Shared Services Opportunities for Southland Local...

McGredy Winder & Co. Wise advice - Creative solutions

McGredy Winder & Co.

Shared Services Opportunities for Southland Local Authorities

A report prepared for Environment Southland, Invercargill City Council, Southland District Council, Gore District Council and Clutha District Council.

Peter Winder

January 2014


McGredy Winder & Co PO Box 9541 Newmarket Auckland 1149 e [email protected] m 021 657048 p 09 5234432 www.mcgredywinder.co.nz

© McGredy Winder & Co. 2013 all rights reserved


Table of Contents

1. Introduction .................................................................................................................. 2

2. Approach ....................................................................................................................... 3

3. A Framework for Thinking About Collaboration ......................................................... 3 3.1. Objectives and Motives ........................................................................................ 5 3.2. Developing the Shared Agenda ............................................................................ 5

4. Types of Collaboration .................................................................................................. 6 4.1. Sharing Information ............................................................................................. 6 4.2. Joint Procurement of Goods and Services ........................................................... 6 4.3. Shared Capability ................................................................................................. 7 4.4. Joint Project Teams / Specific Initiatives ............................................................ 7 4.5. Shared Business Systems ..................................................................................... 7 4.6. Integrated or Joint Delivery of Services ............................................................... 8

5. Current State and Issues ............................................................................................... 8

6. Identified Shared Service or Collaboration Opportunities ......................................... 15 6.1. Information Technology and Core Enterprise Systems .................................... 15 6.2. GIS ...................................................................................................................... 15 6.3. Asset Management ............................................................................................. 16 6.4. Building Consent Authority functions ............................................................... 16 6.5. Legal Services ..................................................................................................... 17 6.6. Internal Audit ..................................................................................................... 17 6.7. Record Keeping and Archive ............................................................................. 18 6.8. Procurement ....................................................................................................... 18 6.9. Corporate Policy ................................................................................................. 18 6.10. Treasury Management ....................................................................................... 19 6.11. Road maintenance contracting .......................................................................... 19 6.12. Road and bridge construction programmes ...................................................... 19 6.13. Biodiversity and Environmental Enhancement Programmes .......................... 20 6.14. Water testing and laboratory services ................................................................ 20 6.15. Transactional accounting services ..................................................................... 20 6.16. Human Resources Management ....................................................................... 21 6.17. Payroll Services .................................................................................................. 21 6.18. Staff Training and Development ....................................................................... 21 6.19. Monitoring and Enforcement ............................................................................ 22 6.20. Business Improvement and Implementation Capacity ..................................... 23 6.21. Policy and Legislative Response and Advocacy ................................................ 23 6.22. Planning – One Plan .......................................................................................... 23 6.23. Regional Strategy ............................................................................................... 24

7. Assessing Opportunities ............................................................................................. 25

8. Recommended Sequencing of Shared Service Initiatives .......................................... 26

9. Next Steps ................................................................................................................... 28


2

1. Introduction

Environment Southland, Invercargill City Council, Southland District Council, Gore District Council, and Clutha District Council have a range of shared service initiatives and collaboration projects that are governed by a Memorandum of Understanding. Each initiative involves two or more of the partner councils. The initiatives are over-seen by a Shared Services Forum, which is chaired by an independent Chairperson.

Southland’s current major shared services include: WasteNet, Regional Emergency Management, Venture Southland, the Southern Rural Fire Authority, and the SouthLib libraries consortia. Together with a range of smaller initiatives these shared services have delivered considerable benefits to Southland over a long period of time. The total estimated annual savings from shared services in Southland is $4.2m. Southland has been one of the leaders in shared services within the local government sector.

In June 2013 the Chief Executive Sub-Committee of the Shared Services Forum considered a paper that made the following recommendations:

· Revisit the MoU to include a vision for shared services that more clearly states the shared services outcomes that the councils expect and to include customer benefits.

· Include a series of objectives in the delivery of shared services in the region that may include those identified at the workshop.

· Retain the principles in the current MoU but include a principle for delivering value to residents and ratepayers.

· Invest in a feasibility study (either via contract or through dedicated council resource) that enables the Sub-Committee to identify a structured, future programme of work.

· Consider the establishment of a dedicated resource (for example: a team seconded to the Sub-Committee from council staff or an externally recruited resource reporting to the Sub- Committee) that covers the following competencies: leadership, facilitation, project management, financial control, contracting, pricing, change management and communications.

· Identify the individual business cases for the opportunities identified in the feasibility study.

· Establish a benchmark and reporting framework for the work programme and agree to report consistently on this across councils.

Before embarking on a new shared service initiative Councils need to be confident that it will deliver better outcomes than the status quo. Councils also need to be confident that the governance and delivery arrangements for the shared service are robust and sustainable so that the service can continue to deliver value without compromising Council’s delivery to its community.

The recommendations considered by Chief Executives in June reflect a considered and sequential process to identifying and evaluating new potential shared services. The feasibility study (recommendation iv) is designed to identify a broad range of opportunities and recommendation vi provides the way of prioritising those opportunities to focus efforts on the detailed assessment of those opportunities that offer the most promise. To progress any one of the priority opportunities the Councils will need to develop a detailed business case that allows the specific assessment of the opportunity, addresses the issues and potential problems and assists the Councils to determine whether or not to proceed.


3

McGredy Winder & Co has been engaged to assist the councils consider shared service opportunities. This report is the first in a two-stage approach designed to ensure that Councils are confident in the recommended priorities, and that the level of resourcing that is recommended supports the scope and timetable for the development of priority business cases.

2. Approach

McGredy Winder & Co conducted interviews and workshops with the Chief Executives and management teams of each of the five councils. Those interviews were intended to:

· provide a robust and realistic assessment of the performance of current shared service initiatives;

· provide a realistic assessment of the current state of each Council’s activities and any planned investments or service improvement programmes designed to enhance business operations (including IT or business system improvements, new contracting or service delivery initiatives, the timing and broad terms of any current contracts for service, etc.);

· provide insights into the strategic and organisational issues that each council is struggling with (i.e. where there are pressures on the business, the size and nature of the operation, skill shortages, capability and capacity issues, particular strengths and weaknesses of each council);

· highlight any significant differences in the level of service provided by each Council with respect to common activities; and

· characterise any differences in management approach and philosophy as well as any significant differences in the extent of delegations and the way in which elected representatives make decisions.

This report draws upon the interviews with council staff and the independent chairman of the Shared Services Forum. The report also draws on the experience of the reviewer in relation to council activities and shared services.

3. A Framework for Thinking About Collaboration

The activities of local authorities are driven and regulated by the core requirements of the Local Government Act 2002 (LGA). Under Section 10 of that Act the purpose of local authorities includes the obligation:

“to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses” (LGA 2002 Section 10(1)(b)).

Where “good quality in relation to infrastructure local public services and performance of regulatory functions, means infrastructure, services, and performance that are –

a) efficient; and b) effective; and c) appropriate to present and anticipated future circumstances.”

(LGA 2002 Section 10(2)).

Under Section 14 the Local Government Act 2002 set out Principles relating to local authorities. Section (1)(e) requires that:


4

“(e) a local authority should collaborate and co-operate with other local authorities and bodies as it considers appropriate to promote or achieve its priorities and desired outcomes, and make efficient use of resources;”

The Local Government Act 2002 Amendment Bill (No 3) seeks to strengthen the obligation to collaborate by replacing the current text of Section 14(1)(e)) with:

“(e) a local authority should actively seek to collaborate and co-operate with other local authorities and bodies to improve the effectiveness and efficiency with which it achieves its identified priorities and desired outcomes; and”.

The Local Government Act 2002 Amendment Bill (No 3) also seeks to reinforce the requirement to collaborate by requiring all local authorities within a region to include within their Triennial Agreement:

“(c) processes and protocols through which all local authorities can participate in identifying, delivering, and funding facilities and services of significance to more than 1 district.” (Amendment to Section 15(2) of the principle Act).

Territorial local authorities all operate under the same legislation and broadly undertake the same responsibilities and activities. The emphasis and balance of effort and expenditure between activities varies between territorial local authorities, but what they do is substantially the same. Regional councils have a different mandate from territorial authorities, but many of their activities (and in particular their back office, administration, revenue collection, and decision-making processes) are substantially the same or very similar.

Local authorities represent defined and distinct communities of interest. It is therefore understandable that, despite their common mandate and roles they see the world differently. To some extent they all have different ways of working, different issues, different priorities, and they need to report to and represent different constituencies. The differences between local authorities reflect:

· conscious decisions to adopt particular business practices;

· particular individuals and their management philosophy;

· real differences in scale, scope, size and constituent communities; and

· the cumulative results of a series decisions that reflect historic circumstances and past business practices.

To some degree local authorities compete with each other. Neighbouring district and city councils will compete for development. Their aspirations for development may also conflict and their constituent communities may compete for access to resources. This sort of competitive and aspirational tension is also likely to be reflected from time to time in the relationship between a regional council and the city and district councils that comprise the region. Despite this tendency to compete – the government has quite clearly signalled in the Local Government Act 2002 Amendment Bill (No 3) that it is seeking greater collaboration and co-operation between local authorities.

In the business world companies choose their partners on the basis of their shared values, shared objectives and the complementarity of their business models. Local authorities do not have that degree of choice. Their need to collaborate stems from their geographic proximity, and the common issues that they must address.

The New South Wales Department of Local Government published “A Guidance Paper on Collaboration and Partnerships between Councils” in 2007. The paper provides a useful framework


5

for considering whether or not, and/or how to collaborate with other local authorities. That framework has been adapted below as a guide for decisions on collaboration.

3.1. Objectives and Motives

There are a number of reasons that councils would consider strategic collaborative arrangements. These include the desire to:

· share knowledge and resources, including being able to have access to high-level professional staff that would otherwise not be justified within a small operation;

· benefit from the knowledge and resources of others (particularly where they have limited capability);

· be seen to collaborate in order to secure other advantage (such as avoiding possible amalgamation);

· modernise and streamline business processes and adopting best practice; · share the costs of developing and maintaining complex business systems; · tailor service delivery to meet common community needs; · reduce costs through the elimination of duplication; · access economies of scale; and · develop an effective local platform from which engage with government to achieve

outcomes for the community.

For collaborative work to be successful it is essential that from the outset the participating councils have common objectives and motives. Successful collaboration will be characterized by councils that have:

· both a need and a willingness to share resources; · an open and transparent approach to working with others; · clearly identified and communicated what they want from the arrangement; · defined the level of financial, intellectual and real resources they can commit; and · developed clear decision-making and problem solving mechanisms for joint work

(including how to set priorities and when they might opt out).

If the objectives and motives of the partners are not sufficiently aligned from the outset it will be very difficult to work together effectively. Collaboration can also be poisoned by other aspects of the relationship between councils that result in conflict.

3.2. Developing the Shared Agenda

Councils do not collaborate simply because it is a good thing to do. Like any other approach to the way in which council’s operate, collaboration needs to address community and organisational needs. Decisions to collaborate in any form of joint procurement, shared capability, shared service, or the purchase of services from another local authority must first and foremost meet the requirements of the LGA with respect to “good quality” infrastructure and services.

Collaborative efforts must address council priorities, and therefore the partners must have common priorities. In addition to the alignment of objectives and motives discussed above, the shared agenda for collaborative work must reflect:

· Strategic Fit / Alignment – any shared or collaborative programme must address areas of common need on a regional or sub-regional basis. If there is no shared strategic intent then there is no point in collaboration.


