2. Local Government’s Role in Fostering National Productivity and Innovation
Mayor Troy Pickard, President
Australian Local Government Association
18 May 2016
This forum is a very useful opportunity to reflect on local government, how is meets its communities needs and how it works with other sectors and levels of government.
In this presentation I will cover what the Australian Local Government Association is doing to facilitate local government’s contribution to productivity, particularly through investment in infrastructure.
I will also cover some of the opportunities for improving productivity through the impact of digital transformation and some of the adaptations that individual councils have adopted to deal with changing environments.

3. About ALGA
Federation of state and territory local government associations
Established in 1947
Municipal Association of Victoria is a member
MAV represented by Cr Bill McArthur and Cr Coral Ross
Cr Bill McArthur is ALGA’s Senior Vice President
Small secretariat based in Canberra
ALGA is a small focused organisation and our primary job is to maintain and strengthen the relationship between local government and the Australian Government. It’s a critical relationship for local government because from a financial perspective local government receives up to 10% of its annual funding from the Commonwealth through grants programs (this year the figure will be in excess of $3.8b out of operational expenditure of just over $33b).
Just a reminder on what ALGA is and the MAV’s important role in ALGA.
I want to take the opportunity to thank Bill McArthur for his contribution to the ALGA Board and the role he plays as ALGA Vice President.

4. Role of Productivity & Innovation
One of the “3 Ps” contributing to growth:
Population increases
Productivity growth
Participation in the workforce
Productivity growth has been slower than it should have been in the last decade
Maintaining and growing future living standards dependent on higher productivity growth
 My focus today is on productivity and innovation and why productivity in particular is so important to the national agenda.
In essence, our future economic growth depends greatly on doing better in terms of productivity growth.
As Peter Harris of the Productivity Commission has said:
“Without a serious effort to resume and sustain productivity growth in Australia, the trend declines in terms of trade from recent high levels, and falling participation rates, indicate that Australia’s income growth per person will be subdued and improvements in living standards could be eroded.”

5. Productivity on the COAG Agenda
New national economic reform agenda to achieve:
A stronger more productive economy,
Greater fairness and equity, and
More efficient and high quality services.
Local government needs to respond to and play its part in this national agenda
The focus on productivity is reflected in a changed agenda at the Council of Australian Governments level.
There has been a quite explicit shift under Malcolm Turnbull away from the federation reform agenda of Tony Abbott to a focus on economic reform, and productivity is one of the key issues.
Local government must play its part in addressing the productivity agenda and from an ALGA perspective we need to leverage of the productivity dimension of our relationship with the Australian Government.

6. Local Government’s Role
Local Government performs an important role in facilitating and driving productivity and innovation.
Major Economic Contributor:
Employs more than 187,000 people - 10% public sector
Annual operational expenditure in excess of $33b
Manages non-financial assets worth more than $354b
 Enables Productivity and Innovation:
Provides infrastructure and services
Shapes local regulatory and planning regimes
Collects data and could collect more – digital transformation
Local Government is a sizeable player in the Australian economy and so what we do as a sector has an impact. We account for about 1.5% of the labour force and 2% of GDP. We own and manage about 33% of the public sector’s non-financial assets. The states have around 52% of the non-financial assets and the remainder are with the Commonwealth (about 10%) or jointly owned by the Commonwealth and the states (3%).
We have the capacity to help the Australian Government implement part of its own agenda for productivity improvements through a partnership with councils.
We also have great opportunities for innovation because of our roles as an infrastructure manager, regulator and a collector of data.

7. ALGA’s 2016 Federal Election Plan
 “Local Government’s Plan for an Innovative and Prosperous Australia”
Investment in productive infrastructure in partnership with the Federal Government
Developed over the past year
Linked to our 2016 Budget Submission
Released last month in advance of the election
Includes an assessment of the GDP and employment benefits of initiatives
A focus on productivity has been reflected in ALGA’s 2016 Federal Election Plan because it is only by adopting an emphasis on productivity, where appropriate, that we can compete for the scarce resources we need from the Commonwealth to continue to deliver the infrastructure and services our communities need.
We developed the Plan over a year and so we were not caught out by the early election.
We deliberately aligned our 2016 Budget Submission with our Election Plan to underline the consistency of our advocacy and because we knew that the Election was quite likely to follow on closely from the Budget.
Importantly, this year we decided to include some analysis on the economic impacts on what we were proposing in terms of GDP and employment outcomes.

