Governance that goes bump in the night: The mysterious case of local government
By Dr Andy Asquith FGIA, Adjunct Research Fellow, John Curtin Institute of Public Policy
- The objectives of a local council are vastly different from organisations whose sole objective is profit.
- The view of councillors being directors of a board originates in the managerial reforms which impacted local government in the 1980s and 1990s and ignores the representational role of councils.
- The governance arrangements for advice and education must be bespoke to fit these unique set of circumstances found in each council.
During the six months I have been in Australia, I have been pleasantly surprised and delighted by the multiple examples I have come across of local councils doing some amazing work within their communities. I have had multiple interactions across the country with mayors; councillors; chief executives; public servants within different state governments; professional bodies; consultants and educators all involved with the sector — each of whom highlighted the vitality and vibrance local government offers. Given my background — this was music to my ears.
Central to the continued vitality and vibrance is the need to promote and maintain good governance within each local authority. For our purposes here, we’ll use the very broad definition of governance offered by the Dutch political scientist Mark Bevir as: ‘all processes of governing, whether undertaken by a government, market, or network, whether over a family, tribe, formal or informal organisation, or territory, and whether through laws, norms, power, or language.’ (2012).
Within a local government context, governance usually refers to the so-called political/administrative interface — the sometimes-grey area where management and politicians interact. This is typically the relationship between the chief executive officer or general manager and the mayor or president. An excellent example of this relationship (and other important local government activities) in the City of Vincent — is illustrated by this video from City of Vincent.
Bevir’s definition is broad in context, allowing for institutional and situational idiosyncrasies to be accommodated accordingly. Organisations are like individuals — it is very rare to find two identical situations and scenarios. It is with this in mind, that recent interactions I have had with two individuals who have a professional interest and engagement in promoting better governance within the local government sector set the proverbial alarm bells ringing in my head.
As an academic researcher who has spent years researching, writing, consulting, and commentating about governance issues in local councils — and who has entered the political fray on several occasions too, I can happily attest to the fact that governance experiences and practices with individual local councils are not something replicated elsewhere. The exchanges which caused much angst can be roughly summarised as:
- I’m a governance adviser for a Big 4 consultancy. I advise councils, ASX listed companies and not for profits. I just wish councillors would realise that they are essentially directors of a board. It would make life much simpler.
- From an educator who informed me that they — as well as several of their colleagues ‘know the public sector’.
Both of these statements hark back to 1980s, when it was fashionable (and some would suggest foolish) to argue that traditional public service values and institutions had failed and that the ‘solution’ to the multiple problems faced by governments around the world lie in mirroring the ideas found in the private sector. A British academic, Christopher Hood (1991) coined the term ‘New Public Management’ to describe the wave of public sector reforms which swept around the globe under the misguided belief that ‘one model suits all situations’.
Following on from this idea, is the idea that ‘management’ is somehow a generic activity. Hence as a ‘manager’ you can transfer your generic bag of management tools from one organisation to another, irrespective of sector. One day you may be managing a meat processing plant or supermarket, the next a local council or government department. The evidence suggests otherwise!
The basis upon which the public sector is found is fundamentally different from that of a private sector entity. An organisation in the private sector is founded solely on the ideal of profit maximisation at the behest of a few large shareholders who are economically rational. If we take Australia’s biggest council, Brisbane for example, then the chief executive has a multitude of stakeholders to placate in addition to the mayor and councillors. I would suggest that as well as having to satisfy 1.2m Brisbanites the governance and management actions also impact on the other 3m Queenslanders too. Hence, the scope, scale, and impact of local government upon the everyday lives of citizens far out reaches that of any single private sector entity — irrespective of its size.
The objectives of a local council couldn’t be more different from organisations whose sole objective is the pursuit of the profit motive. Councils represent the whole community, and are the custodians of millions, sometimes billions of dollars’ worth of community assets. Councils also offer the entry point into participatory democracy given their grass roots nature. Given that we are fortunate enough to live in a full and free democracy — this is a point which too many of us overlook and under value at our peril. This key aspect of local government is blissfully ignored by the ‘board of directors’ perspective.
Councils have statutory obligations which they cannot simply decide to no longer comply with — they can’t simply exit a market because a service becomes uncompetitive or uneconomical to deliver. The whole process of governance in any local council is far more complex than in organisations where pursuing the profit motive is a hard rational, economic objective. What some politicians might want today would well be very different from their objective tomorrow — depending on what the latest opinion poll might report or party policy shifts.
