Australian Politics and Policy - Senior, 2019a

Local government
Fragmented governance: working in partnership
Partnerships between government and the non-government sector are not new;
they stretch back to the local governments of the colonial era. 63 However, the
notion of working in partnership has received growing criticism over the last
couple of decades following widespread outsourcing of service delivery to private
and non-government organisations. While persuasive arguments can be identified
both ‘for and against the private provision of public infrastructure in contemporary
local government’, 64 concerns have been raised about whether the emphasis on
partnership privileges partners over the wider community. 65
Local governments have pursued three common responses to privatisation:
• Hollowing out: declines in revenues and reductions in intergovernmental
transfers have forced local governments to ‘hollow out’ their services by
reducing service levels, outsourcing core service obligations through PPPs and
increasing user fees.
• Riding the wave:somelocalgovernmentsuseprivatisationasatwo-edgedsword,
harnessing the market towards public ends. As services are contracted out, local
governments create markets for public services by allowing competitive bidding
to drive down service costs while maintaining quality for ratepayers.
• Pushing back: often encouraged by citizen action, some local governments
have pushed back against pressures to cut or privatise services. This has led
to initiatives such as establishing multi-sector coalitions of citizens, non-profit
organisations and government to drive service delivery, particularly in the areas
of housing and economic development. 66
Flinders has analysed local government PPPs in the UK, and suggests they
‘raise a host of political issues and tensions that have largely been overlooked’. These
include:
• Balancing efficiency and flexibility: PPPprojectsadopta‘buynow,paylater’
approach, creating issues for the policy flexibility of future local governments,
which are constrained by the need to service payments for contracts entered
into by previous governments.
• Failuretoaddresscorerisks: PPPs do not solve the problems of capital-intensive
service delivery as they focus more on costs and do little to address underlying
revenue issues. Therefore, the risk of revenues not matching expenses stays with
government.
• Complex, delegated governance: when service delivery is contracted out, it can
confuse the public as to who is responsible. There can also be confusion within
63 Larcombe 1978.
64 Cannadi and Dollery 2005, 116.
65 Rees, Mullins and Bovaird 2012.
66 Warner and Clifton 2013, 52–7.
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