representation, senior staff and operational costs per service (p.37).

The savings could be passed on to the community through a 'community dividend' that is, through rate reductions or better local services and facilities. The Inquiry recommended:

That the Department of Local Government formulate and communicate to the community a programme of ongoing reform which will be pursued in a consultative and transparent manner (p.56).

The Inquiry did not support council requests for the abolition of rate pegging. Instead it called for a review of the formula for determining the level of pegging.

The Inquiry's recommendations are worthy. The regional approach to local government reform used in the Inquiry could be used elsewhere in the State, particularly in those area with 'doughnut councils' (where one councils is completely enclosed within the boundaries of another council). At the date of writing, the New South Wales Government had yet to announce its formal response to the Inquiry.

Are 'virtual councils' the answer?

Some small councils advocate (and some, such as Manly, have moved towards) 'virtual councils', where most services are outsourced to obtain economies of scale, with council supervising the contracts. Councillors are then free to concentrate on providing quality local leadership and regulation.

Opponents, such as Sydney Lord Mayor, Frank Sartor, note that small 'virtual councils' still face serious problems (Daily Telegraph 20/3/01 p.16):

Having insufficient revenue to provide major infrastructure, such as aquatic centres. Where these are provided, there is an issue of cost shifting - residents from neighbouring council areas use the major facilities without meeting their full costs.

Accountability problems over contracted services (who can you rely on to resolve complaints about poor quality services?).

Regional problems, such as traffic management, would also be intractable because local interests would prevail over regional interests.

In an argument ad absurdum, one could say: if it is good to have more small councils, then when do we have enough? Do we, by chance, happen to have exactly the right number and size of councils now? In other words, we must inevitably address the question of 'what is an adequately sized and funded council?' And there is a related argument: it is not necessary to be small to be beautiful. One of the most successful and popular councils in Australia, Brisbane City Council, serves a population of over 820,000.

The merger of Windouran and Conargo Shires

Following the appointment of an administrator and an inquiry, and with the local community's support, Windouran Shire merged with Conargo Shire on 1 July 2001, adopting the latter council's name.

Windouran Shire was a small rural shire in south-west New South Wales with a population of 378 people and 447 kilometres of local road, 208 kilometres of which were sealed. The population of the shire had been shrinking for some years. The shire levied low rates and had a high reliance on grants. Its infrastructure and services were in decline. The shire's five-year road resealing plan had been approved in 1994. By 1999, only the roads scheduled for resealing in 1993-94 were done plus less than two kilometres of road scheduled for 1997-98 (p.22).

In November 1999, the New South Wales Minister for Local Government appointed a Commissioner of Inquiry, Mr Droder, to investigate Windouran Shire Council's finances. Mr Droder delivered his report on 21 January 2000. In his covering letter, he summarised his findings as follows:

I believe that Windouran Shire Council's financial viability is most unsatisfactory and is not truly represented in the public documents prepared by Council so as to adequately inform the local community or the State Government as to the state of affairs.

These documents fail to clearly identify, in my opinion, the liabilities for future expenditure inherent in Council's ageing and deteriorating assets and accumulating liabilities to restore them to a satisfactory condition.

This situation has arisen through council and management's apparent reluctance to seriously face the difficulties they identified in 1991 and which continue in Windouran.

It is partly due to Council's failure to increase rates to an appropriate level which in turn was influenced, to a large degree, by the economic conditions faced by the local community, comprised mainly of primary producers.

It is also due to senior management's lack of forcefulness in pushing for change. Poor financial reporting processes and what seems to be a lack of knowledge of local government procedures added to this situation.

My recommendations include the appointment of an Administrator to council charged with doing what is necessary to restore Windouran to a reasonable financial position.

[With regard to] the attempted merger with Conargo Shire ... while both parties entered voluntarily into the negotiations I am not convinced the opportunities and benefits from the potential merger were sufficiently explored by either council ... the Administrator [should] enter into negotiations to achieve a merger with either Conargo or Deniliquin Shires or both.