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· Priority – all councils have scarce resources. Any collaborative work programme must address priority issues for the partners or they will understandably allocate resources elsewhere.

· Identified Needs - areas where councils do not have sufficient capacity to meet a need but could do so in partnership with others are obvious targets for collaboration.

· Opportunity – areas where there is opportunity for innovative approaches to common issues will be attractive candidates for collaboration.

· Available Resources – any collaborative programme needs to reflect the skills, expertise and resources of the partners, both where there are gaps, and where there is capacity that could be of benefit to others.

4. Types of Collaboration

There are a number of ways that Councils can work together. These are summarised discussed below. All of the identified opportunities have costs, risks and potential benefits. Many of the opportunities are dependent upon first addressing common business systems and systems architecture.

4.1. Sharing Information

The most elementary form of collaboration is to simply share what work councils are doing. For instance, where a council is working on an issue and has collected relevant information, or commissioned a legal opinion, or a piece of research that information can be shared with others. Sharing that information may reduce the cost to others where they can adopt or adapt the work to suit their needs. This approach requires no formal machinery for collaborative decision-making and does not challenge the decision-making role of each council.

This is the simplest and easiest way of collaborating. Shared information can be used as is, or incorporated into other work, or simply ignored. This approach requires councils to make no real commitment to each other beyond simply sharing what they are doing. This approach relies on the existing capacity of councils and the individual priority setting processes of councils.

4.2. Joint Procurement of Goods and Services

This is the most common shared service initiative to date in the New Zealand public service. It simply involves operating a club for the joint purchase of goods or services. The club derives benefits from the stronger market power that comes from aggregating demand and delivering certainty of supply.

Joint procurement has tended to focus on goods or services that all parties need and where there is no real difference between what the partners need (or it is easy to achieve standardisation). Joint procurement requires little upfront investment and little resourcing to maintain.

The all of government contracts for the purchase of goods has been a very successful initiative. Given that the benefits of the buying power of the whole of government are available to local authorities there is little scope for a small, regional club to secure better arrangements than the whole of government contracts.

Beyond the sorts of goods dealt with in the whole of government contracts, joint procurement will work best where there is an existing mature and competitive market for the goods and services required and where the aggregated purchase will not drive rationalisation of suppliers or


7

a reduction in the competitiveness of the market. Joint purchase models that drive a reduction in competitiveness will not deliver sustainable longer-term savings. Indeed the sort of rationalisation that has taken place in the road construction industry, the solid waste industry and the market for laboratory services leaves public sector purchasers exposed to both long term quality and price issues.

Joint contracting requires the ability to jointly determine the scope of the service that is being contracted and an appropriate mechanism for overseeing the quality and performance of the contractor. This sort of approach is best suited to activities which have clearly defined deliverables, clear performance metrics, and where joint contracting or joint procurement offers a degree of purchasing power, or economies of scale in the delivery of the activity. It is not essential, but it certainly helps if each of the partners to a joint contract is seeking the same level of service from the provider.

4.3. Shared Capability

One of the significant challenges facing smaller local authorities is how to maintain adequate high level or specialist skills in areas where it is difficult to attract and retain qualified staff, or where they are needed sporadically but local knowledge is important.

One way of dealing with this situation is to share capability. It is increasingly common for local authorities to share specialist building officers or engineers. Other areas of shared capability include: emergency management, asset management, and traffic engineers.

Generally, where there is shared capability, the relevant staff are employed by one local authority and there is a memorandum of understanding that makes them available to one or more other local authorities on an agreed basis. Common challenges with this sort of arrangement relate to the scheduling of work and ensuring that the relevant staff are available when they are needed by the other party.

4.4. Joint Project Teams / Specific Initiatives

This sort of activity is enabled by establishing joint working parties or joint project teams from across the partner agencies. Often it will be important to include other public sector partners, like the District Health Board, or a government agency or department. Establishing joint project teams requires considerably less long-term commitment or infrastructure than the other forms of collaboration discussed here. Because they are put together in response to a shared issue or challenge it is considerably easier to get alignment of objectives between the parties. The challenge is to ensure that there is an agreed and robust way of making the necessary decisions.

4.5. Shared Business Systems

This approach goes beyond joint procurement to a shared approach to owning and developing systems. It includes common ownership and shared hosting of systems, but it falls short of the integration of the service delivery. Examples of likely candidates for this sort of approach are financial and business enterprise systems, IT systems, library systems, and GIS systems. In a shared systems environment the partners would jointly own the systems and share the costs of development, hosting and system maintenance, however they would retain in-house responsibility for their use of the system, for instance with their own finance team.

For this approach to work there must be clearly established governance and management rules for the operation of the system and for sharing costs. Processes for making decisions on future investment and development must be agreed and adhered to. There must also be clear provisions for terminating the arrangement and for adding additional partners. The agreement


8

must also clearly deal with how potential liabilities and risks will be managed.

4.6. Integrated or Joint Delivery of Services

This approach is one step beyond a shared system and would involve not just the use of a common system and processes but also the integration of service delivery. For instance, this could involve establishing one centre of excellence for the delivery of the service and resourcing it to successfully deliver. The centre of excellence could either be one of the partner organisations, or a jointly owned subsidiary, or a separate organisation that delivers the service by contracting it out.

One example of integrated service delivery is the role that the Waikato and Otago Regional Councils undertake in processing building consents in relation to dams for North and South Island regional councils respectively. Another example is the after hours phone service that Palmerston North City Council now provides to a large number of councils.

To make this approach work there must be:

· common and agreed business objectives and service standards; · clear accountability frameworks and clear roles and responsibilities for the service

delivery partner and for those that are paying for the service and remain accountable for its delivery;

· clear governance and management rules; · processes for making decisions on future investment and development and sharing

costs; · provisions for terminating the arrangement and adding additional partners; · rules to manage potential liabilities and risks; and · rules governing how the potentially conflicting demands of each partner will be

managed, for instance, to ensure that a host council’s work does not take precedence to the detriment of a partner council.

Most efforts to derive savings from integrated services have been focused on back-office services, but there are other opportunities.

5. Current State and Issues

The primary purpose of the interviews with council management teams was to complete a indicative scan of the current state of each organisation, the issues that they were dealing with, their priorities and their attitude toward shared services. The framework for thinking about collaboration from Section 3 has been used to present this assessment. In Table 1 the strategic fit / alignment dimension of Section 3.2 has been replaced by a description of the key issues that arose in discussion within each set of interviews.

The comments in Table 1 come from the interviews and they reflect what is on the minds of those interviewed and their response to questions. There may well be other more important issues or priorities than those set out here.

McG

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Tab

le 1

: Sig

nifi

cant

issu

es, p

rior

itie

s, o

ppor

tuni

ties

and

obj

ecti

ves

and

mot

ives

ari

sing

from

inte

rvie

w

Sign

ific

ant I

ssue

s

Sout

hlan

d D

istr

ict C

ounc

il In

verc

argi

ll C

ity C

ounc

il G

ore

Dis

tric

t Cou

ncil

Env

ironm

ent S

outh

land

C

luth

a D

istr

ict C

ounc

il

· Man

y sm

all c

omm

uniti

es w

ith

disc

rete

sys

tem

s · R

ural

de-

popu

latio

n an

d ag

e st

ruct

ure

· Fut

ure

scop

e fo

r da

iryin

g an

d ec

onom

ic g

row

th

· Sco

pe fo

r yo

ung

peop

le

· Ver

y la

rge

road

net

wor

k –

larg

ely

unse

aled

· V

ery

part

icul

ar o

pera

ting

envi

ronm

ent –

ver

y de

taile

d co

st a

lloca

tion

and

high

ly

targ

eted

rat

es

· Maj

or c

omm

itmen

t to

devo

lved

loca

l dec

isio

n-m

akin

g –

com

mun

ity b

oard

s et

c.

· Bus

ines

s co

ntin

uity

and

di

sast

er r

ecov

ery

· Lon

ger

term

labo

ur fo

rce

issu

es fo

r co

unci

l

· Age

str

uctu

re a

nd w

elfa

re

depe

nden

cy /

fixe

d in

com

e is

sues

· U

ncer

tain

ty o

ver

the

futu

re

of th

e m

ajor

em

ploy

er

· Wat

er s

uppl

y is

sues

– li

mite

d st

orag

e, r

un o

f riv

er

limita

tions

and

pos

sibl

e w

ater

qu

ality

cha

lleng

es

· Lon

ger

term

age

/ s

tate

of

infr

astr

uctu

re a

nd r

enew

als

issu

es

· Age

str

uctu

re o

f sta

ff

· Bus

ines

s co

ntin

uity

and

di

sast

er r

ecov

ery

· Lon

ger

term

labo

ur fo

rce

issu

es fo

r co

unci

l

· Wat

er s

uppl

y –

shal

low

w

ells

with

lim

ited

/ de

clin

ing

abili

ty to

pro

vide

re

quire

d ta

ke

· Age

str

uctu

re a

nd s

tatic

/

decl

inin

g po

pula

tion

· Abi

lity

to a

ttra

ct a

nd r

etai

n so

me

spec

ialis

t sta

ff

· Vul

nera

ble

to s

taff

cha

nges

· B

usin

ess

cont

inui

ty a

nd

disa

ster

rec

over

y

· Rur

al d

epop

ulat

ion

and

age-

stru

ctur

e · L

and

use

chan

ge a

nd

inte

nsifi

catio

n · W

ater

qua

lity

· Bal

anci

ng r

esou

rce

qual

ity

with

eco

nom

ic d

evel

opm

ent

pres

sure

s · R

iver

con

trol

and

ass

ocia

ted

asse

t man

agem

ent

· Att

ract

ing

and

reta

inin

g pa

rtic

ular

spe

cial

ist s

taff

– a

ge

stru

ctur

e of

sta

ff

· Lon

ger

term

labo

ur fo

rce

issu

es fo

r co

unci

l · B

usin

ess

cont

inui

ty a

nd

disa

ster

rec

over

y

· Is

our

futu

re in

Ota

go o

r So

uthl

and?

(eco

nom

ical

ly w

e ar

e O

tago

, cul

tura

lly w

e ar

e m

ore

like

Sout

hlan

d)

· Rur

al d

epop

ulat

ion

and

age-

stru

ctur

e · L

and

use

chan

ge a

nd p

oten

tial

for

inte

nsifi

catio

n · L

onge

r te

rm a

ge o

f in

fras

truc

ture

and

ren

ewal

s is

sues

· A

bilit

y to

att

ract

and

ret

ain

som

e sp

ecia

list s

taff

· M

ajor

tim

e of

cha

nge

in

lead

ersh

ip –

CE

O a

nd G

M.

