Local Government

Abstract

The Australian public sector incorporates federal, state, and local government agencies. It is one of the largest employment sectors in the economy incorporating a range of occupations. Technology is key to the development of many sections of the public sector, for example the defence sector is driven by technological developments in hardware and systems. Given the range and coverage of the public sector, this chapter will examine AI and technological developments only in local government. The public sector is too large and diverse to capture in a single chapter, and while local government is immediate and spread across the country, it is under researched when compared to state and federal government. As with all areas of the public sector, local government has been subject to the reforms and pressures of new public sector management to improve service delivery and achieve cost reductions and efficiencies. These changes have also been associated with a range of organisational developments such as privatisation, public-private partnerships, and shared services. Information technology (IT) and automation have the potential to support both the quality and efficiency objectives of local government. However, there are challenges around the impact of the structural and technological change on employment, especially in regions; issues include the COVID impact on finances and the demand for services as well as skills development in the sector.

Introduction

Local government in Australia represents the third tier of government after Federal and State government. It is responsible for local services and provides community and business services. There are over five hundred local councils across Australia that vary in terms of their budgets, size, responsibilities, and functions. In Western Australia, the size of local councils ranges from less than 2 square kilometres in Peppermint Grove, Perth, to over a hundred thousand square kilometres in the North West of the state around the Pilbara region. The long-term trend has been towards fewer and larger councils. In 1910 there were over a thousand local councils in Australia but now the number is around half that (Australian Services Union (ASU) 2016). According to the Australian Local Government Association (ALGA 2017), total employment in the sector is around 190,000 and it manages non-financial assets valued at over $400 billion. There are around 6600 elected councillors who are responsible for the funding, planning, organising, and assessment of services (ASU 2016). The labelling and classification of local governments varies across the states – varying from shires; boroughs; cities; councils and municipalities; and include indigenous local governments in Queensland, the Northern Territory, and South Australia. There is no local government in the Australian Capital Territory, and across the states there are areas that are without local government representation, either because they are too large and sparsely populated, such as Western NSW; or too small and remote, such as Lord Howe Island off the coast of NSW. These special areas, including ski resorts in Victoria, are directly administered by state governments.

Industry Overview

Local government is not recognised in the Australian Constitution and it has a perennial funding problem in that it has only one principal income source (property rates) and it is dependent on these together with grants from Federal and State governments (Dollery et al. 2006). There are also fees, charges, and fines that contribute a small share of local government revenue. Figs. 9.1 and 9.2 below show a sample breakdown of income and expenditure sources for local councils, in this case derived from Hornsby Council. a northern suburbs council in Sydney.

Fig. 9.1

Sample Council Income Sources

Fig. 9.2

Sample Expenditures

(Source: Hornsby Council 2019)

(Note that Hornsby is not considered to be representative, given the diversity across local government)

The Australian Local Government Association (ALGA 2018b: 6) identified the services offered by local government which include:

• infrastructure and property services, including local roads, bridges, footpaths, drainage, waste

• collection and management

• provision of recreation facilities, such as parks, sports fields and stadiums, golf courses, swimming

• pools, sport centres, halls, camping grounds and caravan parks

• health services such as water and food inspection, immunisation services, toilet facilities, noise

• control and meat inspection and animal control

• community services, such as childcare, aged care and accommodation, community care and welfare services

• building services, including inspections, licensing, certification, and enforcement

• planning and development approval

• administration of facilities, such as airports and aerodromes, ports and marinas, cemeteries, parking facilities and street parking

• cultural facilities and services, such as libraries, art galleries and museums

• water and sewerage services in some states

• other services, such as abattoirs, sale-yards and group purchasing schemes

There is no “typical” local council as the conditions governing operations vary across States and across regions. The ALGA (2018b) in a submission on regional inequality noted the gaps in financial capacity and infrastructure access between capital cities, and rural and regional cities. Given the dependence on local rate income, in capital cities with urban consolidation (high-rise and apartments) and increases in land values, the financial capacity of those councils improved. This was not the case in areas outside of the capital cities, especially in rural and remote regions. In its 2018/19 Federal budget submission the ALGA (2017) noted the increase in responsibilities and funding associated with disaster mitigation, recreational activities, health and well-being, environmental risk management, and climate change.