The Commissioner found:

Windouran Shire Council financial viability has been diminishing since at least 1991 from when it has progressively been unable to provide or maintain the quality of services at the level previously delivered to its community. At the beginning of year 2000, Council has no financial reserves, a comparatively low general rate regime, ageing plant and equipment, a minimal workforce and a deteriorating road network.

The Council had attempted to shield farmers from general rate increases. General rates for farms were between 29 per cent and 79 per cent below those levied by Hay, Murray or Wakool Shires.

Windouran and Conargo Shires had discussed the possibility of a merger, but the negotiations were not constructive.

There was apparently no analysis attempted to ascertain the degree of cost savings or efficiency gains that may be achievable by the merged body. There was no analysis of cash that may be released from the sale of assets not required for the merged operations, for example by the sale of an office and plant depots that would be surplus to the requirements of the merged body.

In February 2000 an administrator was appointed and the true financial plight of Windouran Shire was revealed. In late 2000 Conargo and Windouran Councils developed a new merger proposal estimating savings of about $211,000 per annum (or about 15 per cent of Windouran Shire's $1.43 million revenue), mainly from overheads.

This is a story of protecting the structure of local government from reform. The price the community paid was deterioration in services a nd the neglect of local road maintenance. The wider story of faltering local road infrastructure is explored in more detail in chapter 5.

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Performance indicators

Following the Australian Urban and Regional Development Review in 1994, the Local Government Ministers agreed to jointly pursue a benchmarking and efficiency programme. The programme included three strategies for increasing local governing bodies' efficiency and effectiveness, to:

  • encourage processes of continuous improvement, innovation and reform that enable councils to identify best practice;
  • fund specific projects to develop, at a national level, specific new technologies, new practices and systemic reforms that improve council performance; and
  • measure the performance of local governing bodies by using performance indicators.

The goal for performance measurement should be to develop and publish dispassionate and objective data to facilitate well-informed judgements that result in sound public policy action. Performance measures may be strategic or simply housekeeping.

In 1997, the Industry Commission (now the Productivity Commission) was asked to review the value and feasibility of developing national performance indicators for local government. It concluded that a nationally consistent approach to performance indicators was not warranted but that there would be considerable benefit to the community by improving existing State and Territory performance measurement systems. It also concluded that, although national performance indicators would facilitate reporting by the Federal Minister on local government's performance in the National Report, this requirement could be met by providing information and analysis on:

  • the application of the National Competition Policy to local government;
  • progress by the States in improving the use of performance indicators; and
  • developments in areas such as competitive tendering and contracting, increased use of service charters and measures of customer satisfaction, and changes in the structure of local government.

A meeting of Commonwealth State and Territory Officers, the South Australian Local Government Association and the Australian Local Government Association was held in Adelaide on 28 February 2001. At that meeting, a comparison of the various systems indicated that there were significant differences in: the objectives underlying the collections; the indicators being collected; the availability of the indicators to the public and the sector as a whole; and the level of participation by local governments.

The meeting resolved that:

  • Further development of State-based performance indicator systems should be encouraged. States should be encouraged to adopt best practice in the development of performance indicator systems.
  • State officials meet regularly to examine progress in developing State performance indicator systems to help speed up development of such systems.
  • There may be opportunity to develop consistent and comparable national reporting on particular issues, such as infrastructure (in general) or local roads.

State officials will meet again in 2001-02 to examine progress in developing State performance indicator systems. The Victorian Government is to report to the next meeting of Local Government Ministers on the outcomes of the meeting of officials. A report from each of the States and Territories on their individual progress towards developing performance indicators is at Appendix G.

Differences in underlying objectives

The underlying objectives of performance indicators can range from responding to legislated requirements by standardising performance data (housekeeping) to identifying common areas of interest that can usefully form the basis for cooperative action (strategic). The measures taken into account can demonstrate an increase in staff productivity and/or morale, an increased understanding of customer needs, a reduction in the cost of providing services or even an increase in the numbers of the public accessing services. Some indicators suitable for commercial operators, such as raw financial data, have been found to provide an incorrect or misleading picture for public enterprises with a service focus, such as local government.

