Fostering shared services in local government: a common service model

Structural reform of local government through forced municipal mergers has occurred in a number of countries, including Australia, with mixed success. We argue that shared services arrangements by groups of voluntarily participating councils represent a superior means of securing the advantages of scale and scope in local government, without the heavy costs of the blunt instrument of compulsory council consolidation. However, in practice, the success of shared services has been inhibited in small regional, rural and remote local authorities by the costs of establishing and running shared service entities, which can swamp any savings from shared services. Taking into account the special characteristics of small non-metropolitan councils, we present a Common Service Model tailored to minimise establishment and transactions costs, maximise flexibility, and generate transparency.