Local governments are controlled by State legislation and are required to comply with legislation regarding their operations. The size and boundaries of local government are determined by state governments, and council representatives are locally elected for a fixed term, but they can be dismissed by State governments and replaced by administrators. Local government provides services that are essential, and collective in nature, and many services are not priced by the market. Over the past century, the range of services provided by local government have changed from local infrastructure, property services, and utilities (roads, parks, footpaths, lighting, electricity, gas, water, and sewerage), towards community and business services. Utilities have been privatised by state governments and local governments have taken on services such as childcare, parking, environmental regulation, water safety, building and planning codes, and community centres (Dollery et al. 2006). There is a trend towards shared services to improve effectiveness and reduce costs (Dollery et al. 2016), and towards the delivery of services previously delivered by state governments (ASU 2016). Services associated with state and Federal governments are shared with, or delivered by, local government such as roads maintenance, disaster management, and environmental regulation.

The ALGA (2017, 8) stated that:

‘Local governments are responsible for the streetscape, the operating environment for the cafes, restaurants and local business across municipalities. They provide individuals and families with access to public libraries, internet cafes, art galleries, museums, men’s sheds, community halls, sports grounds, parks and gardens, showgrounds, individual properties, and local businesses. Councils manage municipal waste, provide local roads, run local airports and aerodromes in rural communities and sustain transport links for passengers and freight. They manage stormwater services, and in some states, councils provide and manage access to clean drinking water and waste water services. In short, they manage the cities and towns in which people live and work and the well-being of local communities’.

The services provided are intangible, and often do not enter the market, but are essential for the functioning of the community and organisations from schools and places of worship through to sporting organisations and businesses. While there is a natural monopoly with regard to many of the provided services, they are provided on a mixture of payment for service (planning permissions) incorporated into rates (such as garbage collection), or are available to all users without payment (such as gardens, parks, libraries). Other services, such as road maintenance and water management, indirectly support businesses and the community. Providing a combination of marketable and non-marketable services, and inputs that are essential to local businesses and communities.

Over the past hundred years the reduction in councils has, in part, been driven by consolidation forced by state governments, especially in Victoria. This has largely occurred based on economies of scale arguments that suggest that larger councils have lower unit costs of service delivery than smaller councils (Worthington and Dollery 2002).

However, the evidence on scale economies in local government is mixed, with Dollery et al. (2016) suggesting that service sharing without the amalgamation of councils is a more effective model for cost reductions. The other obstacle to amalgamations has been local opposition by the community on the grounds that imposed amalgamations compromise local democracy and the quality of services, and in some cases there is evidence of diseconomies of scale as the amalgamated councils become too large to effectively deliver services and reduce unit costs (Drew and Kortt 2015).

Public sector management principles have been influential in driving the legislative and structural reforms in local government since the 1970s (Parker and Guthrie 1993). These changes have encompassed contracting out; shared services; privatisation; public private partnerships; forced amalgamations; extensive governance and reporting requirements linked to performance indicators; and workplace/IR changes (Worthington and Dollery 2002). Local governments are regulated by state government legislation and are forced to operate within a legislative framework set by state governments. The state governments have control over the main income source, local rates, with (for example, in NSW and South Australia) the increase in rates pegged by the state government. Likewise, control over State and Federal grants to local government means that this source of funding is often dependent on the electoral cycle, government budget priorities, and whether the council is in a marginal electoral seat. Each local government submits an annual report to the state government that addresses key performance criteria in keeping with the new public sector and managerialist agenda. Occasionally, state governments dismiss local assemblies and replace them with administrators for a defined period. In 2020 the NSW state government dismissed the Balranald Shire Council on the grounds that it had “failed to act as a reasonable employer with valuable staff having to quit because of the work environment” (ABC News 2020).