For comparable indicators, there needs to be agreement on the objectives. The reports from the States at Appendix G indicate that individual States are moving towards agreed objectives in several key areas, particularly in relation to specific services they provide, such as waste management and library services, as well as the relatively straightforward indicators of financial income and expenditure.

Councils, States and local government associations may defer the development of performance indicators for a variety of reasons, including a lack of resources and/or time, a lack of skills and/or a lack of expert support to develop such indicators. They may also feel they are working without a framework, particularly councils located in remote areas, as well as believing that indicators alone may not tell the whole story. The development of State performance indicators and the move towards developing nationally comparable performance indicators will need to address these issues, particularly reassuring councils that they are not alone in tackling the issues of performance measurement.

In its 1997 research report, Performance Measures for Councils, the Productivity Commission (then the Industry Commission) pointed out that most States were not linking indicators to key objectives. Indeed, the Western Australian Department of Local Government has found recently that councils are reluctant to voluntarily cooperate in a performance measurement process if it is not closely linked to strategic planning and performance management.

Since the report was released, Queensland, South Australia, the Northern Territory and Tasmania have done significant work to develop their performance indicator framework and link it with partnership or benchmarking objectives. Further, Victoria, with financial support from the Federal Government, has instituted a State-wide programme of customer satisfaction surveys and corporate planning is now a well-established and integral part of the management system of Victorian councils. New South Wales has extended its set of indicators to include nine more indicators that focus on accountability to the local community. This avoids a focus on financial indicators that can reflect level of activity to the exclusion of measuring performance.

In Queensland, the main purpose of the performance management programme is to produce an annual publication of comparative performance information to help local government evaluate their performance.

In South Australia, the Local Government Association's Comparative Performance Measurement project commenced on the basis of local government leadership and State-wide support for a sector-wide comparative performance measurement system. A partnership approach was adopted where central leadership and support is being provided whilst participating councils make a commitment in terms of both direct effort and resources.

In the Northern Territory the purpose of the programme is to introduce performance management tools to all councils in such a way as to ensure they become an integral part of community management practices. The intention is to provide contextual information for data on councils to help identify similar councils against which councils may assess their relative performance.

In the Australian Capital Territory, a purchaser/provider model has been pursued. Canberra Urban Parks undertakes an annual customer satisfaction survey and is initiating a benchmarking project with a number of comparable municipal authorities in New South Wales, Victoria and Queensland. Since 1999, RoadsACT has undertaken benchmarking analysis of both performance and process. This process was linked to identifying continuous improvement opportunities for capital works procurement and contract management.

Different indicators

In New South Wales, comparative performance information on councils has, until recently, focused on the financial health of councils. The additional indicators introduced in 2000-01 on capital expenditure and total operating expense are now supplemented by information on councils' lodgement of the annual, financial and State of the Environment reports.

In Victoria, 76 measures were developed to consistently measure the 'health' and performance of councils and to account to communities for the cost and quality of services. These 76 measures were divided into Annual Plan Indicators and Comparative Indicators. The Annual Plan Indicators are developed around the main categories of:

  • financial performance;
  • community satisfaction;
  • rates management; and
  • operating costs.

Comparative Indicators are service-specific measures of unit costs and service quality covering major services provided by councils. They are developed around:

  • town planning;
  • waste management;
  • cleaning and parks;
  • public libraries;
  • road construction and maintenance;
  • family services;
  • environmental health;
  • aged services; and
  • council administration.

In Queensland, the comparative report first published on 1998-99 data in September 2000, provides a suite of efficiency, effectiveness and quality of service indicators for key local government functions. It includes financial operations, road maintenance, water, sewerage, waste management, library services and parks and gardens as well as comparative rating and financial information. This is supplemented by contextual information ranging from population density to soil types. The performance indicators are reviewed annually and some minor changes have been made to a small number of indicators over the past three years.

