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The value in LGA membership

All councils benefit from working together.
When local governments in South Australia come together to solve problems, tackle challenges and collaborate, great things happen. Communities benefit, issues get resolved and councils save money. It all starts by having a strong and united voice.

There are three high level roles that state local government associations perform for their member councils:

  • Advocacy:   Influencing state and federal government policy, legislation and funding.
  • Aggregation:  Bringing councils together to pursue worthwhile opportunities.
  • Advancement:  Assisting with the business of council, its operations and efficiency.

Not all of these activities result in an identifiable saving or cost offset to councils, but many do. With assistance from an LGAQ business analyst, the LGA has calculated the value of services where possible and also sought to identify non-cash benefits.

The Value Proposition of Membership of the LGA of SA has mapped these financial benefits across nine areas of activity: insurance, LGFA, procurement, governance, workforce, online services, research and development scheme, advocacy, and support for councillors.
 
This work has quantified the value of services provided by the LGA to its member councils as being worth $52 million a year. In 2016/17, grants secured or maintained through LGA and ALGA advocacy will add another $138 million to this figure, resulting in a total benefit to councils of around $190 million.
 
A full copy of the report outlining the LGA’s value proposition can be accessed here. The report provides the methodology for the value calculations and the LGA would welcome feedback on any or all items.

Frequently Asked Questions

The LGA has received a number of questions in relation to this document and so has assembled answers to the most frequently asked below.

1. How realistic is the $52m figure for value generated by LGA services?
2. Is there a danger that too much focus on dollar value will lead to neglect of core areas such as advocating to state and federal governments?
3. There has been a suggestion that Councils could leave the LGA and still gain access to services from the LGA or its entities. How would that be fair?
4. How would Councils lose the benefit of grants from other levels of Government if they left the LGA?
5. How does the LGA facilitate communication with other Governments for Councils. Would a Council miss out if it were not an LGA member?
6. Whatever the value created by the LGA is, are there not valid questions which have been raised about performance of the LGA or governance of its schemes?
7. If the LGA plays such a crucial role in liaising with State or Commonwealth agencies for Councils, what is the role of the Office of Local Government (OLG)?
8. Why isn’t electricity contracting by LGA Procurement captured as an item of high value to Councils in this document?

1. How realistic is the $52m figure for value generated by LGA services?

Appendix 1 of the document lists each service area and the methodology to calculate ‘value’. The LGA welcomes your specific queries regarding estimated benefits and the methodology used.


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2. Is there a danger that too much focus on dollar value will lead to neglect of core areas such as advocating to state and federal governments?

The report clearly identifies both non-cash benefits and financial value. The LGA Strategic Plan; Annual Report; and General Meetings ensure LGA activities have an appropriate balance of focus between activities such as lobbying and value-add activities.


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3. There has been a suggestion that Councils could leave the LGA and still gain access to services from the LGA or its entities. How would that be fair?

The LGA Board is of the view that only LGA members should enjoy the benefits and value that result from the subscriptions they pay.  In contemplating how the LGA would respond if a council was to withdraw its membership, the Board resolved at its July meeting that in the interest of fairness to other councils, the Secretariat should be prepared to remove services as soon as practicable should a Council decide to leave the LGA.  The Secretariat is currently working through the full list of services to determine which services could be withdrawn immediately, rules and contractual considerations, and those that the LGA is forced to continue to provide as a service to local government as a whole and how they might be resourced.


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4. How would Councils lose the benefit of grants from other levels of Government if they left the LGA?

The Value Proposition identifies a number of grants to the local government sector that have been achieved through lobbying or partnerships developed by the LGA - this is a part of the value we deliver to our members.  

We have not listed all of the grants received by councils as there are some that would not be affected by decisions about LGA membership. If the LGA’s capacity for advocacy was reduced, it is more likely all Councils would receive less as governments shifted resources in response to other lobby groups and community demands.


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5. How does the LGA facilitate communication with other Governments for Councils. Would a Council miss out if it were not an LGA member?

 

The LGA currently secures higher levels of access for local government to other governments in various ways. Some are legislative, with more than 40 Acts or Regulations setting out a specific requirement for consultation with the LGA. The State/Local Relations Agreement provides for specific roles for the LGA as does the associated legislative protocol and the Premier’s State/Local Government Forum. This may not translate to “not dealing” with non-member Councils but time restrictions and these long standing arrangements will ensure the LGA continues to deliver higher levels of access on sector-wide issues.

 


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6. Whatever the value created by the LGA is, are there not valid questions which have been raised about performance of the LGA or governance of its schemes?

The LGA Board is representative of elected members of the sector and is committed to a path of continuous improvement. Over the past year the board has endorsed:

  • The establishment of an Audit Committee with independent membership;
  • A review of the governance of the insurance schemes which is due to report later this year;
  • A governance review of the LGA including the method of election of board members;
  • A review of the LGA subscriptions formula which will be finalised before the 2017/18 subscriptions are issued;
  • A review of access to services by non-members.


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7. If the LGA plays such a crucial role in liaising with State or Commonwealth agencies for Councils, what is the role of the Office of Local Government (OLG)?

The role of the Office of Local Government is to provide "policy and other advice to the Minister for Local Government”. This is an important link between the Government, LGA and Councils because the Minister provides a key focus for local government in cabinet and manages core legislation in Parliament (Local Government Act).The LGA works well with the OLG which relies on the LGA to represent Council views. However the LGA believes the OLG is significantly under resourced commensurate with its role and functions.

 


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8. Why isn’t electricity contracting by LGA Procurement captured as an item of high value to Councils in this document?

In the procurement area we have made a nominal estimate of savings on full purchase costs across all contracts managed by LGAP. This produces a conservative average figure of $11,363 for all contracts for an average Council or $773,000 for the whole sector.

We have estimated that a large Council with an electricity bill of around $180,000 a year will be saving more than $200,000 when compared to the default contract. However we have not sought to factor this specifically into the document as a large Council is unlikely to end up on the default contract. Any savings over the default contract would need to be discounted against significant staff time/consultancy to enter the electricity market directly.  As you can see, putting a precise value on where a Council would be outside the LGAP contract is difficult and so we have taken a more conservative approach at this time.


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