To examine the impact of technological change on local government it is important to be cognisant of the differences across local governments in terms of financial, skills, and technological capacity; their limited financial base, the range of services offered, the public goods component of these operations, the controls and reporting requirements imposed by State governments, and the large number of different occupations that contribute to the delivery of local government services. Next, the discussion will examine employment, occupations, and skill sets for the sector, followed by an analysis of the impact of developments in ICT and robotics for the sector; a brief outline of several case studies that address technological developments in the sector; and emerging challenges for the sector are identified.

Jobs, Occupations, and Skills in Local Government

The ALGA (2018b) estimates that there are around 190 thousand employees across the sector. There are also private sector jobs that are linked to the provision of local government services from road maintenance and parks maintenance, to the use of call centres and consultants. As a result, the local government employment headcount by direct employees excludes those who are employed by the public sector in contracting skilled, semi-skilled, and unskilled services. The important employment feature of local government is that it is a major employer and a key source of professional employment (direct and indirect) in regions that have limited direct public sector representation (state and federal) and limited large corporate presence. Federal and State governments, and large corporations, all tend to concentrate employment, especially professional and highly skilled employment, in capital cities.

The main source of data on LG employment can be found in the annual reports by the relevant State government departments. In Queensland, the state government/local government annual report provides a workforce division by outdoor and indoor staff. The outdoor staff work on roads, footpaths, traffic conditions, gardens, parks, bushland, the environment, and public order. The indoor staff include administration, clerical, library services, customer services, legal and governance, community services and planning. Within the broad division there is a range of occupations and skills from labourers through to engineers, IT support, architecture, town planning and legal services. The distribution of indoor and outdoor staff is not standard, nor is the distribution of skills and occupations. From the Queensland annual report on local government, the emerging staff distribution indicates that the smaller the council (in terms of staff numbers) and the more remote it is in terms of distance from capital cities, the greater the share of outdoor staff (Queensland Government 2019). For example, Goondawindi, McKinlay Shire and Lockhart River Aboriginal Shire Council have relatively large outdoor staff numbers compared to indoor staff. For large urban councils, such as Brisbane City and the Gold Coast, the share of indoor staff exceeds that of outdoor staff, and the range of services provided is more extensive with both these councils responsible for managing large public sector transport networks.

The ALGA (2018b) report on skills for the sector reported that, within local government, there were over 390 occupations. Those occupations with over 5000 staff nationally included: specialist managers; engineering, ICT, and science technologist; childcare workers; community service workers; clerical and administrative workers; road and rail drivers; design, engineering, and transport professionals; animal and horticultural workers; office and administration managers; business, HRM, and marketing professionals. Over the period 2006–2016 the largest increase in percentage terms in occupational employment included specialist managers; education professionals; electrotechnology and telecommunication trades; and machine operators and drivers. The occupations with declining employment numbers included cleaners and laundry workers; construction, mining, and other labourers; mobile plant operators; and farm, forestry, and garden workers. Some of these changes may reflect contracting out, shared services, and privatisation, rather than technological displacement. The report identified the key drivers of the shifting occupational composition in local government which included: changes to Legislation/Acts; increasing levels of governance, compliance and integrated reporting requirements; increased devolution of services from state to local government; changes in the scope and level of services delivered; population growth; population demographics – ageing population; and changes in technology (ALGA 2018b).

In terms of the technological displacement of workers through technology, the report (ALGA 2018b: 28) suggested that; ‘Occupations such as General Clerical Clerks, Numerical Clerks, Other Clerical and Administrative Workers, Inquiry Clerks and Receptionists are expected to disappear with the impact of technology advances and digitization. These are often areas of high female participation and where employment numbers have grown significantly between 2006 and 2016’.