The Western Australian Department of Local Government recommenced work in 2000-01 on comparative indicators aiming initially at improving the quality of financial data being received for central processing. In the past, the method for allocating costs, such as administrative overheads, was not clearly understood because councils believed the list of their functions did not adequately describe all their separate activities. The comparative indicators now include 30 key functional and financial performance indicators that highlight significant areas of local government operations in Western Australia.

In South Australia, comparative indicators are being developed in the areas of governance, financial and asset management, community satisfaction and quality of life.

In Tasmania, the aim is to measure 50 key performance indicators initially as well as gather existing data from the Australian Bureau of Statistics, the State Grants Commission and the State Department of Treasury and Finance.

Local government in the Northern Territory is adopting a two-stream approach, with municipal and larger councils collecting a set of quantitative performance information on three identified core services related to roads, waste management and community management. This is to be supplemented with contextual information that aims to explain differences between council circumstances and results. The second stream, consisting of the smaller and more remote councils is less advanced.

In the Australian Capital Territory, over 50 performance indicators were initially established. In 2000 these were aggregated into fewer indicators to illustrate the cost efficiencies of asset creation and asset maintenance.

Availability to the public

In New South Wales, information on the comparative indicators, was first published in 1991, and publications from 1994-95 onwards have been made available on the web. The raw data that is used for the publication is also available for people to download. In Victoria, where a State-wide Community Satisfaction Measurement programme was commenced at the beginning of 1998, the results of the surveys are compiled and provided to all Victorian councils. The 1999 report included information showing relative change in overall council performance in the previous 12 months.

In Queensland a comprehensive report is published annually which includes year-on-year data comparisons. It is now so well established and accepted by Queensland councils that the programme is expanding to include initiatives which focus on the promotion of best practice and the fostering of a continuous improvement culture within councils. Best practice initiatives may include development of case studies demonstrating best practice in local government performance management and benchmarking.

In Tasmania, the State Department of Premier and Cabinet, as the Department responsible for local government, in partnership with the local government association, and with financial assistance from the Local Government Incentive Programme, is developing a series of performance indicators. These are to be available on the web for communities to compare their council's performance against other similar councils. To facilitate this, councils have been grouped into three categories: major cities, other urban and large rural councils, and other councils. Data will be published in summarised tables showing the highest, the lowest and the average figure for each group of councils.

In the Australian Capital Territory the main thrust has been to provide a forum for benchmarking partners to exchange their experience and practices.

Level of local government participation in performance measurement

As indicated above, Western Australia has spent time and resources (including funding from the Local Government Development Programme in past years) establishing that councillors and senior local government managers need help to see the direct benefit to communities of performance measurement before they are willing to voluntarily cooperate. When they can see how the process helps them better meet community needs and expectations, they are more supportive.

South Australia has established the performance measurement process as a partnership, with councils volunteering to pilot corporate level comparative indicators. Data and other information needed for the comparative measures will be collected by the Local Government Association of South Australia from a range of sources including the Local Government Grants Commission, the Australian Bureau of Statistics, councils and a community survey. Tasmanian local government is pursuing a similar cooperative approach.

By contrast, the New South Wales and Victorian Departments have implemented a compulsory reporting system. The Victorian Department of Local Government believes that the Community Satisfaction Measurement programme has provided very valuable information for councils resulting from the standardised method, which allows comparison/benchmarking between like councils. In addition, smaller councils have been able to obtain information and feedback on service delivery. The cost of this feedback would have been difficult for individual councils to justify.

In New South Wales, a number of councils have failed to meet statutory reporting requirements and the Minister has requested details of councils' ability to report in a timely manner with a view to publishing this information on the website.

To help councils in Queensland understand the fundamentals of comparative performance measurement, the State Department facilitated several performance management training seminars and benchmarking workshops with councils that requested the service.

In the Northern Territory in 1999-2000, 42 councils out of the total of 69 were invited to participate in the two-stream local government performance programme and returned comparative data. In 2000-01 all councils were asked to participate but 30 failed to respond to the survey. Of that 30, most have identified a number of reasons for not providing the data.