· Sig

nific

ant b

usin

ess

risk

from

cu

rren

t IT

arr

ange

men

ts

· Bus

ines

s co

ntin

uity

and

di

sast

er r

ecov

ery

McG

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ons

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Pri

orit

ies

Sout

hlan

d D

istr

ict C

ounc

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ity C

ounc

il G

ore

Dis

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t Cou

ncil

Env

ironm

ent S

outh

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C

luth

a D

istr

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ounc

il

· Roa

ding

, the

cos

t of r

oadi

ng

and

the

leve

l and

nat

ure

of

finan

cial

ass

ista

nce

for

road

ing

· Cos

t of o

pera

tion

and

oppo

rtun

ity fo

r ef

ficie

ncy

· Eco

nom

ic d

evel

opm

ent a

nd

jobs

· M

aint

aini

ng c

urre

nt s

ervi

ces

and

asse

ts

· Re-

invi

gora

ting

the

coun

cil

orga

nisa

tion

· Mai

ntai

ning

cur

rent

ser

vice

le

vels

and

sta

ndar

ds

· Dis

tinct

ive

natu

re o

f Gor

e an

d th

e ar

ts /

rec

reat

ion

faci

litie

s th

at m

ake

it un

ique

· Im

plem

entin

g th

e N

PS fo

r Fr

eshw

ater

Man

agem

ent

· Im

plem

entin

g ne

w b

usin

ess

syst

ems

(IR

IS)

· Mai

ntai

ning

cur

rent

leve

ls o

f se

rvic

e · C

onta

inin

g co

st p

ress

ures

· B

uild

ing

Con

trol

· R

oadi

ng, t

he c

ost o

f roa

ding

an

d th

e na

ture

and

leve

l of

finan

cial

ass

ista

nce

for

road

ing

· Dea

ling

with

cha

nges

in

lead

ersh

ip a

nd m

anag

emen

t

Iden

tifi

ed N

eeds

Sout

hlan

d D

istr

ict C

ounc

il In

verc

argi

ll C

ity C

ounc

il G

ore

Dis

tric

t Cou

ncil

Env

ironm

ent S

outh

land

C

luth

a D

istr

ict C

ounc

il

· Nee

d to

rep

lace

cor

e G

L an

d fin

ance

sys

tem

· R

espo

ndin

g to

cha

nges

in

gove

rnm

ent p

olic

y an

d ne

w

legi

slat

ive

requ

irem

ents

· A

rchi

ve, r

ecor

ds m

anag

emen

t an

d di

gitiz

ing

of h

isto

ric p

aper

re

cord

s · B

usin

ess

cont

inui

ty a

nd

disa

ster

rec

over

y · A

sset

man

agem

ent p

lans

, lin

ks

betw

een

asse

t man

agem

ent

· Sta

ff tr

aini

ng

· Bui

ldin

g C

ontr

ol

· Bus

ines

s co

ntin

uity

and

di

sast

er r

ecov

ery

· Ass

et m

anag

emen

t pla

ns,

links

bet

wee

n as

set

man

agem

ent p

lans

, ass

et

regi

ster

s an

d fin

anci

als

· 30

year

infr

astr

uctu

re p

lan

· Res

pond

ing

to c

hang

es in

go

vern

men

t pol

icy

and

new

le

gisl

ativ

e re

quire

men

ts

· Bui

ldin

g C

ontr

ol

· Arc

hive

, rec

ords

m

anag

emen

t and

dig

itizi

ng

of h

isto

ric p

aper

rec

ords

· B

usin

ess

cont

inui

ty a

nd

disa

ster

rec

over

y · A

sset

man

agem

ent p

lans

, lin

ks b

etw

een

asse

t m

anag

emen

t pla

ns, a

sset

· Str

engt

heni

ng m

onito

ring

and

enfo

rcem

ent c

apab

ility

· P

olic

y an

d pl

anni

ng

fram

ewor

k fo

r w

ater

m

anag

emen

t · R

espo

ndin

g to

cha

nges

in

gove

rnm

ent p

olic

y an

d ne

w

legi

slat

ive

requ

irem

ents

· A

ging

mob

ile te

chno

logy

and

th

e ne

ed to

inte

grat

e m

obile

da

ta c

aptu

re w

ith s

patia

l in

form

atio

n an

d re

cord

s

· IT

sys

tem

per

form

ance

and

la

ck o

f for

mal

arr

ange

men

ts

· Fin

ance

and

bus

ines

s sy

stem

s · B

uild

ing

Con

trol

· R

espo

ndin

g to

cha

nges

in

gove

rnm

ent p

olic

y an

d ne

w

legi

slat

ive

requ

irem

ents

· C

orpo

rate

pol

icy

deve

lopm

ent

(i.e.

FIS

, Tre

asur

y M

anag

emen

t Po

licy,

etc

.) · P

rocu

rem

ent c

apab

ility

McG

redy

Win

der

& C

o.

W

ise

advi

ce -

Cre

ativ

e so

luti

ons

11

plan

s, a

sset

reg

iste

rs a

nd

finan

cial

s · 3

0 ye

ar in

fras

truc

ture

pla

n · F

inan

cial

con

trol

env

ironm

ent

(just

impl

emen

ting

purc

hase

or

ders

)

regi

ster

s an

d fin

anci

als

· 30

year

infr

astr

uctu

re p

lan

· Arc

hive

, rec

ords

man

agem

ent

and

digi

tizin

g of

his

toric

pa

per

reco

rds

· Bus

ines

s co

ntin

uity

and

di

sast

er r

ecov

ery

· Arc

hive

, rec

ords

man

agem

ent

and

digi

tizin

g of

his

toric

pap

er

reco

rds

· Bus

ines

s co

ntin

uity

and

di

sast

er r

ecov

ery

· Ass

et m

anag

emen

t pla

ns, l

inks

be

twee

n as

set m

anag

emen

t pl

ans,

ass

et r

egis

ters

and

fin

anci

als

· 30

year

infr

astr

uctu

re p

lan

· on-

line

serv

ices

Shar

ed S

ervi

ce O

ppor

tuni

ties

Ide

ntif

ied

by S

taff

Sout

hlan

d D

istr

ict C

ounc

il In

verc

argi

ll C

ity C

ounc

il G

ore

Dis

tric

t Cou

ncil

Env

ironm

ent S

outh

land

C

luth

a D

istr

ict C

ounc

il

· Nex

t ste

p of

IT

pla

tfor

m

· Fin

ance

sys

tem

· B

ack

offic

e fin

ance

inte

grat

ion

· HR

and

Pay

roll

· Bui

ldin

g C

ontr

ol

· Env

ironm

enta

l hea

lth a

nd

enfo

rcem

ent a

ctiv

ity

· Pos

sibl

y ro

adin

g · G

IS

· Pla

nnin

g an

d po

licy

deve

lopm

ent (

One

Pla

n)

· Tra

inin

g an

d de

velo

pmen

t and

a

cade

tshi

p pr

ogra

mm

e

· Nex

t ste

p of

IT

pla

tfor

m

· Fin

ance

sys

tem

· B

ack

offic

e fin

ance

in

tegr

atio

n · H

R a

nd P

ayro

ll · B

uild

ing

Con

sent

s · T

rain

ing

and

deve

lopm

ent

and

a ca

dets

hip

prog

ram

me

· Roa

ding

– in

clud

ing

oppo

rtun

ities

for

shar

ed

purc

hase

and

join

t co

ntra

ctin

g · B

uild

ing

Con

sent

s · P

ossi

bly

plan

ning

· G

IS

· Mon

itorin

g an

d en

forc

emen

t · G

IS

· Bac

k of

fice

finan

ce

inte

grat

ion

· Pla

nnin

g an

d po

licy

(One

Pl

an)

· Str

ateg

y de

velo

pmen

t

· Nex

t ste

p of

IT

pla

tfor

m

· Ent

erpr

ise

syst

ems

incl

udin

g fin

ance

, GIS

, ass

et

man

agem

ent,

reco

rds

and

arch

ive

and

dog

regi

stra

tions

on

line

. · S

ome

back

-off

ice

func

tiona

lity

McG

redy

Win

der

& C

o.

W

ise

advi

ce -

Cre

ativ

e so

luti

ons

12

Ava

ilabl

e R

esou

rces

Sout

hlan

d D

istr

ict C

ounc

il In

verc

argi

ll C

ity C

ounc

il G

ore

Dis

tric

t Cou

ncil

Env

ironm

ent S

outh

land

C

luth

a D

istr

ict C

ounc

il

· Lim

ited

and

has

sign

ifica

nt

inte

rnal

com

mitm

ents

· D

oes

not h

ave

busi

ness

im

prov

emen

t cap

abili

ty

· Lim

ited

and

curr

ently

has

a

sign

ifica

nt c

omm

itmen

t to

cultu

re c

hang

e an

d re

invi

gora

ting

the

orga

nisa

tion

· L

imite

d bu

sine

ss

impr

ovem

ent c

apab

ility

· Ver

y lim

ited,

Gor

e ha

s a

very

sm

all s

taff

lim

ited

capa

city

to ta

ke o

n ne

w

proj

ects

or

initi

ativ

es

· Lim

ited

and

curr

ently

co

mm

itted

to im

plem

enta

tion

of I

RIS

– b

ut h

as c

apab

ility

re

plan

ning

and

pol

icy

deve

lopm

ent

· Ver

y lim

ited

has

a ve

ry s

mal

l st

aff a

nd li

mite

d ca

paci

ty to

ta

ke o

n ne

w p

roje

cts

or

initi

ativ

es

Obj

ecti

ves,

mot

ives

and

app

roac

h to

sha

red

serv

ices

Sout

hlan

d D

istr

ict C

ounc

il In

verc

argi

ll C

ity C

ounc

il G

ore

Dis

tric

t Cou

ncil

Env

ironm

ent S

outh

land

C

luth

a D

istr

ict C

ounc

il

· Gen

eral

ly o

pen

to s

hare

d se

rvic

es

· Sta

ff k

een

to c

ontr

ibut

e · A

deg

ree

of s

cept

icis

m o

ver

bene

fits

– w

e m

ay n

ot b

e th

e ne

t ben

efic

iary

· “

we

coul

d do

that

” at

titud

e

· Mix

ed to

ligh

tly n

egat

ive

– so

me

very

kee

n an

d ve

ry

ambi

tious

, oth

ers

very

ca

utio

us

· Doe

s pr

ovid

e sh

ared

ser

vice

s to

sub

sidi

arie

s an

d to

som

e ou

tsid

e or

gani

satio

ns

· Sce

ptic

al o

ver

bene

fits

for

Inve

rcar

gill

– sm

alle

r co

unci

ls

net b

enef

icia

ries

· “w

e ca

n do

that

for

you”

at

titud

e

· Ver

y ca

utio

us a

nd n

ervo

us

abou

t loc

al jo

bs

· Str

ong

mot

ive

to m

aint

ain

iden

tity

/ st

rong

ly

inde

pend

ent

· Int

eres

ted

whe

re th

ere

are

bene

fits

to G

ore

· Lik

ely

to p

ick

and

chos

e an

d op

t in

only

whe

re it

su

its

· Rec

ogni

ses

diff

eren

t act

iviti

es

of r

egio

nal c

ounc

ils

· Has

sub

stan

tial i

nves

tmen

t in

shar

ed s

ervi

ces

with

oth

er

regi

onal

cou

ncils

(IR

IS)

· Gen

eral

ly o

pen

to s

hare

d se

rvic

es

· “w

e co

uld

do th

at”

attit

ude

· Cau

tious

and

ner

vous

abo

ut

loca

l job

s · N

eed

to d

ecid

e if

they

are

in

Sout

hlan

d or

Ota

go

· Fee

ls le

ft o

ut o

f day

-to-

day

enga

gem

ent b

etw

een

Sout

hlan

d C

Es

- the

forg

otte

n pa

rtne

r · S

tron

g m

otiv

e to

mai

ntai

n id

entit

y /

stro

ngly

inde

pend

ent

· Int

eres

ted

whe

re th

ere

are

bene

fits

to C

luth

a · L

ikel

y to

pic

k an

d ch

ose

and

opt i

n on

ly w

here

it s

uits


13

The interviews also highlighted that there are fundamental differences between the councils that help to explain why there has not been more progress with shared services. The councils each have features that reflect their particular history, size, different decision-making practices, differing approach to the role of elected representatives, etc.

