Building Tech Resilience
From Stagnation to Innovation in Local Government
Despite all the talk about digital transformation and customer-centricity, most city governments remain stuck in the same cycle of outdated technology, slow progress, and underwhelming results. It’s an infinity loop of stagnation. Decisions made decades ago still dictate the technology landscape today, and each attempt at modernisation simply bends back on itself, repeating the same inefficient patterns1.
While industries like banking, retail, and airlines have been forced to modernise, local governments have largely been able to get away with stagnation. The real question is: why? The real answer is: because they can.
Unlike private sector organisations, which must continuously improve to remain competitive, local governments face no such imperative. Their main obligation is to meet legal requirements, not to optimise service delivery. That’s a low bar, and it explains why so many councils lag behind in digital maturity.
In theory, competitive pressure should come from the public. The Tiebout Model suggests that if residents are dissatisfied with their local government, they should “vote with their feet” and move to a better-performing council area. But in reality, switching local governments isn’t like switching banks or internet providers. It’s an expensive, disruptive life event.
Because the cost of moving LGAs is so high, local governments operate as geographic monopolies. Unlike a failing airline or a bank with a broken app, a council with terrible digital services doesn’t face an immediate financial or political consequence. And in a system where there are no consequences for doing nothing, doing nothing becomes the default.
Sure, some councils are trapped in a cycle of short-term fixes, budget constraints, and vendor lock-in. Their IT teams know what needs to be done but lack the authority, funding, or time to drive real reform. But others are actively resisting change, whether through bureaucratic inertia, risk aversion, or outright leadership incompetence.
Could you imagine any other customer-facing business today where a CEO could simply ignore a transformation agenda without consequence? In competitive industries, failing to modernise means falling behind, or being replaced. Yet in local government, leaders can actively resist digital transformation and face little to no pressure to change (see The Power of Perspective).
When questioned, they often claim that other priorities take precedence, but this has become a facile argument and a convenient excuse that allows inefficiencies to persist unchallenged. Other companies don’t get to defer core service improvements indefinitely, because competitors force them to evolve. In local government, no real market force demands better service, no competitors threaten their position, and without accountability mechanisms in place, stagnation is simply allowed to continue. And so, the infinity loop persists.
Some councils want to modernise but lack the resources. Others have the resources and still won’t change. Some leaders don’t understand technology well enough to make informed decisions. Others actively choose short-term patches over long-term reform because it’s easier.
The Paradox of Digital Maturity
Some argue that exposing digital inefficiencies through benchmarking will create pressure for change. Transparency does help. When the Victorian state government published planning application times, it forced slow councils to respond. But exposure alone isn’t enough.
If councils respond to scrutiny by making only surface-level changes, the real inefficiencies remain. Instead of fixing broken workflows, they add layers of bureaucratic workarounds. Instead of adopting modern, real-time service models, they invest in reporting tools that analyse delays rather than eliminate them. If vendors keep selling new versions of old problems, nothing really improves. If there’s no accountability for poor digital performance, then change remains optional. The infinity loop of stagnation continues, because no external force is breaking the cycle.
This is the paradox: councils need to measure digital maturity to justify modernisation, but their outdated systems prevent them from gathering the necessary data to measure it in the first place. It’s a self-reinforcing loop where the very thing required for change is also what’s missing.
Because their systems weren’t designed for visibility, automation, or workflow orchestration. They can’t see inefficiencies, let alone fix them. Without data, they can’t prove inefficiency. Without proof, they can’t secure funding or political backing. And without funding, the cycle repeats itself, indefinitely.
Acknowledging the paradox is the first step in resolving it. But understanding the loop is not enough. Breaking it requires addressing its key crossover point. The moment councils reach the decision to modernise, they are faced with two paths: real transformation or superficial change.
Too often, instead of committing to real digital transformation, councils opt for surface-level improvements. Things like new UI overlays, minor software upgrades, or repackaged versions of the same inefficiencies. This is the point where the loop bends back on itself, feeding the illusion of progress while ensuring the underlying issues remain untouched.