In general, local government is moving, at the State level, towards establishing a set of performance indicators and identifying a range of key stakeholders and effective reporting procedures. Some States are beginning to build up historical data that give local government activities context over time as well as across regions. Councils are starting to recognise the usefulness of data in supporting arguments for particular policy approaches and issues. The next move is to establish ways of making the information available at the State level comparable and accessible at the national level, and this will be a particular focus of the Local Government Joint Officers Group.

At the same time, the Federal Government is keen to help councils measure their progress using currently available data - some of the national sources of data currently available are listed in Appendix M.

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Federal Government support for local initiatives

The Federal Government recognises that local government is a prime delivery agent for many essential services to Australian communities and that some of these responsibilities require significant additional resources. To help local government in its wide range of tasks and ensure that individual local actions are set in the context of national priorities and perspectives, thus maximise efficiency and effectiveness, the Federal Government delivers several funded programmes to and through local government. Some of these programmes aim to give local communities better local capacity and some are specific assistance to communities administered through local government. Details of these programmes are below, with examples of projects funded in 2000-01.

Local Government Online

The Federal Government believes it is essential that not only do local communities have access to the latest in communication technology but also that they have the capacity to make the most of the opportunities these technologies represent. The Local Government Online Fund, administered through the Networking the Nation Programme, supports projects that help councils in regional Australia use advanced telecommunications to enhance service delivery to their communities, including:

  • providing online access to their information and services, such as Internet-based online services;
  • developing best practice design and delivery models that could be broadly replicated and could position Australia as a world leader in this area;
  • facilitating collaboration between authorities to develop and implement best practice models;
  • delivering services using video conferencing facilities; and
  • providing improved and more affordable access to telephone-based local government information and services.

The Local Government Online Fund was announced in 1998-99 and is to provide $45 million over five years (1999-2000 to 2003-04) to support regional and rural local councils in using telecommunications to deliver improved services and benefits to their communities. Each State is to receive funding of $6 million, with $6 million provided for the Territories and the remaining $3 million to be maintained in a national pool.

Aggregated, whole-of-State approaches are being given priority, subject to support from individual councils involved and local government associations. Smaller scale projects that demonstrate innovation and best practice, and have the potential to act as models for broader implementation, will also be considered. Consultation with the relevant local government peak body is encouraged in relation to these projects. Priority is also given to projects that contribute to integrated service delivery across all spheres of government.

Projects worth just over $24.5 million to local government associations were funded in 2000-01 under the Local Government Online programme. Some samples are featured in the box below.

Queensland Local Government - Connecting Communities - Phase Two

Organisation: Local Government Association of Queensland Inc.
Project description: This project will enable the Local Government Association of Queensland to implement an online service environment for local government in regional, rural and remote areas of Queensland which will provide local government services online to the community.
Funding: $4,687,629

State and Territory Association Local Government Information System

Organisation: Australian Local Government Association
Project description: This project involves development and implementation of an Online system to gather and share information on an increasing range of Local Government online initiatives across the country, establishing and providing a forum to develop and discuss standards, principles, benchmarks for all 'e' initiatives of local councils in this field.
Funding: $784,000

Local Government Incentive Programme

The Local Government Incentive Programme was a two-year Commonwealth-funding programme that recognised the need to support small and medium sized local councils to improve the delivery of services and to lead local communities. In 1999-2000, approximately $3.25 million was allocated to local government associations to help all councils prepare for implementation of the new GST.

In 2000-01, around $4.5 million was provided under this programme with individual grants up to $100,000 available where two or more local councils proposed cooperative projects to address issues in their local region. A total of 55 projects were funded.

The focus of this programme in 2000-01 was on the three national priority areas of:

  • activities that led to the adoption of best practice and sharing of technical expertise across councils;
  • promotion of an enhanced role for local government in leading their communities; and
  • increasing the capacity of local government to contribute to regional development.