Let us look at each of the statements above. Firstly, the assertion that councillors are simple directors of a board. This view originates in the managerial reforms which impacted local government in the 1980s and 1990s. The very neoliberal view was to remove politics from local government, to subvert everything to the management credo mimicked from the private sector. The effect of this in New Zealand — perhaps the most extreme example — where the impact of the management model has been detrimental to the political aspect of (local) government is illustrated in Asquith (2016) and Molineaux and Asquith (2022). Whilst there has been a trend over the last 30 or so years to focus on the governance role of councillors — accentuating the board of directors’ model — this ignores the other role which councillors have — that of representing their communities.
In her excellent book, The Balancing Act, the New Zealand academic Jean Drage eloquently described this point:
‘The governance tag has enabled this inequity to develop as it connects the elected council too closely to a board of directors model. Councillors are not directors of a board making decisions about their local communities. They are representatives of their communities elected by these communities, advocating for them, and representing them. The other big difference between an elected council and a board of directors is that councillors are directly accountable to those who elect them.’ (2008, p 171)
Drage commented further too:
‘The substantive role of the locally elected councillor in the 21st. century is clearly twofold: as an elected representative they work within the expectations that their communities have of office holders and as decision-maker they work within the concepts of governance, a framework within which they carry out the legislative functions and duties of office.’ (2008, p.175) (italics in original)
Hence, we can see, that the role of councillor is quite clearly much more than simple one concerned with organisational governance. The (at least) equally important role of community representation unfortunately being effectively brushed aside. The term ‘local voice, local choice’ is sometimes used to underpin the representation role of councillors. However, the one-dimensional view of them being directors of a board doesn’t simply negate this role, it ignores it completely. Without this important role for councillors — giving you and I a voice in the decision-making process whilst enhancing citizen participation and engagement — the whole ideal of local democracy is questionable. If you have local government then the representation role is central — it is not an optional extra, it is essential to local self-determination. Without it, you effectively have local administration, which from a neo-liberal perspective is much more efficient and economical!
The neo-liberal idea of ‘one size fits all’ outlined above effectively underpins the second statement from an academic who is based within in a business school. It is perhaps relevant to note here that business schools were established to meet the needs of business — echoing the words of Milton Friedman that ‘the business of business is business’. Nowhere is this mindset do organisations whose focus and primary objective are around community wellbeing and representative democracy feature.
Scholars of public administration/management and local government generally tend to come from one of two backgrounds. The first are those with a discipline background in management and those with a background in politics. The former approach the subject as simply a subset of management — as in management is a generic concept irrespective of the organisational setting or context — one where the theory of economic rationality dominates. The latter on the other hand understand that management in the public sector/local government is a much more nuanced and subtle activity carried out in a political environment where, as noted earlier, decision-making can be driven by a variety of imperatives.
The public sector is huge in scale and scope — and despite efforts of governments of all political persuasions in the last 40 years, the public sector in OECD countries typically still form the biggest employer in the country by far. In Australia — when you include Commonwealth, state, and local government together — the headcount is in excess of 2.1m. Hence, to claim to ‘know’ the sector is somewhat startling claim. Earlier I noted the scope and scale of Brisbane City Council. From a local government perspective in metropolitan Perth, we have the Shire of Peppermint Grove with a population of less than 2,000 — which is far from being the smallest in terms of population in WA. Using a one size fits all approach to the sector is clearly a nonsense — a little like playing 18 holes with a putter.
The upshot of all this is that those involved in governance within a local government setting need to both recognise and understand the uniqueness of the sector and its requirements. Further, governance in the private, public and not-for-profit sectors is a very different activity. In the public sector, the political aspect of its actions underpins this. Further, the public sector covers a whole multitude of organisations — just one subset of which is local government. Even here, the range of organisations and opportunities is seemingly limitless. As such, the governance arrangements for advice and education must be bespoke to fit these unique set of circumstances found in each council. One size or model does not fit all!
Dr Andy Asquith can be contacted on 0493 299 092 or by email at andy.asquith@curtin.edu.au
Material published in Governance Directions is copyright and may not be reproduced without permission. The views expressed therein are those of the author and not of Governance Institute of Australia. All views and opinions are provided as general commentary only and should not be relied upon in place of specific accounting, legal or other professional advice.
References:
A Asquith A, (2016) ‘Public Sector Management in New Zealand’s Local Government’. In J Drage and C Cheyne (eds), Local Government in New Zealand: Challenges and Choices, Auckland: Dunmore Publishing.
J Molineaux and A Asquith, (2022), ‘Local Government in Aotearoa New Zealand’. In C Copus, R Kerley and A Jones (eds.), Modern Guide to Local and Regional Politics, Cheltenham: Edward Elgar. (In Press).
M Bevir, (2012), Governance: A Very Short Introduction, Oxford: Oxford University Press
J Drage, (2008), A balancing act: Decision-making and representation in New Zealand local government, Wellington: Institute of Policy Studies.
C Hood, (1991) ‘A public management for all seasons?’, Public Administration, 69, 1, 3‒19.