The following examples of the cultural and practice differences between the councils provide some important insights. They are provided as examples of the differences – they are not an exhaustive list of the differences between the councils.

a. Southland District has a strongly devolved decision-making framework that empowers community boards and community groups to make decisions. Staff spoke about the strong focus on expenditure and reported community board debates over $1,000 to $2,000 of expenditure lasting more than an hour. In contrast Environment Southland, Gore District and Invercargill City appear to have a stronger sense of separation in the roles of elected representatives and managers with respect to implementing policy and making expenditure decisions.

b. Invercargill City has a large proportion of its staff on a collective employment agreement that utilises grades and steps to reflect remuneration based on seniority and length of service. In contrast the other councils have a considerably greater proportion of their employees on individual employment agreements, and have remuneration frameworks based on a pay for performance model adjusted annually for market movements and employee competency and performance.

c. Southland District Council has a very complex system of cost allocation and a complex system of targeted rates designed to recover allocated costs from specific communities or beneficiaries. To support this Southland District has around 800 business units on its general ledger. Southland produces monthly income and expenditure statements for each business unit. A business unit can be as small as a block of toilets.

d. Gore enjoys the benefit of two particular cost savings:

· a historic arrangement around the price of electricity for municipal use in the area that was previously the Gore Borough of one penny per unit; and

· a local wireless network that provides virtually free interconnection across its Gore operational locations.

e. Each council has a different approach to monitoring and enforcement activity. Generally the scale of the monitoring work undertaken by the territorial authorities is considerably smaller than the monitoring work undertaken by Environment Southland. In part this reflects the different and continuing nature of the resource consents issued by the regional council. Several councils have an approach that is more education based than enforcement based. Southland, Gore and Clutha are more likely to seek resolution to an issue by educating the people involved and negotiating a resolution than by initiating a prosecution. In contrast Environment Southland, and to a lesser degree Invercargill, are more likely to initiate a prosecution. This marked difference in approach limits the potential for collaboration of shared monitoring and enforcement activity.

f. Environment Southland’s systems for collecting and updating remote data rely on PDAs, which are now obsolete and increasingly difficult to source or repair.

g. Invercargill City has a high level of internal promotion to senior roles and historically has had a fairly low staff turnover. Southland District has historically had a higher rate of staff turnover. The different levels of turnover both have some down-sides, but one of the up sides of a higher staff turnover is that Southland District is more frequently exposed to new


14

or different ideas and business techniques from outside the sector and the region.

h. Culturally Southland District has a stronger focus on engineering and in particular roading than the other councils. In marked contrast Gore has a bias towards place-making activities, main-street improvement, beautification, recreational facilities, the museum and gallery. Gore’s pattern of expenditure on these activities is probably unique in New Zealand for a council of its size.

i. Clutha and Gore Districts both have a very small staff complement. This means that their management teams are far more involved in ‘doing’ than in ‘managing’. In contrast Southland District, Environment Southland and Invercargill City have their senior managers more involved in ‘managing’. However, given the more complex framework of governance adopted by Southland District senior managers there spend considerably more of the their time supporting decision making by elected representatives than their counterparts.

j. Clutha District Council has its paper archives stored in a three bay garage – a far cry from the Archive Act compliant storage facility that Invercargill City has put in place.

k. The five councils have historically had different, but overall very cautious views over the potential for council controlled organisations (CCOs). The relative views over the role and issues associated with CCOs limits the potential for that form of entity to provide the vehicle for a shared service or services.

In addition to the marked differences between the Councils noted above, it is also worthy to note the very mixed motives for considering shared services that emerged through the interview process.

The mix of motives that emerged through the interviews included:

a. a desire to use shared services to demonstrate that there is no case for local government reform or amalgamation in Southland;

b. a desire to use a shared services agenda to demonstrate that there is a case for local government reform of amalgamation in Southland;

c. a desire to use every possible opportunity to deliver better and more cost effective services for ratepayers;

d. a desire to expand personal career opportunities;

e. a desire to protect current personal position and role;

f. a healthy scepticism over the potential for my local authority to benefit from a shared service initiative (especially from Invercargill who tended to see the smaller authorities as net beneficiaries and themselves as either worse or no better off as a result of shared service initiatives);

g. a belief that current services are not good enough and can be significantly improved; and

h. a belief that the status quo is just fine and continuing on “as is”, is perfectly acceptable;.

It is perfectly reasonable to expect this range of viewpoints. However, for shared service initiatives to work there must be common motive and objectives. The interviews demonstrated that as yet that does not exist. To make any initiative work leaders will need to forge a meeting of minds and a common resolve.


15

6. Identified Shared Service or Collaboration Opportunities

The interviews and workshops with council managers identified a range of shared service or collaborative opportunities. In the following section those opportunities are explored and evaluated. Each opportunity is described and evaluated in terms of the success factors discussed above. In the Section 7 the opportunities with the greatest potential are highlighted and recommended for further work. These are not the only opportunities for shared services. Indeed at the extreme it would be possible to operate all of the existing councils through a single administration that supported multiple governing bodies. None of these more extreme options for shared services are explored here because there is no appetite for them from within the current councils, and without common objectives and motivation shared service initiatives will fail.

6.1. Information Technology and Core Enterprise Systems

Four of the five councils identified the opportunity to progress the development and sharing of a shared IT platform. Southland District, Invercargill City, Environment Southland and Clutha District all see potential for progressing the shared IT platform as planned. This will involve finalising the connectivity through fibre, jointly addressing disaster recovery and off-site backup, exploring infrastructure as a service, a shared help desk and progressively common applications. All see this as a series of steps that will progressively bring the organisations closer together.

All recognise that common applications is the last phase of this journey. The history of stand alone investment decisions and use of different core systems means that it will be some time before it is possible to move to common applications. In particular both Southland District and Clutha District face decisions in relation to core General Leger and financial applications. All councils face challenges in the integration of asset management plans with their financial and fixed asset systems. The decisions that councils make on this generation of legacy systems could offer the potential for a new generation of more common applications. Alternatively, a new generation of stand-alone decisions could make the rest of the IT shared service problematic.

Clutha has a particular risk associated with the current shared IT service. Clutha’s IT system is operated on their behalf by Invercargill on the basis of a handshake. There is no service level agreement, not even a memorandum of understanding that sets out the basis on which this operates. This represents an untenable level of risk for Clutha and needs to be addressed.

Gore District is notable in its view that it can continue to progress its own IT. Significant factors in this decision are: the close proximity of all of Gore’s business activities in Gore township and their existing (and ‘free’) local network, their recent investment in upgrades, their current ability to retain staff with adequate skills, and their unwillingness to be exposed to additional business continuity risk that they cannot control, and small size and stable nature of their system and network.

6.2. GIS

All councils identified some potential around a shared GIS platform or GIS resources. All councils have small GIS capability and are very dependent on one or two key people. GIS skills are scare nationally and this represents a real business continuity risk to the organisations.

There is a history of shared purchase of areal photography, but different timeframes for purchase and differing requirements for resolution have resulted in Gore pursuing its own imagery in isolation from the other councils.


16

The councils do not use the same GIS platforms and at present have differing standards and data formats. It would be possible to adopt a phased approach to developing shared GIS services.

It is also apparent that the Southland Councils could achieve significant business efficiencies, better business planning and service enhancements by integrating their current databases and supporting the presentation of spatial information on mobile devices. For instance, the one-time capture of asset maintenance work in the field could significantly reduce data handling, and errors associated with multiple versions of the truth.

The possible sequence of a shared approach to GIS and spatial information would start with the shared IT platform and could progress through:

· agreed and standardised data formats that will support easy information exchange; · agreed metadata standards and conventions; · shared data purchase; · links between all relevant databases to bring together all of the councils’ spatial

information in a coherent way - this could include links to property and rates information, consents and monitoring and enforcement activity, building consents and building control and inspection activity, asset management systems and as built plans, asset condition assessments, etc.; and

· enabling mobile devices to capture in the field spatially referenced data and remove double handling of information.

6.3. Asset Management

All of the councils have issues with their asset management systems and the way in which the interface with their other systems. Typically links between asset registers, financial systems, asset plans and as-built records, and asset management plans are either manual, or involve major translation processes.

A number of staff described asset management plans spread across a number of spreadsheets that did not necessarily relate to the council’s financial management or expenditure plans. Staff also noted issues with how they captured and integrated work by contractors in terms of both records of the physical works and the completion of work scheduled to be undertaken in asset management plans.

Staff at all councils noted challenges with the new requirement to produce a 30-year infrastructure plan as part of the next Long Term Plan.

Given the diversity of systems (many of the ad hoc) across the councils, and the common problems of integration, data capture and multiple versions of the truth this is an area that is ripe for a collaborative approach to addressing the challenge. Sharing the costs of integrating these systems (or purchasing new ones) would be a significant opportunity.

6.4. Building Consent Authority functions

The Southland territorial authorities have now identified a pathway toward standardisation and greater integration of building consent authority functions, including the potential for common charges. The pathway involves a staged approach to harmonising forms, processes, systems and charges. It also involves sharing staff to ensure that all councils have access to the levels of


17

specialisation necessary to process the consent applications that they receive.

The staged approach is a sensible and credible way of exploring the potential for shared services in this area. The principal obstacle for greater integration is the inability for each local authority to contract out of the legal liability associated with building consent decisions. It will be difficult to achieve greater integration of building consent authority functions without sharing the liability for all decisions between all of the participating councils. It seems unlikely that councils will be willing to accept potential liabilities associated with decisions in neighbouring local authorities over which they have no control.

6.5. Legal Services

None of the staff who were interviewed identified legal services as a potential shared service until they were prompted to consider it. Across the councils the scope of legal work varies. There is a mix of transactional legal work associated with property, subdivision, road reserve issues and leases and licences. There are two other areas of legal work – local government administrative law and legal advice associated with rates, rating, changes to local government legislation etc., and legal work associated with the Resource Management Act, policy development and appeals.

The councils currently have no in-house legal capability. Legal services could be developed as a shared service by establishing a joint contract for specific services and/or by establishing a shared in-house capability. For the more transactional aspects of leases, licences and property transactions a shared in-house legal team could be very cost effective. Given that the degree of specialisation is greater, and the level of use less, a shared in-house local government administrative law capability may be less attractive. However, it may be possible to achieve better results through a joint tender – or the joint application of the government contract rates for legal service.

6.6. Internal Audit

All of the Councils have a requirement for an Internal Audit capability that is separate from and additional to the external audit work delivered through the Auditor General. The Internal Audit function should provide a programme of on-going internal review of systems and processes to provide assurance of their integrity. Internal Audit should be one of the prime ways of detecting and eliminating fraud or theft by employees. It is also one of the key ways of ensuring that council policies and procedures are implemented and probity is maintained.

Internal Auditors generally work to a rolling programme of review along with specific or one-off audits. In a smaller organisation it is not a capability that is needed year round. All of the councils struggle to maintain the level of skill, independence and authority that is necessary of an Internal Audit capability.

As with legal services it would be possible to develop a single internal audit capability that services all of the councils. The costs of the internal audit function could be shared on the basis of an agreed base level reflecting the on-going programme in each council and a variable amount that reflected the costs of any particular one-off investigation in a council. This service could be provided by either a joint in-house capability, or through a joint contract for service with a suitable accounting firm.

A common approach to Internal Audit would also benefit from a common approach to Audit and Risk Committees across all Councils, and possibly from the appointment of a common ‘independent’ member of the Audit and Risk Committee of each Council.