In keeping with the Government's emphasis on the needs of regional Australia, projects were required to benefit rural councils, or small and medium regional or urban fringe councils.

For details of Local Government Incentive Programme projects funded in 2000-01, see Appendix J.

National Awards for Innovation in Local Government

The National Awards for Innovation in Local Government foster and acknowledge innovation and leading practice in local government. The awards identify and reward local government bodies, associations and other collaborating organisations who are developing and implementing innovative, resourceful practices that improve local government outcomes and help build sustainable Australian communities.

In 2000-01, the Department of Transport and Regional Services launched a series of Leading Practice seminars at which National Awards for Innovation in Local Government winners demonstrated their successful projects to representatives from interested councils. The seminars were in response to feedback from councils indicating they would value opportunities to learn about leading practice in local government business. Seminars were held in Hobart, Perth, Cairns, Alice Springs, Sydney and Launceston. More are planned for 2001-02.

Award categories and sponsors for 2001 included:

  • Business and Regional Development - sponsored by Rural Transaction Centre Programme, Federal Department of Transport and Regional Services;
  • Community Services - sponsored by the Federal Department of Family and Community Services;
  • Engineering and Infrastructure - sponsored by Ansett Australia;
  • Health Services and Aged Care - sponsored by the Federal Department of Health and Aged Care;
  • Information Technology - sponsored by Business Entry Point;
  • Organisational Practices - sponsored by the Federal Department of Transport and Regional Services;
  • Planning and Urban Design - sponsored by the Federal Department of Transport and Regional Services;
  • Sustaining Local Communities - LA21 sponsored by Environment Australia;
  • Youth Services - sponsored by the Youth Bureau, Federal Department of Education Training and Youth Affairs;
  • International Year of Volunteers - sponsored by the Federal Department of Family and Community Services; and
  • Strengthening Rural/Remote Communities - sponsored by the Federal Department of Family and Community Services.

The Rural winner for 2001 was the Coorong Communication Project, entered by Coorong District Council in South Australia. The council entered three projects for Awards. Of these three, two were category winners, including the national rural winner. The Communication project led to the development of a community-based alternative regional telecommunications network.

The National Award winner in 2001 was Skills for the Future - A Partnership between the City of Casey, Motorola, the Department of Employment, Education and Training and Local Schools entered by the City of Casey in Victoria. Through the project, Casey coordinated a successful targeted partnership with State government, the private sector and the education system to provide skilled employment for young people in its community.

For full details of winning projects, category awards and entry conditions, see Appendix K.

Active Australia Local Government Network

As part of the Local Government Incentive Programme projects in 2000-01, the Federal Government sponsored the Active Australia Local Government Network. More than 60 per cent of councils in Australia have backed the Active Australia initiative by becoming involved in the network. The Local Government Sport and Physical Activity Case Studies booklet, published in 2000, provided examples of good practice in sport and physical activity coordinated by local government organisations.

Regional Flood Mitigation programme

The Federal Government announced the Regional Flood Mitigation programme in May 1999. An allocation of $20 million over three years was made available for projects across Australia aimed at reducing the significant social and economic costs of recurrent flooding in rural and regional areas. In May 2001 the programme was expanded. An additional $30.8 million was provided to extend the life of the programme by three years, to increase annual funding, and to include outer metropolitan areas in the programme.

The programme is administered in partnership with the States and local authorities. Local authorities with flood control responsibilities, generally local governments, are eligible to apply for funding. Project proposals are comparatively considered by State Assessment Committees against their potential effectiveness in mitigating the impact of flooding. Environmental impact is also considered. The Federal Government contributes one-third of the cost of approved projects. States are required to match Federal funding, but may contribute more, with the balance of project costs being met by local authorities.

Projects eligible for Regional Flood Mitigation include:

  • structural flood control works - flood control dams, retarding basins, levees, bypass floodways, and channel improvements;
  • property/infrastructure modification - voluntary purchase, house raising, flood-proofing buildings, and flood access provisions; and
  • response modification - community awareness, flood warning systems.