Key Technologies

As the local government sector encompasses a range of occupations and professions and a range of services and functions, it also encompasses all technologies that impact on other industries. However, there are three important differences to consider when evaluating the impact of technology on the sector. The first is that the capacity of the sector to embrace technologies is uneven. Remote and rural councils are limited by their skills and professional capacity, in their financial capability, and by their infrastructure, especially in terms of internet access. Overall, the sector is constrained in its financial capacity. Second, the sector provides public goods that are not priced by the market and they must meet legislative standards imposed by state governments regarding service provision and the quality of services. Third, they are subject to legislative and voter controls and sanctions that mean that choices are constrained.

To highlight the importance of inequalities in capacity and infrastructure across regions the ALGA (2018a: 3) submission to the Senate Reference Committee on Regional Inequalities noted that:

‘Experiences cited by the local government sector demonstrating unequal access and/or outcomes in non-metropolitan areas included transport and health, plus:

• access to basic infrastructure such as reasonable road access, clean water supplies and wastewater services, digital technology and telecommunication services, and housing, including housing for employees in remote localities providing social and essential services to the community; and

• declining intellectual capital to support local workforce skills needs, particularly in transforming employment markets’

Employment Impacts

As with other sectors, those occupations that are non-cognitive and routine are subject to replacement through automation and digital technology (Aldeney 2018). The ALGA (2018b) and ASU (2016) identified clerical and administrative positions as most likely to be replaced by technology. The process may be direct or indirect, through outsourcing and contracting out. Automation and digital technology can also support many LG functions such as monitoring the environment; planning and development; parking; the maintenance of parks and gardens; customer feedback; the payment of bills; financial reporting; governance; reporting to State governments; and the maintenance of roads, footpaths, and parks. Technologies including drones; solar energy cells; sensors; satellite technology and cloud computing can support asset management and maintenance; water management; planning and construction management; flood and fire mitigation; traffic management; and improve service delivery.

The following section identifies some of the technologies, the opportunities for implementation, and the challenges for local governments.

Case Studies in Local Government & Employment Impacts

Australian Local Government Association Report Local Government Workforce and Future Skills Report Australia (ALGA 2018b)

The ALGA (2018b) surveyed councils across Australia to identify areas of current and prospective skill shortages. Across all local governments, and across three classifications of local government (rural and rural remote; urban and urban fringe; and urban, regional cities) the major shortages were in the professions – engineers; middle managers; town planners and surveyors. The main challenges faced in recruiting professional staff included the inability to compete with the private sector for remuneration; limited local talent available; remoteness and lack of facilities and infrastructure, for those councils in rural areas; and lack of career progression, especially in small councils.

Many councils reported a skills gap and the difficulties of providing access to training programs to address the skills gap. The constraints included lack of courses and training providers locally, the absence of suitable online programs, the costs associated with attending training programs in capital cities, changing legislative requirements that generate demand for new skills, and the difficulty of freeing up staff to participate in training programs.

In terms of those factors that will impinge on future training needs, the major conditions identified by the survey were changes in external funding from state and federal government, local infrastructure projects, an ageing workforce and community, changes in state government legislation, and technological change and digitisation. Although technological change and digitisation was identified as a factor impacting on future skill needs, 70% of councils reported that they had not conducted an analysis of the likely impact on jobs and skill requirements (ALGA 2018b: 56).

Of those councils that had considered the impact of technological change, the major developments included the application of drones, cloud computing, mobile devices, GPS and mapping, social media platforms, data analytics, and remote working. The technologies have potential application across all council functions and are likely to displace labour, generate the demand for new skills and jobs, augment existing jobs, and change work and workplaces. The key challenge identified in the report is for local governments to develop soft skills within its workforce to accommodate the demands of technological change. The report suggested that, in terms of soft skills development that local governments should address:

Ability to work productively, drive engagement, and demonstrate presence as a member of a virtual team; novel and adaptive thinking; and the ability to understand concepts across multiple disciplines. In order to address these emerging skills gaps, local governments will be mainly looking to upskill existing staff. To a lesser extent they will look to use shared service arrangements to address these gaps, particularly in the Digital Skills area. (ALGA 2018b: 60)

