New Zealand's next general election is less than nine months away. It's not quite yet the silly season, but very obviously politicians are already working through what options might tempt the electorate.

It's a tough year to be doing it. Even before the Christchurch earthquake there was almost a consensus that the New Zealand tradition of rolling out the goodies had to be put to one side. With the added burden of earthquake recovery, the challenge is now hugely how we do more with less, and how we reduce the cost of the state, both centrally and locally.

And we need to look for an imaginative solutions, rather than more in the way of knee-jerk reactions about profligate local government, inefficient public servants, or overregulation. Too much of our recent experience, especially in local government, illustrates the law of unintended consequences - instead of getting better community engagement, more accountability and lower costs, most government interventions over the past 10 years have produced exactly the opposite outcomes.

Could this be local government's opportunity? On the track record perhaps not. The 1999-2008 Labour led government spoke the language of community engagement and community outcomes but was responsible for the largest quantum leap in compliance burdens on local government in New Zealand's history. Ironically this was done in the name of greater community engagement and accountability but led to increased frustration for ratepayers and residents who really wanted to understand what their councils were doing.

The National led government in office since 2008 has tinkered at the margins of the compliance burden but left it largely unchanged. Instead its focus has been on "efficiency" most notably through a major restructuring of the Auckland metropolitan region.

On their track record, both major parties clearly believe that, in local government, big is better. Auckland provides the ultimate illustration with a council of 20 elected councillors and a Mayor serving a population of approximate the 1.4 million - a representation ratio (councillors to residents) of 70,000:1 in a world in which many jurisdictions start worrying if the ratio exceeds 1000:1. Even Auckland's local boards, intended to be the flagships of local democracy, have a representation ratio of 10,000:1.

Perhaps its time for New Zealand's politicians to have a hard look at what is happening internationally and why. First they would find that representation is generally regarded not as a cost to be minimised, but as an essential element in the key role of local government, the delivery of local democracy. Next, they would find increasing doubts about the effectiveness of the standard model of expert bureaucrats, remote from the communities their government's policies are intended to serve, designing, targeting and delivering social services to improve community outcomes.

The current changes in England are a good example. The coalition government's big society programme might look like an ideologically driven cost-cutting strategy as many of its opponents claim. At its heart, though, is a research-informed belief in the need to rebalance the relationship between government, local government and community. It's an acceptance that the best decisions are taken closest to the people directly affected, and ideally with them involved in taking those decisions. Among other things, it's prompting some really interesting experiments with employee and/or community owned mutuals as more effective means of enabling service delivery. For a recent example from the English Government's Pathfinder initiatives.

Despite the fact that New Zealand takes a different approach to the delivery of social services (much more through central government than in England, much less through local government) the two countries face similar problems of fiscal constraints, and the need to get better outcomes from services which too often are too remote, or insufficiently connected with the communities they serve.

Is it time for New Zealand to re-engage, and learn from the experience of other jurisdictions?

Shared services in local government have always looked like the idea which never quite made it. There have always been good arguments for doing it, but largely not good enough to overcome resistance, apathy, inertia and the sheer difficulty of shifting from well trodden ways of doing what we have always done.

In 2010, Deloitte was lamenting that "despite a history of tactical collaboration, shared services have really succeeded at scale". Similar comments are common throughout the research literature on local government.

Most notably, higher tiers of government, in search of the holy Grail of improved local government performance, normally reject arguments for doing so through shared services in favour of amalgamation. That's got the political attraction of looking like firm and positive action, and electoral cycles mean the fallout usually affects a different government. But it also reflects real resistance within local government. Queensland's Local Government Reform Commission was put in place to restructure local government because the state government lost patience with attempts to improve performance through a shared services strategy. One reason the Royal Commission on Auckland Governance decided not to put in place a second tier of substantial councils below a regionwide council was it believed such a tier would not be capable of agreeing on the measures needed to improve performance through a shared services approach.

But it's amazing what a bit of fiscal pressure can do. Most local governments are now facing as tough a financial outlook as ever they have seen. The New Local Government Network's just released publication Shared Necessities: The Next Generation of Shared Services makes a compelling argument that simply sharing back-office services, even if every council across the country does that to an optimal level, will come nowhere near coping with reduced revenue. The only option is to move to comprehensive shared services across the full range of what councils actually deliver.

Interest is increasing elsewhere. In New Zealand one group of councils has taken an innovative approach to how they think about shared services - for them it is very much a matter of access to and management of information, rather than the former approach of physically shifting things around, outsourcing etc. Key to this is a high-speed fibre optic cable linking all the councils together. This will enable the development of a 'centres of excellence’ approach with each council developing a different specialty, so that there is room for the large and small. Contrary to the usual fears about shared services, this approach should underpin local democracy and the continued relevance of the smaller councils.

Peter McKinlay will be presenting the findings from a case study on this initiative at the forthcoming colloquium of the Research Advisory Group of the Commonwealth Local Government Forum to be held in Cardiff 12-14 March 2011. His paper will shortly be available in the resources section of our website.