The cooperation in all spheres of government in addressing damage caused by flooding has contributed to the success of the programme. Over its first two years of operation, 92 projects have been approved. The Federal contribution to these programmes amounts to some $13 million and a number of significant projects across Australia have been completed. Flood mitigation projects funded in 2000-01 include projects for the Launceston City Council and the Shire of Busselton (see box).

Launceston City Council

Location: Scottsdale, in north-eastern Tasmania

Federal Government funding: $37,000 this financial year, following on from $5,000 last year for design work. The total cost of the project is expected to be $200,000.

Project description: Relocation and stabilisation of sections of the Scottsdale Levee.

The Scottsdale Levee is showing distress in a number of locations and needs upgrading to maintain a high level of protection for Launceston. In the 1960s, construction of an extensive system of levees to protect Launceston's commercial, industrial and residential centre was undertaken to prevent major flood damage. Significant foundation failure now requires upgrading in order to maintain an acceptable level of protection for Launceston.

The population of the project area is 2,200. The population affected in the event of an extreme flood is 1,300. The number of properties benefiting from the project is 1,115. The cost of not providing protection against the proposed design flood is estimated at $21 million.

The project may result in minor and temporary disturbance to the environment, principally local short-term increased water turbidity in the tidal section of the North Esk River at the site of the works. In the long term it offers to reduce the flood susceptibility of the community.

Shire of Busselton

Location: Busselton, in the south-west of Western Australia

Federal Government funding: $320,000 for 2000-01 following on from design work funded in 1999-2000.

Project description: Construction of the first of nine detention basins in the upper catchment of the Vasse River to increase flood protection from a 1-in-20-year flood to a 1-in-100-year flood.

The Vasse River Diversion was built in the 1930s to reduce flooding in the Busselton area and to divert floodwaters from the central business district into its outlet at Geographe Bay. In 1993, following recommendations of a flood study, the levee banks of the Vasse River Diversion were raised by 0.5 metre to accommodate a 1-in-100-year flood level. In August 1997 major flooding occurred and levee banks were over topped in the lower reaches around Busselton. A review of the 1997 flood indicated that Busselton had a 1-in-20-year level protection and not a 1-in-100-year level. A flood larger than that experienced in 1997 occurred in July 1999 forcing evacuation from 80 houses.

Design works were completed in 1999-2000. The Water and Rivers Commission has indicated that it will apply for funding for construction of some of the detention basins in the 2001-02 Regional Flood Mitigation programme round. The Commission will be responsible for the ongoing maintenance costs of this project.

Roads to Recovery

In November 2000 the Prime Minister and the Minister for Transport and Regional Services introduced a new Federal Government programme under the Roads to Recovery Act 2000 to address widespread concerns, especially in rural and regional Australia, about the state of local roads. This Act provides for a Federal Government contribution of $1.2 billion to local government over four years from 1 January 2001 for roads.

The first quarterly payments to councils under the programme were made on 1 March 2001. To 30 June 2001, 3,000 projects had been submitted for funding and $150 million had been paid to councils.

Many of the projects involve maintenance work - resealing or resheeting roads - but there are also a considerable number of improvement projects including replacing bridges, widening roads, installing lighting and building new bikeways. A full list of projects funded to date is on the Department of Transport and Regional Services website at

Rural Transaction Centres

Part of the capacity of local communities relates to the services provided within those communities. The Federal Government has recognised the essential role of local government in maintaining services to small and remote communities by providing funding for Rural Transaction Centres through local councils.

The Federal Government announced, in the May 1999 Federal Budget, that it had committed up to $70 million over five years to help rural and regional communities establish Rural Transaction Centres. The programme focuses on small towns, generally with populations of fewer than 3,000 people where basic services are not being provided and there is no likelihood of service provision in the future without government assistance.

