There was an interesting piece in by Michael Stutchbury in yesterday's Australian. It referred to the work done by Alan Brown and his Federalism Project team at Griffith University. Brown argues that local government needs to be strengthened so that it can handle an increasing role in service delivery. Stutchbury picks up the theme of stronger regionalism pointing out that a Griffith University survey found that 42% of voters favour some new form of regional government.

To some extent this reflects a disillusion with state governments who have not done well with roads, water, hospitals and planning as population pressures have increased. This disillusion is likely to spill over onto the federal government as the problems with the insulation and schools projects continue. It is natural for communities to believe that problems could be fixed better if they were dealt with locally. There is some support for this. Work on organisational analysis in the U.S. and Britain has shown that there is an optimal size for the delivery of services, which is between one and ten million people depending on how dispersed the recipients are. Once the service delivery organisation grows beyond the optimum size the delivery costs tend to increase and the quality of the delivery declines.

As the health debate has shown the real concern of governments is the transaction costs involved in the delivery of the services. The Rudd plan seeks to overcome this through the competition model. The fee for service (activity based cost) will be set by the most efficient supplier. That supplier will have the lowest transaction costs since most of the other elements of the service will be priced the same wherever they are delivered. States with high transaction costs will have to absorb the additional charges until they become efficient. If organisational theory is correct then this will involve identifying the optimal regional size for the management of the relevant health network. This will have to be done organically through a system of analysis, trial and error. It will be a shambles if the the regional size is defined a priori without the possibility of adaptation.

The other advantage of regional service delivery is that it enables consumer feedback. Service delivery is likely to be more efficient if it is responding to demand from consumers thus avoiding waste. The use of resources is likely to be optimised if it is dealt with on an integrated case management basis. In an ideal situation the general practitioner would manage the requirement for health services on behalf of the patient and would integrate this with the patient's other requirements for social services. The citizen would access all his/her requirement for services through a one stop portal thereby increasing the service levels and reducing the transaction costs.

In the Australian context this would involve all levels of government being integrated onto the one platform not only for health but for a range of service delivery; a reform considerably greater than that contemplated by the Rudd health reforms but one that is the inevitable consequence of those reforms. It is also a reform that will be forced on governments by rapid increase in population that seems to be occurring. It has been contemplated in the report of the Moran Committee, “Ahead of the Game”.

It is not however such a big leap for the average punter. They are used to going into local libraries, maintained by Councils around Australia, and getting their child immunised, paying their taxes on the library computer, paying their rates to the librarian, registering the car and then going next door to Centrelink and the G.P.

As the Griffith University survey shows, many people already think regionally.