18

6.7. Record Keeping and Archive

There was positive feedback about the standard and scalability of the archive storage provided by Invercargill City. Beyond that all councils, noted a significant challenge with either the current state of their record keeping system, or the size and difficulty presented by the management of their historic paper archives and appropriate scanning and digital record keeping of those records. Clutha District highlighted the challenges that it has with its current storage of paper records and the need to comply with the requirements of the Archives Act. Southland District noted the very large cost associated with trying to comprehensively scan and digitally record its historic records.

Despite the fact that the five councils use a number of different electronic document management systems, it would be possible to develop a shared record keeping and archive service. Building off the storage facility that Invercargill City has developed it would be possible to develop a shared resource that was capable of cost-effectively scanning and digitally recording historic paper files. Sharing the costs of the equipment and the recruitment and professional development of the necessary staff over the five councils, and over an appropriate period of time could provide the most cost effective and robust way of dealing with this legacy. Experience elsewhere in the country has demonstrated that work such as this must be done to the highest professional standard or the council’s record keeping is compromised. Equally, the experience of others is that there are potential savings associated with sharing staff and equipment to complete this task.

6.8. Procurement

There is relatively little scope to develop a ‘club’ purchase arrangement that could secure better purchasing arrangements that are possible under the all-of-government contracts. There could however be benefit to the smaller local authorities in having access to a joint procurement capability that could expedite their purchase of both consumables, and their infrequent purchase of medium size capital items (like printers and photocopiers) which require a degree of expertise but are done infrequently. A shared procurement capability could bring into one place expertise with tendering, requirements specification, contracting, etc. This sort of capability could be co-located with a shared legal capability, providing a service to all councils.

The potential savings from this sort of initiative will be from removing duplication of expertise across the five councils, from ensuring that all benefit from a degree of specialisation that may not otherwise be available, and from using specialisation to reduce the risk of poor procurement.

Limitations to the potential for this will be where councils have a particular emphasis on local procurement, or where councils are not prepared to put this responsibility at arms length from current management.

6.9. Corporate Policy

The smaller councils noted an on-going challenge with the cost and complexity of dealing with changing requirements for corporate planning and accountability documents. They noted the difficulty of retaining staff with the right level of expertise, and the periodic (every three year) requirement to undertaken significant work. Clutha District in particular noted interest in having access to a shared or external capacity to develop corporate policy, including supporting its long term plan, and reviews of treasury management policies, significance policies, etc.

There would be some potential to develop a shared in-house capacity or expertise in this area. Sharing the costs of staying current and addressing any changes to legislation could be advantageous. The challenge would be how to scope the level of on-going shared resource


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given the rather peaked nature of demand for such services. It may well be that this need would be best met by contracting in the required skills as and when they are necessary. There is certainly no shortage of consultancy capability with expertise in this area. Another approach that could be very effective is to ensure that those staff working in this area across all of the councils regularly meet and share both their work and their experiences. The joint commissioning of advice through such a forum could also be cost effective for the councils.

6.10. Treasury Management

One of the most significant financial benefits on the amalgamation of Auckland Councils was the ability to consolidate the treasury management functions of the eight councils. In addition to being able to consolidate debt the integration of the funds management delivered immediate benefits from improved short-term and on-call placement of funds and better management of working capital, long-term debt and cashflow.

The Local Government Funding Agency provides a significant opportunity for all councils to enjoy the benefits of consolidated debt placement and it would be difficult to achieve the benefits associated with managing combined financial position of the five councils as if they were one. However, there is potential to deliver benefits from the effective management of the combined treasury of the councils to manage short-term investment funds and working capital requirements to best advantage.

6.11. Road maintenance contracting

There is a considerable national debate over the potential for different forms and size of road maintenance contracts deliver savings. Across Southland there is considerable effort going into exploring and evaluating different procurement models. Southland District in particular has focused on this issue. The value of savings from road maintenance to each council differs depending upon the significance of roading as a component of total expenditure. For Southland District it is critical. For Gore, roading is a far smaller percentage of total expenditure.

The evidence to date suggests that Southland on its own has a road network that is already larger than optimum size for efficient management of maintenance contracts. This suggests that there is little value to Southland District from shared services opportunities in this area – but there may be to other councils. It is likely that the greatest potential benefits from shared road maintenance approaches would be with respect to the inclusion of the State Highway network in joint contracts and through the ability to retain an larger pool of in-house engineers who can guide roading expenditure to best effect. Certainly, directing expenditure to where it delivers the best return over the life cycle of the road is likely to deliver better savings for councils than are possible by different approaches to the procurement of services.

6.12. Road and bridge construction programmes

In addition to road maintenance the councils collectively have a substantial and on-going programme of capital works to re-seal, re-habilitate and re-build roads and bridges. There is potential to achieve savings in this area through the co-ordination of the timing of works, tendering and potentially joint contracting. One of the material issues facing the construction sector is to have sufficient on-going certainty of work to allow them to get the most out of their equipment. Co-ordinating a region wide programme of capital works effectively could deliver savings, but it could certainly deliver continuity of work and the ability for contractors to locate necessary machinery permanently in Southland.


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6.13. Biodiversity and Environmental Enhancement Programmes

Across the Southland Councils there are a variety of initiatives designed to enhance biodiversity or the quality of the environmental through restoration planting, riparian management, weed removal, or beautification. These initiatives span public and private land.

In addition to the activities of the Southland Councils the Department of Conservation undertakes substantial land and conservation management programmes across the conservation estate within the region.

It would be possible to deliver this activity through a combined or shared approach across all of the councils and ideally including the Department of Conservation. The scale of the resulting programme could deliver considerable advantages, but it could be very difficult to manage within the various objectives of the partners.

6.14. Water testing and laboratory services

All of the Southland territorial authorities require regular testing of potable water supplies to ensure that they meet public health standards. They also require regular testing of the quality of discharges from wastewater treatment plants to ensure that they comply with the relevant standards of their resource consents. Invercargill City maintains a laboratory to undertake this activity in-house. Their laboratory is certified by the Ministry of Health to undertake testing of public water supplies. The laboratory is also currently permitted to undertake testing of water effluent quality under the conditions of the Council’s discharge consent issued by Environment Southland. The Invercargill City laboratory is not Telarc certified.

Environment Southland has a substantial workload associated with water sampling and investigation through its monitoring and enforcement activities. In order for samples to be used in an evidentiary process Environment Southland must ensure that all testing is done by a suitably certified laboratory that meets the relevant standards with respect to its processes and practices. Environment Southland currently contracts out this activity.

It would be possible to establish an appropriately certified shared laboratory that can provide the necessary testing for all of the Southland Councils. There is potential for an apparent conflict between the territorial authorities (who discharge effluent) and the regional council (who consent and monitor the discharge of effluent). However, an appropriately certified laboratory would be required to deliver the requisite tests according to the agreed protocols – or it would lose its accreditation. Shared water testing and laboratory services could deliver considerable savings to all of the councils. Invercargill City has advised that the additional costs associated with securing and maintaining Telarc certification would be minor.

A shared water testing and laboratory service could be delivered either as an in-house (or jointly owned) operation that builds on the existing Invercargill City laboratory, or as a jointly contracted service delivered by an external laboratory.

6.15. Transactional accounting services

The potential for shared or standard business enterprise and finance systems is discussed in Section 8.1 above. Whether or not the five councils (or any group of the councils) can get to the point of common enterprise systems it would be possible to develop a shared approach to transactional accounting and back-office services, including accounts receivable, accounts payable, debt management and collection, rates collection and billing, and supporting other financial transactions (including dog licensing).


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There are relatively few staff involved in this activity within each council, but it is possible to achieve some scale in this area, and a focus on how this is done is likely to improve or advance more quickly decision-making on payment channels and automation of financial transactions. Better channel management could deliver benefits to the councils, to ratepayers and to those who do business with the council.

6.16. Human Resources Management

There are quite differing views about the appropriateness of, or potential for, human resources management as a shared service. Currently each council has limited HR capability and is quite dependent upon an individual for the delivery of this function.

Those that argued for its inclusion as a potential shared service consider that approaching this as a shared service would provide access to higher level skills in the industrial relations, health and safety, remuneration and performance management areas. They also note that in the business world it is commonplace to provide shared HR services across a group of related companies and retain the distinct culture and approach of each.

Those that argue against the potential for HR to be developed as a shared service note the distinctive characteristics of each council and the need for their CE to develop and manage the staff to best effect.

On balance the reviewer considers that there is potential for a shared service – but it is significantly limited by the very different approaches and culture within each council.

6.17. Payroll Services

A number of managers identified the potential for payroll to be delivered as a shared service. Others consider that it is not worth the effort and Gore has successfully contracted out its payroll function and sees no reason to reconsider that approach.

Given the variety of approaches adopted by the councils, and the very marked differences in the remuneration systems between Invercargill and the other councils it seems difficult to see that a shared service would deliver any more benefits than could be secured through simply contracting out the activity on a council by council basis.

6.18. Staff Training and Development

All councils noted to some degree a longer-term challenge in relation to their labour force. Councils noted a high average age of staff and dependence on staff approaching (or well passed) historic retirement age. Some councils noted more difficulty recruiting staff in particular areas than others. The territorial authorities noted the recent process of building officials moving between councils and their vulnerability to loosing key building staff. Environment Southland noted particular challenges with the development and training of the next generation of river engineers.

Invercargill City described the work it was doing to assist the training of roading engineers through the Southland Institute of Technology (SIT). Both Southland District and Invercargill City also noted the potential for a broad cadetship and training programme that developed suitable staff with a wide variety of skills. They shared a vision for a cadetship programme that would support school leavers through a combination of formal training through SIT and a series of staff placements in multiple organisations. To be successful such a programme would need a number of organisations to participate, including the local authorities, but also the Southland offices of government departments, and potentially a number of CCOs, private


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sector, or not-for-profit organisations. This sort of scheme is difficult to get going and requires a long-term commitment to the people that it supports. The sort of commitment to placing people that is required could only be achieved if it is given some formal status as a shared initiative with contractual obligations to be delivered.

At a level below a formal cadetship scheme it would be possible for the councils to co-ordinate their investment in the training and development of staff. Given the limited number of staff that will be involved in any one training initiative in one local authority, jointly engaging education providers to deliver training programmes would be considerably more cost effective than doing it individually.

Probably the biggest impediment to developing staff training and development as a shared service is the different management approaches to recruitment, staff development and labour-force management across the councils. To make this work as a shared service there would need to be considerable investment in formalising training needs and priorities across all councils.

6.19. Monitoring and Enforcement

The Southland territorial authorities are currently collaborating over the implementation of the Sale and Supply of Alcohol Act 2012. This includes a common approach to the development of a Local Alcohol Policy, and common membership of District Licencing Committees.

There are similar opportunities for collaboration in relation to managing the sale of psychoactive substances, and the development and implementation of policies and approaches to earthquake prone buildings.

Councils currently operate a mixture of in-house and contracted activity across the monitoring and enforcement roles of councils. For instance, after hours noise complaints are dealt with by security firms, animal control is generally done in-house, but Southland and Invercargill share a pound. As is noted above there are also differences in the approach to monitoring and enforcement between the councils.

There is a broader opportunity for the councils to develop one, shared capability to deliver monitoring and enforcement activity under a number of statutes. It would be possible to progress from a common approach to earthquake prone buildings to a common approach to dangerous and insanitary buildings and indeed to a shared resource dealing with building warrants of fitness and compliance with the fire regulations. Equally it would be possible to have a region-wide approach to dealing with after hours noise complaints, either through a single contract, or through a shared in-house capability.

