A lack of sector data and executive and councillor support for business improvement are among the barriers to improving how councils deliver services, audit shows.

A report into how Victoria’s councils plan and review their service delivery, and their spend on back-office corporate services, has found that none have a “comprehensive approach” to their frontline operations.

The state’s auditor found councils do not understand the full cost of their frontline services, and while many benchmark their service costs informally they are challenged by the lack of consistent, comparable data across the sector.

“Each audited council has some good examples of service planning, review and evaluation – but none had a comprehensive approach,” said auditor general Andrew Greaves.

And while all councils could provide examples of projects that had improved the efficiency of back-office corporate services, “this is on an ad hoc basis,” he said.

The findings are based on an audit of the service delivery planning and review of five councils, as well as a survey of 58 councils to benchmark corporate service costs.

“Overall, we found that the audited councils could improve the effectiveness of their service planning by taking a longer-term approach and making better use of information about the full cost of delivering services,” he said.

Mr Greaves highlighted the uniform approach to service planning developed by Indigo Shire Council, where managers annually enter key information into a template, which informs the budget process. He said:

“This approach demonstrates that service planning does not need to be a complex and resource-intensive process. Smaller councils can develop simple yet useful tools to enable them to plan for better service delivery.”

Wodonga Council is also developing a council-wide approach to service planning, which is due to be implemented by February next year, he added.

Corporate services costs

The survey found the 58 councils collectively spent more than $1 billion on corporate services during 2016-17. Councils on average spent 15 per cent of their total expenditure on back-office functions.

While all the audited councils had taken steps to achieve cost and time savings in corporate services, including streamlining processes and introducing new technology, none had “effectively” examined their corporate services to determine if they were efficient.

Council staff reported that executives and councillors “did not always support resourcing business improvement, either through dedicated positions, funding training or consultants for service reviews, or participation in commercial business frameworks,” the auditor said.

Councils were missing out on opportunities to achieve savings, said Mr Greaves, arguing there is “still significant scope” for councils to expand shared services.

He found local governments are currently constrained by the lack of accurate data on corporate expenditure. While Local Government Victoria collects information on councils’ expenditure, local governments input the data inconsistently and LGV does not undertake quality assurance to ensure confidence around the data.

Highlighting best practice, the auditor pointed to Wodonga Council’s work to complete service reviews of all corporate services, which is due to be completed by the end of this year.

Need for common framework

Toni Jones, local government sector lead at KPMG, said the report highlights that the sector needs a “common vocabulary” for how services are defined, which would help with data gathering and benchmarking.

“There isn’t a common definition or framework that councils are using for how they define service,” Ms Jones told Government News.

“That’s why one council might have 100 services and another has 60, yet 80 per cent of the services being delivered are the same.”

A common categorisation of services would also enable local governments to better understand the outcomes that each service should achieve, how that would be measured, and what it costs to deliver, she said.

Ms Jones also said councils needed to undertake more holistic reviews of services. “With a library review, for example, they’ll often look at it from a purely efficiency perspective as opposed to the cost to deliver, the future needs of the community, what assets are contributing to that.”

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at editorial@governmentnews.com.au.  

Sign up to the Government News newsletter.