Councils look beyond rate rises as digital evolution reshapes local government

Australian local councils are under growing pressure to rethink how they operate as they face rising community expectations and constrained revenue growth.

The sector’s recent push for the federal government to allocate 1% of total tax revenue to local government has highlighted the financial strain facing councils across the country. Now the debate is shifting from simply securing additional funding to determining how councils can use technology and new operating models to deliver better outcomes for communities.

To call this process ‘transformation’ would be misleading, as what councils are really facing is an ‘evolution’. They are adapting and evolving at a rapid rate as the pressure to do so is rising. For many councils, this process of evolution begins with improving the citizen experience.

Historically, government services have often replicated physical processes online, effectively replacing a queue at a service counter with a digital queue. The next step is moving towards a consumption-based model where citizens are placed at the centre of service delivery.

AI’s role in creating proactive councils

Artificial intelligence is expected to play a major role in this shift. It can help remove friction from service delivery, allowing councils to move away from reactive customer service models towards proactive engagement with residents. Rather than waiting for citizens to request assistance, councils could use data and automation to anticipate needs and deliver services earlier.

However, councils need to first examine their existing processes and remove inefficiencies before deploying AI tools. Without this preparation, technology risks simply accelerating outdated systems rather than improving them.

The current AI trend can be likened to earlier technology shifts, such as the internet and cloud computing. They showed that the most successful innovations often come from solving practical problems rather than simply adopting the latest tools.

One recent example was a high-profile transport and logistics business that achieved significant financial improvements through relatively simple technology implementations. In one case, introducing digital signatures for deliveries improved cash collection times by seven days.

The key lesson is to keep it simple. Technology should remove friction from the business, not become the focus itself.

Councils as community platforms

Beyond improving internal operations, councils have an opportunity to become more entrepreneurial and create new sources of community value and revenue. Rather than relying solely on rates and government funding, councils could use their existing digital capabilities and local networks to facilitate new services and partnerships.

Councils could use their position within communities to connect different groups and create platforms that deliver broader benefits. Examples include helping connect local workers with organisations requiring labour or using council-owned data and technology platforms to support tourism and economic development initiatives.

The question councils should be asking is ‘how can we create value?’ as they already have capability and infrastructure. The opportunity is to use those assets in smarter ways. This approach would represent a significant cultural shift for local government, where traditional thinking has often focused on delivering mandated services within existing funding structures.

However, councils must approach change carefully. Local government is a highly political environment, and leaders need to frame innovation around improved community outcomes rather than purely financial gains. The conversation cannot just be about cost reduction. It has to be about value creation and delivering better outcomes for the community.

A gradual path to the council of the future

While many councils are developing AI strategies and exploring digital opportunities, implementation remains uneven. Some organisations are approaching emerging technologies primarily from a compliance and risk perspective, particularly around cybersecurity, rather than focusing on opportunities for innovation.

As councils prepare for the next decade, the challenge will be balancing financial sustainability with increasing community expectations. Technology, automation and AI will be important tools, but the biggest shift may be cultural: moving from councils that process requests to councils that actively create value for their communities. Using a model of continuous improvement where early adopters inside councils can demonstrate what is possible and encourage broader change is a solid path forward. The future council will not simply be more digital. It will be more responsive, more connected, and more focused on the experience of the people it serves.

Top image credit: iStock.com/Thurtell