Ultimately, it would be possible to develop a shared competency that dealt with all compliance checks, including environmental health, food safety, and even compliance with RMA consent conditions. The two largest competencies with respect to monitoring and enforcement within the region are currently with Invercargill City and Environment Southland. It is understood that Environment Southland is currently re-building this capability after it was found wanting in a rather spectacular way.

Despite the need to operate under a number of different and distinct pieces of legislation there is are common threads that run through all monitoring and enforcement activity including:

· the need to schedule visits (logistics capability); · the need to understand risk and develop inspection frameworks that recognize and

appropriately respond to risk; · the need to understand specific requirements and gather evidence of either compliance


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or failure to comply; · the need to have robust systems for managing evidence and investigations and ensuring

that fairness and natural justice principles are applied; and · the ability to engage with people and get the right mix of education with enforcement.

A shared monitoring and compliance approach could be developed through contracts between local authorities, or the joint contracting out of particular activities, or the transfer of functions to the regional council.

6.20. Business Improvement and Implementation Capacity

From the interviews it was apparent that none of the councils had a significant business improvement capacity. Neither did they have capacity to implement business improvement initiatives. All of the councils interviewed have significant areas of their operation where a business improvement programme could significantly improve performance, reduce business risk and ensure statutory compliance. Despite these opportunities Councils were resourced for business as usual. This will result in the status quo, unless or until increasing pressure for savings, or competition between activities within each council results in a service failure.

It would be possible for the councils to jointly develop and deploy a business improvement and change implementation capacity. Indeed, these core competencies would be necessary in any central resourcing of shared service initiatives.

6.21. Policy and Legislative Response and Advocacy

Earlier this year McGredy Winder & Co. provided advice to the Canterbury Councils with respect to “Options for collaboration between Canterbury councils on strategy, policy and planning issues”. A significant extract from that report is set out as Attachment 1 to this report.

It is considered that exactly the same issues and opportunities as were identified in Canterbury exist to a greater or lesser extent in Southland. The recommendations that were made to the Canterbury Councils have now been successfully implemented and have resulted in considerable change in the way in which the councils work together. It is suggested that the Southland Councils consider a similar approach.

6.22. Planning – One Plan

A number of people referred to the potential for the development of a single resource management plan for Southland. This sort of initiative has been foreshadowed through proposed amendments to the RMA which would make changes to Schedule 1 processes for plan changes associated with collaborative approaches to policy development and plan making.

It is understood that there have been previous efforts to develop joint planning documents that have failed. From the interviews it seems that a significant reason for the failure of past efforts was the ultimate unwillingness to share decision-making. Differing philosophical approaches to planning by council offices appear to have contributed to the difficulties of a joint approach.

No collaborative policy development process will be possible without a sharing of responsibility for making policy decisions. At this stage it is considered that it would be too difficult to progress directly to a joint policy development or plan making process. However, it is considered that there is considerable potential for this – if the Southland Councils have first successfully developed an agreed regional strategy.


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6.23. Regional Strategy

On reflection at the end of the interviews the reviewer realised that across all of the responses and all of the interviews there was one thing missing. Most of the staff identified a number of fundamental regional issues that were troubling them and set the context for their decision-making. They spoke of static or declining rural population, of small communities that were struggling, of greater emerging differences between rich and poor, of long-term demographic and economic challenges, of issues with job, tertiary education and career opportunities for young people, of uncertainty over the future of the Tiwai point aluminium smelter, of the slow down in dairy intensification and the significant remaining opportunities, of the challenges of water quality and the conflict between maintaining appropriate environmental standards and realising economic development opportunities, and of the potential for utilising the lignite deposits and a urea plant. Most of the issues that were raised were concerns over the future of the region. The single thing that was missing was an answer to the simple question – well so what is the plan to deal with these problems?

In Auckland prior to amalgamation and in the Bay of Plenty there has been a long-term practice the councils of a region working together to develop regional strategies to deal with common problems. For both Auckland and the Bay of Plenty the challenge was and remains how to deal with and manage growth. Both regions are experiencing sustained and quite rapid population growth as well as growth in employment. Managing growth requires neighbouring councils to co-operate and have effective and joined up strategies for building the necessary infrastructure and controlling the sequence of land development that is necessary to build attractive and well functioning cities.

In many respects Southland faces the opposite problems to Auckland and the Bay of Plenty. Southland also has a history of significant initiatives to help to drive the development of the economy. The Zero Fees initiative with SIT is a very significant example of an effective regional collaboration, harnessing the resources of the region to make a difference.

Given the significance of the challenges and opportunities that Southland continues to face it is suggested that the it would benefit greatly from a strong regional development strategy that provides the platform for joint work and collaboration between the local authorities of Southland, but also with Southland’s major businesses and institutions. At the core of a regional development strategy Southland needs to address and resolve key environmental management issues associated with water quality and more intensive farming, as well as how to build resilience in the face the uncertain future of the smelter.

Elsewhere it has been found that working together to build the shared strategy can provide the track record of success and the shared vision that are necessary to then develop deeper and more meaningful partnerships and shared delivery of services. The experience of developing Our Way Southland in response to the statutory requirement for community outcomes provides some evidence of what may be possible in Southland.

Developing a regional development strategy through a truly collaborative process involving a wide range of stakeholders and the councils of the region could:

· lead to a single RMA plan, because the key policy direction will emerge from the strategy;

· support a joint policy and advocacy approach – because the key reasons for advocacy on behalf of Southland will come from the strategy;

· provide the potential for alignment of capital works and infrastructure upgrades within a coherent region-wide approach,

· provide the track record of joint decision-making and trust necessary to move to joint


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delivery or shared services on a broader scale; and · galvanise resources far greater than those of the councils to deliver better long-term

outcome for the people of the region and each district.

7. Assessing Opportunities

Table 2 stets out the high level assessment of the potential for the shared services opportunities that are discussed above. For each opportunity the assessment reflects a high level view of the extent to which the initiative addresses issues, needs, or priorities that emerged from the interviews, how difficult it would be to achieve, the scale of the resulting benefits, the extent to which the resulting benefits will be shared equally or unequally, and the level of resourcing that would be required to implement it. The assessments are necessarily high level and indicative. Their purpose is to assist with setting priorities for further work. To progress any of the initiatives further it would be appropriate to develop a business case considering in detail the issue, the scope of the initiative, the cost and resources required to implement it, the scale and spread of benefits and the likelihood of success.

Table 2 does not record the likely view of each council with respect to each possible initiative. It is difficult to do that because the interviews demonstrated some divergence of views, motives and expectations within each of the management teams.

Another consideration with respect to which shared service opportunities to pursue is the extent to which they build or contribute to a stronger sense of shared vision and direction and a track record of successfully working together. Initiatives that build trust and confidence in working together will be important early on even if they do not offer large benefits.

Table 2 indicates the level of resourcing that would be required to progress each shared service initiative, as low medium or high. The scale is intended to illustrate the relative effort that will be required to progress each initiative. The full extent of the resources that would be required to progress any of the initiatives will need to be investigated in depth in the preparation of the business case for each shared service. It is important to note however, that even the low level of resourcing that is indicated for some of these projects probably exceeds the level of resource that is currently devoted to developing and implementing new shared service initiatives.

Overall the assessment of shared services opportunities for Southland Councils is that there is considerable potential, but it will be difficult to achieve because of the very different governance and management approaches across the councils, the mixed motives from the councils, the lack of resources to drive and implement organisational change, and the underlying fear of amalgamation or ‘take-over’ that means that sovereignty of decision-making will be jealously guarded.


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Table 2: Assessment of Shared Service Opportunities

Initiative Consideration

Add

ress

es

an I

ssue

Add

ress

es

a Pr

iorit

y

Add

ress

es

Nee

d

Deg

ree

of

Diff

icul

ty

Scal

e of

B

enef

it

Spre

ad o

f be

nefit

s

Res

ourc

ing

requ

ired

Shared IT Platform ✔ ✔ ✔ M H E M Shared Core Enterprise Systems1 ✔ ✔ ✔ H M U H GIS ✔ ✔ ✔ L H E L Asset Management Systems ✔ ✔ ✔ H H E H Building Consent Functions ✔ ✖ ✔ L M U L Legal Services ✖ ✖ ✖ M H E M Internal Audit ✖ ✖ ✔ M M E L Record Keeping and Archive ✔ ✔ ✔ L H E M Procurement ✖ ✖ ✔ L M U L Corporate Policy ✖ ✖ ✔ L M U L Treasury Management ✖ ✖ ✖ L H E L Road maintenance contracting ✔ ✔ ✔ M ? U M Road and bridge construction programmes

✔ ✔ ✔ M ? U M

Biodiversity ✖ ✖ ✖ M M U M Water testing & laboratory services

✖ ✖ ✖ L H E M

Transactional accounting services ✖ ✖ ✖ L H E M Human Resources Management ✖ ✖ ✖ M M U L Payroll Services2 ✖ ✖ ✖ L M U M Staff Training and Development ✔ ✔ ✔ M H U L Monitoring and Enforcement ✖ ✖ ✖ H H U M Business Improvement and Implementation Capacity

✖ ✖ ✖ H H E M

Policy and Legislative Response and Advocacy

✔ ✔ ✔ L H E L

Planning – One Plan ✔ ✔ ✔ H M/H E H Regional Development Strategy ✔ ✔ ✔ M H E H

✔ means yes it does ✖ means no it doesn’t H means High M means medium L means Low ? means uncertain U means uneven spread of benefits of costs E means even spread of benefits and costs

Notes: 1. This assessment reflects the short-term problem that every one starts with different systems on different

investment cycles. Over the longer term this initiative offers high and even benefits. 2. It is considered that simply contracting out payroll would provide better benefits with lower costs of transition

and establishment.

8. Recommended Sequencing of Shared Service Initiatives

In order to build on existing initiatives, establish a further track record of success, depth of trust and confidence in working together it is proposed to group the initiatives into four groups and consider them in that order. Table 3 shows the recommended groups of initiatives.


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Table 3: Recommended Priority Shared Service Initiatives.

Initiative Group Shared IT Platform 1 Shared Core Enterprise Systems1 2 GIS 1 Asset Management Systems 2 Building Consent Functions 1 Legal Services 2 Internal Audit 2 Record Keeping and Archive 1 Procurement 2 Corporate Policy 2 Treasury Management 2 Road maintenance contracting 4? Road and bridge construction programmes 4? Biodiversity 3 Water testing & laboratory services 2 Transactional accounting services 3 Human Resources Management 3 Payroll Services2 ? Staff Training and Development 2 Monitoring and Enforcement 3 Business Improvement and Implementation Capacity 1 Policy and Legislative Response and Advocacy 1 Planning – One Plan 2 Regional Development Strategy 1

The Group 1 initiatives are either existing initiatives or address universal problems and therefore have the potential to benefit all of the councils. The inclusion of the Policy and Legislative Response and Advocacy and Regional Development Strategy initiatives in the first priority projects is designed to provide the direction and shared vision that will be required to drive the subsequent initiatives. The Business Improvement and Implementation Capacity is in Group 1 because it will be necessary to drive the shared services agenda and implement any one of the proposed initiatives.

The Group 2 projects are selected because they depend upon the completion of Group 1 initiatives or because, even though they are not that complex there will be limits to the number and complexity of shared service investigation and implementation programmes that can be run at any one time.

Treasury management is selected as a Group 2 because it requires a high trust environment in order to be successful. Building trust through the Group 1 projects should create the environment necessary to contemplate joint treasury management.