8. Five Key Priority Areas
Financial Assistance Grants (indexation & quantum)
A targeted freight strategy
An increase in local roads funding
A community infrastructure program
Work on climate change
 Also calling for:
Review of municipal funding arrangements for indigenous communities.
Adequate funding for human services
Better natural disaster funding
Legislative or administrative funding certainty
There are a number of initiatives we are proposing but they can be usefully grouped into the first five major issues you see here on the screen. We have an obvious focus on the Financial Assistance Grants for local government because they are such an important part of our funding, but we also have a strong focus on infrastructure and investment in productive infrastructure.
In addition, you can see the second list of areas which reflects the need to also maintain a focus on equity and community outcomes.

9. ALGA’s Plan for an Innovative and Prosperous Australia
Financial Assistance Grants - indexation and quantum
A targeted freight strategy – to increase freight productivity
An increase in local roads funding – to address the backlog
Community infrastructure program – to stimulate local economies
Work on climate change – to promote adaptation
Outlay over three years would be an aggregate of $4.05 billion but would add an additional $7.5 billion to GDP and create 19,300 jobs over the same period.
Infrastructure is where local government can make a difference in partnership with the Australian Government on productivity.
The targeted freight strategy reflects the importance of our local roads - 75% of Australia’s roads by length- 640,00 km, with a value of around $140b in written down value ($180b in replacement value)
There is an increased demand on local roads to carry freight on larger vehicles, and local road and bridges must perform at a higher standard than that required by local residents and businesses
This requires additional investment in the first mile/last mile on identified freight routes. Assets must be assessed and investments made
Regional groups of councils must be supported to liaise with states and territories to coordinate investment on key freight routes.
The returns on this investment are there for all to see – a positive return of nearly $3.4b in GDP and more than 19,300 jobs over a three year period.

10. Advocacy for ALGA’s Election Plan
Builds on and is consistent with ALGA’s 2016 Budget Submission Advocacy on budget submission has reinforced our election proposals
Election Plan released early and sent to MPs and political parties
Already the subject of advocacy with Ministers and backbenchers
Councils asked to identify local benefits of proposals
June NGA – important part of our advocacy
Our focus on productivity in ALGA’s Election plan is a continuation of the themes of our Budget document and aligning the two documents strengthens our advocacy.
We have been preparing our Election Plan since the middle of last year and we brought its release forward to before the Budget after it became obvious that there was going to be a July 2 election.
We have engaged with all political parties and MPs at the Federal level but we want you as councils to complement our efforts by raising this agenda directly with your local candidates in the Federal Election and identifying local projects and priorities – and their productivity benefits – which would be funded if the programs we seek are implemented.

11. Productivity through Innovation in the Digital Economy
Local Government in a privileged position
Collects huge amounts of data
Shapes local regulatory and planning regimes
Owns or has access to infrastructure to support digital transformation
Local Government is a winner from digital disruption
Councils are in a privileged position: 
We collect huge amounts of data which can be analysed and applied to improving the lives of our residents and their interactions with us as well as the efficiency of our own operations.
We can shape local regulatory and planning regimes which facilitate the way our economy can adjust to and take advantage of the pace of digital change
We own or have access to infrastructure which can be used to support the digital transformation as well benefit greatly from that transformation.
Councils should be winners from digital transformation not losers. Changes enabled by digital technology will benefit us and our communities.

12. Digital Economy: Data Utilisation of Local Government facilities
Transactions with Local Government for services
Frequency, level of expenditure, geographic patterns user characteristics, behaviour patterns
Data is valuable for improving and better targeting services
Local Governments collect data through their operations –
-data about usage of facilities,
-data about transactions with local governments for services,
-data related to frequency, level of expenditure, geographic patterns, characteristics of users and patterns of behaviour.
All of this data, with appropriate protections for privacy, is valuable to us and also to the private sector in improving and better targeting services.
We can collect and manage data about parking and parking spaces, which reduces congestion by enabling optimal usage of parking
Copenhagen, Berlin and Amsterdam claim about 30% of inner city traffic is cars looking for a parking space

13. Digital Economy: Infrastructure
Local Government manages $354b of assets
Data collected from ‘The Internet of Things’ provides invaluable infrastructure information
Data can be used to better measure infrastructure use and extend asset life
Significant potential for LED street lights as technology enablers
Local Government manages $354b of assets.
Data can be collected from an enormous number of internet connected devices (the internet of things) which tells us about infrastructure.
Vehicles and the infrastructure itself can be enabled to measure condition. We can use the data to better measure infrastructure use and extend asset life through preventative maintenance or more timely servicing.
LED street lights can cut energy bills, reduce carbon emissions, be operated remotely and linked to smart technology. Councils should take note.