Once you understand the infinity loop, it can be broken. The key is recognising the cycle for what it is: a self-perpetuating system sustained by outdated structures, low accountability, and misplaced incentives. Councils that make an intentional break from short-term fixes and invest in true digital transformation can escape it entirely.
This means realising that a different architectural approach is required. One that may still involve existing vendors but demands modern, API-driven, event-based digital platforms designed for automation and real-time measurement, rather than just repackaged inefficiencies.
It requires benchmarking not as a bureaucratic exercise but as a tool for real accountability. It means treating digital service efficiency as a core function, not an afterthought.
A Way Forward
The fundamental step in breaking the infinity loop is addressing the lack of competitive pressure. Since councils don’t operate in a competitive market where failure leads to lost customers, external forces must create accountability. This is where regulatory benchmarking and public scrutiny must play a larger part.
Regulatory bodies can enforce mandatory benchmarking, requiring councils to publicly report on key digital performance metrics. Things like transaction completion times, automation rates, and service efficiency. For example, similar to how housing availability metrics are reported in urban development policies, councils could be required to report on digital service performance in a standardised format. Making this information transparent forces underperforming councils to justify their delays and inefficiencies, driving political and operational consequences for inaction.
Public scrutiny also plays a role. If residents had access to clear, comparable data on how their council’s digital services rank against others, they could apply direct pressure on leadership. Digital transformation would no longer be a facile IT discussion but a broader issue of governance and accountability. This approach mirrors public hospital performance reporting, where publishing wait times and patient outcomes has influenced hospital funding and operational reforms.
Funding models must also shift. Instead of allocating digital investment based on historical budget cycles, state and federal governments should tie funding to measurable improvements in digital service maturity. A model similar to school funding reforms, where investment is tied to student performance and infrastructure upgrades, could be applied.
Councils that modernise successfully should receive greater investment, creating a real incentive to adopt best practices rather than maintain outdated systems. While some may argue this creates inequality, the real issue is leadership accountability. Where there is an equitable opportunity to secure more funding and improve services within their LGA, council leaders must take responsibility for making that change, rather than using excuses to justify inaction.
Finally, procurement reform is essential. Many councils default to legacy vendors due to risk aversion and outdated procurement policies. If contracts prioritised real-time service efficiency, interoperability, and automation, councils would be incentivised to pursue true modernisation and the companies that can deliver it, instead of cycling through the same vendors and technology. This could work similarly to renewable energy policies that tie government contracts to sustainable practices, rewarding forward-thinking providers rather than reinforcing outdated procurement models.
Bottom Line: Local governments won’t change until the system forces them to. If regulatory oversight, public scrutiny, funding incentives, and procurement policies align, councils will no longer have the option to maintain inefficiency. That’s the way everyone else does it. So breaking the infinity loop is possible. But only if the pressure to modernise from those in charge becomes real.
Simple Infinity Loop of Digital Stagnation in Local Government
Many local governments are trapped in an endless loop of digital stagnation, where each attempt at progress bends back on itself and reinforces the same inefficiencies. Here is a simple summary of the core elements of the article.
Local governments rely on outdated systems that lack visibility and automation, preventing them from measuring digital maturity.
Without measurement, inefficiencies remain unseen, making it impossible to justify funding or political support for meaningful change.
They must choose between real transformation or superficial modernisation. Too often, they resort to short-term fixes, renewing contracts with legacy vendors, applying superficial upgrades, or adding bureaucratic workarounds. These fixes create the illusion of progress while preserving inefficiencies, ensuring that systems remain fragmented and ineffective.
Councils operate as geographic monopolies, meaning they face no competitive pressure to improve. Residents can’t easily "opt out" like they would with a failing business.
In the absence of external accountability, many councils delay modernisation, some due to budget constraints, others due to active resistance or incompetence.
The loop resets, repeating itself indefinitely. Without modern digital platforms, performance remains unmeasurable, inefficiencies persist, and councils continue to justify the status quo.