Productivity is the engine of growth

I was once taught a valuable lesson by my former boss, Dr David Morgan, the renowned economist and CEO of Westpac. It applies just as much to local government as it does to business. Whenever one of my executive colleagues proposed a “fantastic” idea to grow our respective businesses, it was often accompanied by a request for additional funding. Dr Morgan’s first question was always the same: Have you looked at how you can fund that growth through productivity?

Growth funded by productivity is always the best kind of growth because it delivers better outcomes without increasing costs. 

At the recent City of Victor Harbor public meeting on the 2026/27 Annual Business Plan, I asked elected members and the administration which expenditure reductions or productivity improvements had been considered before deciding to introduce the proposed 1.5 per cent p.a. Financial Sustainability Index -- that is, a rate increase above inflation. While the answer wasn’t immediately available, the Council’s administration shared that information at the Council's Annual Business Plan and budget briefing session on 6 July. It was a good list, but I suspect there could have been many other items that could have, or should have, been considered.

If Dr Morgan had been reviewing the Council’s budget, he would have forensically reviewed each line of expenditure to identify which areas could be cut or reduced, or even reinvested to directly fund growth. In his opinion, and in mine, no organisation ever operates at 100 per cent productivity. Choices are always able to be made. Resources can always be better used. 

A great example for improving productivity, which has been raised by many, is reducing unnecessary duplication across South Australia’s 68 councils by sharing more administrative and back office functions. Maybe this is something the state government or the LGA SA could investigate. The financial services industry has done exactly this for decades. Cuscal, for example, was established to provide shared back-office services for credit unions and now supports mutuals, smaller banks and other financial institutions, allowing them to improve efficiency while keeping their focus on customers.  

Ratepayers deserve value for money. This means questioning how Council operates, benchmarking performance against comparable councils, pursuing genuine productivity improvements and reducing unnecessary overheads before asking residents to pay higher rates. Should I be elected to Council next April, these are the types of issues I will pursue.

Peter Hanlon,
Candidate for Victor Harbor Council