2016 Federal Government Smart Cities Program

The Smart Cities Program (Australian Government 2016) developed by the Federal Government provides competitive funding for developing infrastructure and deploying technological solutions to support the future development of Australian cities. Under the program, local governments have the opportunity to partner with other organisations, such as universities, to apply for funding for programs that seek to achieve the program objectives in three areas: infrastructure; governance; and technology. On technology, the purpose of the program was to: “embrace new technology with the potential to revolutionise how cities are planned, function, and how our economy grows. Disruptive new technology in transport, communications and energy efficiency are becoming a reality—we will position our cities to take full advantage. We will leverage real time open data driven solutions and support investment in sectors commercialising new innovations to grow Australia’s economy.” (Australian Government 2016: 4).

The Round 2 programs selected for funding included:

• City of Parramatta Council, NSW – Melrose Park: Smart planning for Climate Responsive Neighbourhoods, $571,000

• Wollondilly Shire Council, NSW, Western Sydney Parkland City Sensor Network Project,

• $700,000

• Logan City Council, Queensland, Flooded Roads Smart Warning System, $250,000

• Cairns Regional Council, Queensland, Smart Urban Irrigation Project, $250,000

• Launceston City Council, Tasmania, Greater Launceston Transformation -Creating our Digital Future,

• $2,904,775

• Mornington Peninsula Shire Council, Victoria, Mornington Peninsula Smart Parking and Amenities for High Demand Areas, $500,000

Technology, jobs, and lifestyle are central to the Smart Cities Program. However, the program has limited funding, the grants are one off, and many of the grants are awarded to councils in capital cities that already benefit from large infrastructure investment by state and federal government.

Australian Services Union Submission to the Human Rights Commission Inquiry into Artificial Intelligence (2019)

The ASU is the union that represents employees in local government. The ASU (2019) submission to the Human Rights Commission Inquiry into Artificial Intelligence set out several key principles associated with what it called a “just transition” to digitalisation and automation of service jobs, including those in local government.

‘Just Transition policy framework should address the uncertainties regarding job impacts, risks of job losses, of undemocratic decision-making processes and of lowering rights at work, as well as of regional or local economic downturn, among others. Key principles of a Just Transition should include:

• Research and early assessment of social and employment impacts

• Social dialogue and democratic consultation of social partners and stakeholders

• Active labour market policies and regulation, including training and skills development

• Social protection, including securing of pensions

• Community renewal and economic diversification plans

• Sound investments leading to high quality, decent jobs’

The adjustment and transition process following technological transformation is important for local government since in many regions there are few alternative employment opportunities. The twin effects of unemployment and the degradation of employment conditions will adversely impact local economies and further encourage the concentration of skilled jobs in capital cities. The submission identified the challenges associated with technological change for the sector including local job loss, the growth in insecure employment, and the skill and training requirements for preparing the workforce to apply new technologies to the range of occupations found across local government.

Local Government Libraries

Technology is used to extend and transform service delivery, and at the same time it is utilised to monitor and measure staff and library performance. Local government public libraries are offered as free services to the community and they are expected as part of the service delivered to the local community (Wyatt et al. 2018). The public library sector in Australia operates in the form of branches; mobile libraries; online and outreach services (Leorke and Wyatt 2018). Public access to libraries was not free until 2008 with every council providing free access to the community to access library services (Bundy 2012). According to Mansell (2002), public libraries mediate between the community and the state. Public libraries have undergone organisational transformation from that of book repositories and lending, towards meeting local community functions such as meeting and information services, online access and service delivery, and providing services for targeted groups such as children and retirees (ALGA 2018a). Libraries have moved beyond storing and providing access to physical book collections as libraries are responsible for meeting the information, educational, cultural and recreational needs of the community members and offer variety of services including extensive collection of books, magazines, CDs, DVDs, audio-books, eBooks, electronic sources of information, meeting rooms, and recreational materials. Australian public libraries provide digital access to communities by providing static PCs and free Wi-Fi in branches; programs for all age groups including early childhood literacy, cultural activities, job seeking skills, workforce development and opportunities for lifelong learning (PLV 2018). Library services have been digitalised; can be linked to other regional, state, and national collections; and offer the opportunities for shared services.

