The Productivity Commission says states and territories should require ‘more meaningful’ performance reporting from local government, pointing to Victoria’s 'Know Your Council' reporting framework as a possible model for adoption.

In its five-year productivity review titled Shifting the Dial, the Commission recommended that local government reporting should allow for comparisons between councils to improve accountability, identify best-practice and provide an incentive for improvement.

According to the report: “At present, there are multiple aspects of performance that local governments around the country are required to report on, including financial performance, service delivery and governance." 

“While much work has already been done on collecting the information, it needs to be accessible and comparable. Providing data on the scope, quality and efficiency of service provision across comparable councils would allow communities to better engage in council processes and make more informed decisions at elections. This type of benchmarking can provide more information that councils can use to identify the scope for improvements, as well as placing greater pressure on them to improve."

The Commission recommended that state and territory governments should draw on Victoria’s experience and “require more meaningful performance reporting by local governments, providing support on this where needed.”

Additionally, the Commission reflected on the ability of local government to deliver the wide range of services required, particularly in light of restrictions on revenue raising such as rate capping.

Common concerns raised by inquiry participants included the ability of councils to meet these demands, and incentives for improvements in performance.

“There has been a general increase in the scope of local government responsibilities, reflecting greater devolution of state and territory functions over time and the desire of local governments to fill perceived gaps. For example, it is not unusual for councils to be responsible for food safety inspections, childcare, housing, and distance education services,” the Commission found.

It was suggested that – at least in theory – more meaningful and comparable performance reporting could reduce the need for rate capping, by improving local government’s accountability.

IPWEA Vic CEO David Hallett says although the ability to compare council performance could be useful, it is worth keeping in mind that different councils can have very different priorities, particularly if those priorities are informed by their individual communities, which could skew the data. 

The Commission also reflected on amalgamations, and found that while there were savings to be found in economies of scale, there were mixed reports as to their overall effectiveness.

Recognising that amalgamations are highly contentious, the Commission said that:  

“A simple and preferable step before amalgamations would be for residents and ratepayers to receive a professional assessment of the trade-offs of ‘standing alone’, a cost/benefit consideration that would be better informed over time by more meaningful comparative indicators of performance.

The Commission also found that state governments have delegated functions to councils without clear policy frameworks or well-designed support.

What is 'Know Your Council'?

The Victorian Government’s local government performance reporting framework (LGPRF) requires councils to report indicators across four categories: service performance, financial performance, sustainable capacity and governance and management.

The indicators are provided on the ‘Know Your Council’ website, which allows the public to see detailed profiles of individual councils. Council profiles include information on the geographic and population attributes of the council area, finances, and performance results for the four categories. Councils have the opportunity to explain or comment on their results.

The public can also compare the performance of similar councils. Victorian councils are divided into five categories: metropolitan, interface, regional city, large shire and small shire.

Mandatory performance reporting became a requirement for local government from the 2014-15 local government annual budgeting and reporting cycle onwards.

In a Feburary 2017 report, Local Government Victoria surveyed all 79 Victorian councils on their experiences with the LGPRF and the Know Your Council website.

The report says: “Results show council attitudes to the LGPRF and Know Your Council website have improved, likely due to a greater understanding of the reporting process and how it is undertaken. As a result, LGV has also seen an improvement in the quality of data submitted and positive engagement with councils wanting to assist in the continuous improvement of the LGPRF and reporting processes.”