During 2000-01, over 400 communities were involved in the programme. Eleven Centres were opened in regional and rural communities, bringing the number of Rural Transaction mmenced to 76. Of these, 26 of which are operational, 29 were sponsored by local councils. In 2000-01, the programme provided $3,953,680 in project assistance to establish Centres and $661,913 in business planning assistance for communities wishing to establish a Centre.

Local government plays a key role in helping their communities establish Rural Transaction Centres. Approximately two-thirds of all approved Centres are sponsored by councils. New business planning applications for 2000-01 also reflect this distribution. Councils have helped communities with cash or in-kind support, planning and, as with the Urana and Tasman Centres, by providing their council chambers to house the Centre.

The programme's field officer network, which commenced operations in March 2001, has further assisted communities to establish Centres. The programme has also improved its accessibility for Indigenous communities. Oenpelli Rural Transaction Centre, which has been sponsored by the Kunbarllanjnja (Gunbalanya) Community Government Council, and the centre in Maningrida sponsored by the Council, both scheduled to open in late 2002, are examples of the way the programme is helping Indigenous communities access basic transaction services through the establishment of their own Rural Transaction Centres.

Regional Solutions programme

The Regional Solutions programme was launched in October 2000. It is an $86 million, four-year Federal Government programme which aims to help regional, rural and remote communities build their capacity and identify and implement development opportunities.

It is designed to be a flexible funding programme that may be able to offer funding for projects which do not meet the selection criteria of other grant programmes.

The Regional Solutions programme targets communities that:

  • are experiencing economic stagnation and/or population decline due to industry restructuring and/or lack of diversity of economic activities;
  • are seeking to develop community infrastructure and/or services to cope with population or economic change; or
  • can build on the opportunities available in their local communities or regions by undertaking appropriate projects.

Regional Solutions programme grants of between $1,000 and $500,000 are available to not-for-profit community organisations or councils (or local government agencies) based (or with a significant presence) in regional, rural or remote areas for:

  • community planning;
  • local project implementation;
  • community adjustment initiatives;
  • local industry development;
  • resource people to work for a community or region; and
  • regionally-based and community-oriented enterprise or infrastructure projects.

The programme funded a number of local government projects in 2000-01 to the value of $3,075,658. Some projects that illustrate the wide range funded under this programme are featured in the box below.

Shire of Nannup, Western Australia

Project title: Restoration of the Historic Railway Bridge

Project description: Restore the Old Railway Bridge and employ a tourism development officer to oversee the restoration and further construction of other projects they are developing.

Funding: $60,000

Shire of Hepburn, Victoria

Project title: Extension of Creswick District News Premises

Project description: To increase publication of the local newspaper from monthly to fortnightly, extend premises, employ a part-time reporter and acquire new equipment.

Funding: $51,750

Urana Shire Council, New South Wales

Project title: Urana Doctor's Residence and Surgery

Project description: To construct a new doctor's residence and surgery in Urana.

Funding: $109,090

Wellington Shire Council, New South Wales

Project title: Feasibility Study/Business Plan for Establishment of a Photo Voltaic Array Power Station in Briagolong

Project description: To employ a consultant to undertake a feasibility study.

Funding: $9,090

The Federal Government is also helping councils determine which funding programmes may be able to assist them through projects such as GrantsLINK.


Finding the most appropriate funding for community projects was made simpler in May 2001 with the launch of GrantsLINK. GrantsLINK is an innovative website that provides easy, fast and straightforward access to information on Commonwealth funding programmes, through a single site. Communities without Internet facilities are supported by a freecall telephone service, 1800 026 222, that provides applicants with information available on the GrantsLINK site. In the six weeks following the launch, the site was visited more than 21,000 times, with more than 76,000 pages of information viewed. On average, about 450 people visit the site per day.

At an inquirer does not need to know which departments offer grant funding. The site lets a person search for grant programmes based on the project the inquirer has in mind.

By the end of June 2001, the level of usage was:

  • total pages viewed: 51,067 (average 3000+ per day)
  • total visitors to the site: 8,390 (average 490+ per day)
  • number of visitors considered unique: 3,251

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