Technology has supported the extension of library services within local communities and at the same time the function of libraries has expanded. NPSM principles have resulted in libraries and staff being monitored for performance, and the system of metrics is supported by ICT systems. For example, in Victoria public libraries reporting metrics include the number of service points, opening hours, staff numbers, registered users, loans made, the number of reference enquiries, the number of items in collection/acquisition, the number of public access PCs and all data on usage (Rosenfeldt 2006). The Victorian Public libraries routinely collect performance information that is machine generated and include data on membership numbers, holdings, number of visitors, website traffic, usage rates of PCs, program attendance, and circulation activities (PLV 2018). In order to justify their services, public libraries conduct customer satisfaction surveys to measure the impact of their services on communities (Schwirtlich 2010).

Challenges & Opportunities

The ethical challenges around data storage, surveillance systems, data sharing, and automated decision making in the delivery of public services embodies many ethical challenges. The limits and dangers of using automated systems to deliver public services was demonstrated by the infamous “Robodebt” saga (Hayne and Doran 2020). The Robodebt system demonstrated that using AI to make decisions in the administration of welfare was profoundly flawed as it was based on an incomplete data set, was not subject to close supervision, and decisions were automated and not subject to an independent evaluation.

The Robodebt crisis highlights the ethical and regulatory challenges associated with the deployment of AI in the delivery of public services, not just by the Federal government, but by all tiers of government where automated processes are applied for decision making. The potential areas impacted include: rate evaluations, billing and charges for local services, planning approval processes, disaster mitigation, and environmental assessments. Local government will increase the application of IT systems for service delivery and evaluation. However, behind the use of data systems there are major ethical issues that all tiers of government must carefully consider as more services are being bundled and moved to online delivery. The UK Committee on Standards in Public Life (2020: 6), commented that:

‘Artificial intelligence has the potential to revolutionise the delivery of public services, creating an opportunity for more innovative and efficient public service delivery. Machine learning in particular will transform the way decisions are made in areas as diverse as policing, health, welfare, transport, social care, and education’.

The other challenge facing local government will be to accommodate the consequences of COVID19. Since local government delivers local services of a public goods nature, the demand for services will be unaffected by the pandemic. However, the financial capacity to deliver services will be tested. The main income source (rates) will be affected by a downturn in the property market in both the commercial and residential sectors across Australia (Business Insider Australia 2020). Transfers from state and federal governments are also likely to be reduced as the fiscal positions of both levels of government decline for the duration of the pandemic. For local government, the likelihood is that the demand will be to meet its service obligations with reduced revenue. This will support further outsourcing and reductions in employment, and encourage shared services, automation, and multi-tasking of staff. However, there are two challenges to further streamlining of service delivery, especially through IT, that have been noted. First, IT infrastructure is unevenly distributed across the regions. Second, there are skill shortages and difficulties in upskilling staff in remote and regional areas.

Conclusion

Technological applications will be employed in local government for service delivery, cost reductions and efficiencies, and for meeting the various reporting requirements imposed by state governments. As with other industry sectors discussed in this book there is the potential for technological displacement of routine service work and the augmentation of professional work. Ongoing structural changes imposed by state governments and the financial pressures linked to falling property prices will further put pressure on governments to seek technological solutions to reduce costs but maintain services. Within the sector, and before COVID, there were funding challenges linked to the dependence on grants from other tiers of government (ALGA 2017). However, there are limits to the application of technological solutions to structural and financial pressures. First, public services and goods must be provided and of a specified quality under the various state government regulations. Second, the reach of ITC supporting infrastructure is not even across the nation, with local governments in rural and remote regions at a disadvantage. Third, and associated with remoteness, there are skills shortages in non-metropolitan regions and there are challenges in developing skills in existing workforces. Finally, local government occupation and skill profiles are uneven across regions, and the scope for uniform IT and AI solutions is limited since many tasks remain labour intensive and individualised – such as water safety, health inspections and childcare services.