14. Digital Economy: Regulation
Presents an opportunity for Local Government to rethink its regulatory environment
Capitalise on disruptions and facilitate the evolution of regulatory and compliance regimes
Better manage compliance regimes through a more focused risk management approach
Work with disruptive industries and design workable regulatory environments
We can review and allow regulatory and compliance regimes to evolve to take advantage of data and permit types of services created by digital disruption including new forms of accommodation (Airbnb), transport (autonomous vehicles, one-way car sharing and parking requirements).
We can manage compliance regimes (eg food safety) by adopting a more focused risk management approach which takes account of all data generated about locations where food is prepared and sold (eg restaurant reviews and comments). 

15. Digital Productivity Exemplars
City of Boston (US) apps Street Bump, Trash Day, Flu Shot
Mosman Council (NSW) parking technology
Singleton Council (NSW) use of unmanned drones
Brimbank Council (Vic), transitioning services to be available online
-Street Bump is a mobile app that gathers data about Boston’s streets, using a smartphone’s built-in sensors, as residents drive. The City of Boston can aggregate the collected data to find and fix problems and plan long-term infrastructure improvements.
-Trash Day, a web and mobile app, allows residents to easily access their trash and recycle collection schedules and sign up for reminders via text, or phone.
-The Flu Shot App gave Boston residents a simple interface to find where they could get a free flu shot and, then, to schedule it.
-Singleton Council recently commissioned flights over its livestock markets, waste and water facilities for planning and development purposes, a cost effective and safe method of aerial imaging and inspection.
-Mosman Council is looking to install parking technology that will enable drivers to find the best available car parking spaces at the click of a button.
-The new technology will mean residents can easily check on-street and council car park availability via an app or the Council website before they even leave home.
-Brimbank Council has set the goal to transition around half of its transaction services to be available online by April 2016.
-Goal to develop a new transaction based and mobile responsive website, a payment gateway and master customer database that will enable ‘one view of customer’, and to better connect information sources so that customers will eventually be able to register, login and have a 360 degree view of self, for example, rates payments due, library books borrowed, memberships to leisure centres etc.

16. Digital Productivity – Opportunities for Partnerships
More dialogue between each sphere of government to develop national solutions
Digital transformation should be led nationally
Councils require assistance to embrace and transition to digital economy
Digital Divide challenges
Need to improve digital literacy
-ALGA would welcome dialogue between Local Government and State and Federal Governments to develop national solutions.
-Digital transformation should be led nationally, as recommended by the Audit Commission, in order to achieve the significant transformation required. Developing a coordinated and collaborative long term strategy will be needed to drive the change.
-Councils, particularly rural and remote councils, will require assistance to embrace and transition to a digital economy. A funding program for this purpose could ensure local government can make this transition.
-There are challenges for the Commonwealth and local government as a result of the digital divide generally, and specifically if services (such as tax, healthcare) are provided only digitally. Local government could be called on to assist the 4.1 million Australians who have no computer, internet access, or the skills to use the technology. Local government is not resourced for this externally.
-There is already estimated to be a cost shift to local government as a result of e-government on public libraries, estimated at $78.7M over the past 15 years. Further work is being done canvassed to estimate the potential escalation in the cost of providing assistance to the public in relation to e-government. Part of the savings made by the Commonwealth in the shift to a digital economy, could be provided to local government for the services it provides, while still achieving an overall saving to the Commonwealth.
-There is a need to improve digital literacy as the transformation process rolls out. A Commonwealth program to improve digital literacy, in the same manner as the $15.3M Digital Hubs program in 40 communities, would be welcome.

17. Digital Transformation
Digital transformation will facilitate innovation and productivity improvements for local government
Digital transformation can improve liveability of places and quality of life Local Government wants new ways to collaborate with communities
Need to understand more about the ‘costs v benefits’ of digital technology
Digital transformation offers the opportunity to improve community outcomes and our productivity
While digital disruption can appear to be a threat, councils currently provide a range of digital transaction services, including:
• Collecting rates
• Providing parking permits
• Registering fixed and mobile businesses
• Processing development applications (when using or subdividing land, erecting a building, pruning or removing trees, demolition)
• Licensing and management for animals (such as dog licences).
Communities prefer digital transaction as it is a cheaper, more convenient and more accurate way to interact with their local government authority.
Local Government wants to connect and collaborate with communities in new ways and to be more productive.
Many cities see digital technology as a way to increase productivity, while continuing to provide the same or better services at a lower cost.
However, many need to understand more about the "costs v benefits" of digital technology to assist them in adopting new technology.
Local government delivers services and infrastructure to improve the liveability of places and the quality of life of communities and digital transformation offers the opportunity to improve outcomes for communities

18. Thank you Any Questions?

19. Thank you