The Staff Training and Development initiative is proposed ahead of any other changes in HR because progressing training and development opportunities will force the councils to address the cultural and sovereignty of management issues that are central to the vision and needs of HR. It would be possible to implement a long-term training and development strategy and cadet scheme without going any further to share HR services.

The Group 3 projects are more speculative than the others and may not prove worthy of exploration. Of these the most substantive initiative is exploring the potential for shared services (or indeed transfer of functions) for monitoring and enforcement activity. Sharing transactional


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accounting services would be considerably easier in an environment of shared and common core enterprise systems, hence it is placed behind that initiative.

The Group 4 projects are a bit of an enigma. If there are benefits from scale, or changes to joint procurement or contracting for road maintenance and capital works they could be quite large in relation to the benefits from other initiatives. However, the ability to secure such benefits is uncertain.

9. Next Steps

This is the first of two reports designed to address the June 2013 resolutions of the Chief Executive Sub-Committee of the Southland Shared Services Forum. This report identifies a number of potential shared service opportunities that are worth pursuing further. In order to determine whether or not to actually implement a shared service Chief Executives will need to develop and consider a business case for each opportunity. That business case will need to establish in far more detail the exact nature of the service, the business requirements of the partner councils, options for the way in which it can be delivered, the costs of transition, the on-going costs of operating a shared service, and the extent and nature of either any savings or any improvements in the level of service that can be provided (including the ability to meet statutory requirements).

The second report will identify the level of resourcing that will be required to progress the identified shared service opportunities to the point that there is a business case that the Chief Executives can consider. That report will also address the decision-making framework that will be necessary to systematically work through and consider the identified opportunities.

In developing this report it was identified that whilst some of the existing shared services (like the Rural Fire Authority, and WasteNet) are reflected in very formal contractual relationships, others (the IT shared service for instance) are very informal. The degree of informality exposes councils that are dependent on the shared service (in the case of IT Clutha District Council) to a high level of risk. It is strongly recommended that as the Southland Councils develop business cases for new initiatives they should also develop a more formal process for establishing the rules around any shared service. This needs to include a process for setting and reviewing objectives, a funding model, a clear planning process that links back to decisions relating to levels of service, rules around entry into and exit from shared service arrangements, and rules around the allocation of resources that may be shared. This matter will be addressed further in the second report.


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Attachment 1: Extract from “Options for collaboration between Canterbury councils on strategy, policy and planning issues”, A report prepared for Environment Canterbury.

3. Strategy, Policy and Issues

There are three quite distinct sets of strategy and policy issues that councils must address: local, regional and national issues. The following sections discuss differences between these issues and what that means for the need for, and the potential benefits and issues associated with, attempts to collaborate.

3.1. Local Issues

Within each district, and within the specific responsibilities of a regional council there are issues that are specific, local, and distinct that need to be dealt with by the responsible local authority. There is limited need for, or merit in, collaboration on those issues other than in the sharing of information that reduces the cost of implementation and shares learning. Good examples of local issues will be: local alcohol policies, the collaboration between South Canterbury councils on road safety, collaboration to implement the Mackenzie Agreement, the policies relating to the level of service for social infrastructure, and particular plant pest programmes like the joint Environment Canterbury and Marlborough District Council effort to tackle Chilean needle grass.

3.2. Regional Issues

Regional issues are best characterised as those that either sit in the overlapping interest of both the territorial local authority and the regional council, and/or have a larger geographic impact than one territorial authority. These issues are complex, frequently reflect resource use and allocation decisions, and therefore reflect the hierarchical nature of decisions made under the Resource Management Act. Navigating regional issues can be tricky. There is a sound basis for collaboration and effective partnership can deliver far better outcomes than other approaches. Regional issues usually have complex groups of stakeholders that also need to be engaged in decision-making processes. Good examples of collaborative approaches to regional issues include: the development of the Canterbury Water Management Strategy (CWMS), the zone committees that have been established to implement the strategy, and the Urban Development Strategy for Greater Christchurch.

3.3. National Issues

While local and regional issues arise from activities within the district or region and need to be resolved by local or regional players, national issues reflect a very different set of drivers and actors. There are three distinct types of national issues where collaboration is material and can make a real difference. They are:

· New policy debates and decisions. These issues are characterised by national policy processes involving government agencies and Ministers. The processes often require very rapid responses to very complex issues. To be effectively engaged councils need to have good connections to the government policy process and to understand what is happening. Effective submissions frequently require advocacy as well as the research and analysis necessary to write a submission. The impact of proposed policies is often similar across local authorities, or across the region. This makes it quite likely that the councils in the region could adopt a common approach with little risk of major differences. It is also likely that sharing information would result in better submissions and a greater ability to influence decisions. Given the political nature of these decisions it is likely that there


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is strength in numbers and collective regional responses, or indeed a collective national approach would be more effective than a submission from a single council.

Good recent examples of this sort of issue are: the review of financial assistance rates by NZTA, the response to the Productivity Commission Report on Local Government Regulation, response to the report of the Local Government Efficiency and Effectiveness Task Force, engagement with the Ministry for the Environment on their Brown Paper on Resource Management Act Processes and their Blue Paper on Water.

· Implementing national policy decisions and regulations Where councils are faced with implementing new policy decisions or regulations from government there is a sound argument for collaboration on implementation to reduce costs and share learning. Typically this sort of issue benefits from information sharing and joint policy advice. It makes sense to jointly commission legal advice if there are questions over what new regulations mean. If a new local policy is required it makes sense to share the development work to the extent that it can be, and to share the experiences of those working in the area to maximize the opportunities to learn from different approaches and difference experiences.

Good examples of this sort of issue are: the recent changes to the liquor licensing requirements of local authorities, changes to the Building Act, changes to the standard form of contracts for physical works and services, utilising the CWMS framework to implement the National Drinking Water Standards and the National Policy Statement on Freshwater Management through the sub-regional planning process, and implementing changes to regional land transport planning and decision-making following amendments to the Land Transport Management Act.

· Advocacy to get an issue on the national agenda or to advance the cause of the region There are often issues that arise in one region, which can only be addressed by national action – either by Parliament, or by a government agency. Getting the issue on the national agenda can be a complex and time-consuming process. Regional collaboration and joint advocacy is often key to ‘being heard’ and having the issues addressed. Issues of this nature need a strong collaborative effort. Having one or two dissenting voices can completely undermine the efforts of the others. For this sort of issue there is strength in numbers and a need for a single, united regional voice. For a single united ‘Canterbury voice’ to be heard there must first be an agreed ‘Canterbury position’.

Probably the most obvious areas of on-going joint advocacy on the national stage that will be relevant to Canterbury are: the provision of water infrastructure and water management under the CWMS, the productivity of rural land, roading and the development of the freight network, and the role, function and structure of local government in predominantly rural areas with large land area, long road networks (much of which is unsealed) and relatively small populations.

4. A Spectrum of Collaborative Approaches to Strategy and Policy Issues

Councils can adopt a range of different approaches to collaborative work targeting strategy and policy issues. The spectrum that is set out below shows the progression from simply sharing what is already being done, through to shared decision-making.

4.1. Sharing Information

The most elementary form of collaboration on strategy and policy issues is to simply share what


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work councils are doing. For instance, where a council is working on an issue and has collected relevant information, or commissioned a legal opinion, or a piece of research that information can be shared with others. Sharing that information may reduce the cost to others where they can adopt or adapt the work to suit their needs. This approach requires no formal machinery for collaborative decision-making and does not challenge the decision-making role of each council.

This is the simplest and easiest way of collaborating. Shared information can be used as is, or incorporated into other work, or simply ignored. This approach requires councils to make no real commitment to each other beyond simply sharing what they are doing. This approach relies on the existing capacity of councils and the individual priority setting processes of councils.

4.2. Shared reports, policies or submissions

One step beyond sharing information is to share reports, policies or submissions. For instance, when a national policy issue is under debate and one or more councils are working on a submission, sharing their work with the other councils in the region allows all to benefit from that work. Sharing draft submissions can result in common approaches to issues without the need for any formal machinery for collaborative decision-making and without compromising or challenging the decision-making role of each council.

This approach is only slightly more complex than sharing information, and is an easy way of collaborating. Shared policies and submissions can be used as is, or incorporated into other work, or simply ignored. This approach requires councils to make no real commitment to each other beyond simply sharing what they are doing. This approach relies on the existing capacity of councils and the individual priority setting processes of councils. The only complexity with this approach is that it will highlight early on any distinct policy differences between councils but have no way of then resolving or dealing with those differences.

4.3. Joint investigation

Where councils are grappling with the same issue the next, and more complex form of collaboration would be to undertake a joint investigation. This would normally require some form of joint procurement, or agreement between councils on the scope and brief for the work and who will undertake it. This sort of collaboration targets a shared understanding of an issue, but does not necessarily extend to a shared or agreed approach to how to deal with the issue. A good example of this sort of work would be a jointly commissioned piece of work to get technical agreement on an issue that is before the Environment Court in order to narrow the scope of an appeal. Another example would be to develop a shared understanding of the impact of a national policy. Another would be joint investigation into water quality or availability within a diverse catchment.

This approach does require a joint management framework that ensures that the work is delivered on time, to budget and addresses the agreed issue in an appropriate way. Because this approach stops short of seeking agreement on any action to follow up the investigation it does not need a complex joint decision-making process. The approach requires a medium level of joint commitment and leaves each collaborating council free to decide what to do with the jointly commissioned information.

4.4. Joint policy work

This approach goes one step further than joint investigation in that it actively seeks to develop common and shared advice on a policy issue. Whilst in theory this approach preserves the separate role of each partner in making policy decisions it substantially reduces the scope for a


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council to opt out because all councils receive the same advice. This approach requires a high level of commitment to working with partners. It requires a management framework that is capable of meeting the needs of each partner’s Chief Executive in ensuring the quality of the advice that goes to their council.

Joint policy work is not needed or appropriate for all of the issues discussed in Section 3. Joint policy work is important to support the sort of national advocacy discussed in Section 3.3.

4.5. Adopting a common position

This approach builds on the provision of joint advice to try to adopt a common position. This approach deliberately maintains the separate decision-making role of each partner council, but seeks to find a common position. This approach is relatively straightforward where the issues are simple and there are strong incentives for a common approach (for instance in response to a national policy issue where the impact on the partners is similar and it is easy to agree a response). This approach is far more complex where the matter in question impacts on the partners differently. This can readily result in negotiating or gaming behaviour that is difficult to deal with.

For this approach to work there has to be a form of governance relationship that provides the vehicle for developing and reviewing (negotiating) the common position. This approach requires a high level of commitment to partners and to the vision of a common position. Partners need to have a sophisticated and robust approach to relationship. It is likely that from time to time they will need to agree to disagree.

It will be easiest for Canterbury councils to reach common positions on national level issues. This is because national level issues will tend to impact on all councils in the same way, and therefore the shared Canterbury perspective and interest will be clear. It is also easier to reach a common position when all of the partners are trying to influence the same, external decision-maker - government. Canterbury councils are likely to have the greatest collective impact where they can achieve a robust common position on a national issue that is important to all councils and to all of their communities.

4.6. Joint decision-making

The most sophisticated form of collaboration on strategy and policy issues is joint decision-making. This approach requires some form of delegation of authority from the partner councils to a joint committee or group that exercises the responsibility of the partners jointly. Examples of this sort of joint decision-making are Civil Defence and Emergency Management Group Committees and Regional Land Transport Committees. Experience suggests that it is very difficult to achieve real delegation of decision-making to that sort of joint committee – particularly where the financial decisions involved are material for each partner organisation.

