Shared services set to grow

The Victorian Auditor-General’s recent report, Shared Services in Local Government, has highlighted the current trend of local governments to share services and that further growth in this practice is expected in the future.

The Auditor-General noted that ‘this provides a significant opportunity for the sector to realise cost savings and other benefits’.

Shared services are one way councils can achieve greater efficiency in service delivery, improve service quality, and deal with cost pressures and other challenges.

Shared services involve councils working together and/or with other organisations to share costs and resources, and may include delivering external services to the community, such as libraries and waste collection, providing back office functions, such as human resources and payroll, or the procurement of goods and services.

While existing initiatives primarily relate to external service delivery and procurement, an increase in shared back office functions is expected, based on a statewide survey undertaken by the Auditor‑General.

The survey identified a range of barriers and challenges related to implementing shared services, and strategies and success factors to assist in delivering effective initiatives.

Initiatives were noted to be generally soundly based and well managed.

However, despite councils entering into these arrangements to reduce costs, increase service quality and improve community outcomes, the measurement of expected outcomes was proven to often be inadequate.

A lack of baseline data and other information makes it difficult to measure the full extent of financial and non-financial benefits from shared services, and there is significant scope for improvement in monitoring, evaluation and reporting.

An inability to quantify outcomes may undermine otherwise effective partnerships and the success of initiatives.

The Auditor-General noted that ‘without evidence of impact, those making financial or other resource contributions may either withdraw support from current initiatives or avoid committing to new ones’.