Shared Services and Other Co-operative Arrangements

Abstract

Shared services occur when two or more local governments enter into an agreement to co-operatively produce one or more local government goods or services. Doing so can help regional planning, internalise externalities, augment insufficient technical expertise and mitigate professional isolation. However, the most widely cited reason for entering into shared service arrangements is to increase technical efficiency. Moreover, interest in shared services often peaks during amalgamation debates and it is therefore not unreasonable to suspect that a major motivation for entering into these arrangements might be to maintain extant political identity. In this chapter I examine both the benefits and costs of shared service arrangements, paying particular attention to oft-overlooked exogenous costs which lie outside of the particular service collaboratively produced. Following this I consider the likely determinants of success for shared service arrangements. Thereafter I discuss an innovative approach to mitigating costs which might otherwise wreak devastation on local governments which have entered into collaborative arrangements. I conclude with a brief discussion of important considerations when selling shared services as a public policy prescription.