Generally, joint decision-making would be most appropriate for issues that arise entirely within a region. Those sorts of issues tend to be very difficult and to cut right across the independent decision-making expectations and roles of partner councils. This is the most complex form of collaboration. It requires the highest level of joint commitments to process and very robust governance and management frameworks to support decision-making.

Joint decision-making is by far the most challenging form of collaboration. In the absence of a strong track record of collaboration, attempting joint-decision making is unlikely to be successful.


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5. A Range of Opportunities

Combining the scale of the issue with the type of collaboration establishes the collaboration opportunities matrix shown in Figure 1.

The key concepts behind the matrix are:

· Collaboration is not always relevant: there are some types of issue and decision-making where collaboration between local authorities is not possible, or will not add value. Issues of relevance to only one local authority, or determined locally with no wider impact will benefit from information sharing, but not joint decision-making. Governments will make decisions on national issues, therefore joint decision-making for national issues is not possible unless government becomes a collaborating partner.

· Difficulty: working down the matrix from top to bottom collaboration becomes progressively more difficult and complex to achieve as it moves from simply sharing information through to joint decision-making.

· Benefits: working across the matrix from left to right the benefits of collaboration increase. Interestingly, the potential benefits from collaboration on regional issues are the highest because the decisions sit within the ambit of the local authorities and cannot be addressed effectively by just one council. This is why regional level issues sit at the right of the matrix.

· Collaboration is not always feasible: the balance between the benefits from collaboration and the difficulty and complexity of working together present a significant irony. Regional level (i.e. greater than one authority working alone) issues offer the greatest potential benefit from collaboration, but regional joint decision-making is profoundly more difficult than other forms of collaboration. In the absence of a strong track record of collaboration, and a very robust framework for working together at all other levels, successful regional joint-decision making will not be possible.

Figure 1: Collaboration Opportunities Matrix

Type of Collaboration

Local Issues National Issues Regional Issues Implement-

ation New Policy

Regional Advocacy

Information Sharing

✔ ✔ ✔ ✔ ✔

Shared reports and policies

✔ ✔ ✔ ✔ ✔

Joint investigation

✖ ✔ ✔ ✔ ✔

Joint policy work

✖ ✖ ✔ ✔ ✔

Adopting joint position

✖ ✖ ✔ ✔ ✔

Joint decision making

✖ ✖ ✖ ✔ ✔

Note: In this context regional issues mean issues that are larger than one local authority,

✔ means that collaboration of this type is possible,

✖ means that collaboration of this type is not possible or relevant.

Increasing benefit from collaboration

Col

labo

rati

on in

crea

sing

ly d

iffic

ult


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6. A Way Forward

Collaboration between local authorities takes place in the context of the overall relationship between them. It is difficult to collaborate in one area if there is conflict or distrust in other areas of the relationship. The hierarchical nature of some decision-making under the RMA can give rise to marked tension between regional councils and territorial authorities. Similarly, differing development aspirations, competition for resources, or indeed simple personality conflicts between leaders can result in tension and relationship challenges between local authorities.

The most successful way to secure the benefits from collaborative efforts within a region is to build a track record of success and experience in working together. This approach would generally seek to start with the easiest forms of collaboration and progressively develop more elaborate and complex forms of collaboration that tackle some of the more challenging issues.

Any approach to collaboration must recognise and reflect the requirements for shared objectives and motives and a shared agenda set out in Sections 2.1 and 2.2 above.

There are a number of approaches to collaboration that the Canterbury councils could choose to pursue and these are discussed below.

In introducing the choices it is important to note that local authorities do have existing national frameworks for engaging with government on policy issues. Local Government New Zealand, as the collective voice of all local authorities, may be best placed to develop a sector-wide response and lead advocacy on behalf of the sector. Generally Local Government New Zealand would be best placed to deal with national issues that do not have a particular or distinct impact on Canterbury. The more the issue has a different impact on Canterbury, the more important it will be to identify and articulate those impacts through a common voice. One significant caveat on the potential role of Local Government New Zealand is that is has often struggled to adequately represent the interests of rural local authorities.

It is also important to remember that collaboration is substantially easier where the decision-maker for the issue at hand is external to the region. For this reason will be far easier to achieve joint or common views on national issues that impact on Canterbury than to achieve common or joint approaches to the issues that must be determined within the region.

6.1. More effective sharing of information, insights and reports – Local Issues and Implementing National Policy

There is no impediment to sharing the work that councils are doing to implement new national policy or regulations, or to share the local policy work that is being done under existing responsibilities. To make this a routine feature of the way in which Canterbury councils work with each other will require focus and attention to build a culture of sharing understanding. This will be necessary at many levels. Ensuring exchanges between Mayors, Councillors, Chief Executives, senior managers and the groups of professionals from different disciplines within Canterbury may need to involve the Mayoral Forum, regular exchanges between councils, possibly a re-think of the way in which Zone 5 of Local Government New Zealand operates, the CEO Forum, and the local SOLGM branch.

6.2. More effective sharing of information, insights and reports – National Issues

There is a constant stream of policy development work undertaken by government that impacts on Canterbury. For many issues there is potential to reduce the burden on councils by sharing the work that one, or more councils do on a particular policy initiative. This is important where councils have few resources and many other priorities. Finding ways to more effectively share work to understand the consequences of proposed changes in government policy and


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legislation and draft submissions would be a very good way to build understanding and experience of collaboration – and deliver a better response to government.

Better collaboration is likely to evolve from a track record of working together and doing some relatively simple things very well. More effective sharing could be as simple as a regular stocktake and scan of the issues and an exchange between councils that includes:

· a briefing on the policy issues that are under development by government; · the timetable and opportunity for engagement and response on the issue; · noting which councils are devoting effort to understanding the issue and its impacts; · noting which issues are being addressed by Local Government New Zealand and what

the individual councils are doing to support that effort; and · sharing that work undertaken by individual councils in time for others to use it.

To be effective and to become a routine part of the way in which councils engage on strategic and policy issues a regular stocktake and scan could be developed and reported to the Chief Executive Forum. From there it should be reported to and used by each council as relevant. It would be wise to escalate the most important elements of this stocktake and scan to the Mayoral Forum from time to time. For a regional stocktake and scan of national issues to be effective each council will need to contribute to it, and it will also need to reflect insights from Local Government New Zealand. It would be wise for one council to facilitate and support the development and regular updating of the stocktake and scan.

Having identified the issues through a regular stocktake and scan process the Canterbury Councils will then be able to determine which issues they wish to work on jointly.

6.3. A Common Voice with Government

To have a common voice on policies that have a particular impact on Canterbury, or to get a national attention for a Canterbury issue, councils will need to have a mechanism to:

· build a shared understanding of the issue and the options for dealing with it; · identify and resolve differences; · arrive at a common position; · deliver the agreed message; and · deliver consistent advocacy in support of the agreed position.

Developing a mechanism that will work for all issues will take time and a great deal of negotiation. It is also likely that changes in the political make-up of councils over time will impact on the approach to collaboration by some councils. Changes in council leadership that result in different inter-personal relationships and working styles also impact on the usefulness of some mechanisms for collaboration.

The best way to develop a common voice will evolve over time as councils build a track record of working together. Adopting a horses for courses approach to responding to issues and building issue-based coalitions of like-minded councils to progress them is more likely to bear fruit in the short term than investing a lot of time and energy in trying to design and agree a complex regional infrastructure for making joint decisions (particularly at this point in the electoral cycle).

If the Canterbury councils implement an effective joint stocktake and scan process through the Chief Executive Forum it will then be possible to escalate issues that may warrant a common regional voice through the Mayoral Forum, or directly by each Chief Executive to their council. Councils can then develop a common approach either through the Mayors adopting a position


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on behalf of their councils (with or without relevant resolutions or debate within each council), or a stronger common position could be developed through a common agenda item progressing through each council for consideration and (hopefully) adoption.

6.4. Joint Strategy and Policy Development

Joint strategy development is considerably more complex and challenging than the other forms of collaboration discussed above. Ultimately, working together on the major policy and strategic issues that face Canterbury would deliver far better outcomes than each council pursing its own course of action in response to Canterbury-wide challenges. Joint strategy development between local authorities is also made more complex because of the large number of other stakeholders (including iwi) who have legitimate expectations of considerable engagement with, and input to, region-wide strategy and policy debates.

The Canterbury Water Management Strategy is a sound example of what can be achieved through joint strategy development. It also provides some key lessons on the challenges and complexities of joint processes and the resources and effort required. There are a number of regional scale policy processes currently underway progressing the implementation of the Canterbury Water Management Strategy. It would be wise to let these existing processes run their course and deliver the intended step change in resource management policy that the region needs. It would then be appropriate to revisit the potential for further joint strategy and policy development. At that time decision-makers will be able to reflect on the experience of collaboration before determining what, if any, future joint regional level strategy and policy work is attempted.

The one possible area for joint strategy development that may be worthwhile pursuing now is the vision for regional economic and infrastructure development in post-quake Canterbury. There may be a case for greater alignment under a joint regional vision for development of Canterbury that is akin to the Smart-Growth framework in the Bay of Plenty and the Regional Growth Strategy approach that Auckland used prior to amalgamation.

7. Conclusion & Suggested Approach

Building a track record of success with simple, but effective collaboration will lay the foundations necessary for more complex, but more rewarding collaboration. It is therefore suggested that the Canterbury councils would be wise to focus collaborative efforts relating to strategy and policy on the simple but effective forms of collaboration.

Joint approaches to national issues will bring significant benefits. They have the potential to reduce costs for individual authorities. They are also less likely to result in irreconcilable differences than trying to develop joint approaches to the complex policy issues that must be determined within the region.

It is therefore suggested that the Canterbury councils focus firstly on:

· sharing information, reports and policies on local level issues and on the implementation of national policies and regulation;

· sharing information, reports and policies on new national level policy issues; and

· developing a single ‘Canterbury voice’ to advocate on behalf of Canterbury and ensure that Canterbury issues are on the national agenda.

To be successful in the proposed areas of collaboration the Canterbury councils will need to establish mechanisms for collaboration. It is suggested that the best way to start information


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sharing will be through the combination of the Chief Executive’s Forum, the Mayoral Forum and the other measures that are discussed in Sections 6.1, 6.2 and 6.3.

In short, it is recommended that the Canterbury councils:

a. make sharing information a routine feature of the way in which Canterbury councils work;

3. build a culture of sharing understanding and learning;

4. facilitate exchanges between Mayors, Councillors, Chief Executives, senior managers and the groups of professionals from different disciplines within Canterbury;

5. develop a regular stocktake and scan of national issues that includes:

· a briefing on the policy issues that are under development by government; · the timetable and opportunity for engagement and response on the issue; · noting which councils are devoting effort to understanding the issue and its impacts; · noting which issues are being addressed by Local Government New Zealand and what

the individual councils are doing to support that effort; and · sharing that work undertaken by individual councils in time for others to use it.

6. ensure that the regular stocktake and scan is regularly reported to the Chief Executive Forum and from there reported to and used by the Mayoral Forum and each council as relevant;

7. all contribute to the regional stocktake and scan of national issues and that one council facilitates and supports its development and regular updating.

8. use the stocktake and scan to identify which issues they wish to work on jointly and adopt a horses for courses approach, building issue-based coalitions of like-minded councils to develop and articulate a ‘Canterbury voice’.

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