Davidson, one of Australia’s leading recruitment and advisory firms, proudly presents the fourth edition of its annual Australian Local Government CEO Index. This year’s Index, informed by responses from over 170 local government CEOs across Australia, provides a comprehensive overview of the critical issues shaping local government today.

The CEO Index was just launched at the LG Innovate Artificial Intelligence Summit in Noosa, where local government leaders and AI experts have convened to explore various innovations across the sector. During a dedicated session at the Summit, CEOs will discuss the Index findings and their implications for local government and technological change, shedding light on the key insights and discussions that are shaping the sector.

“Over the years, the Index has evolved and has accurately pinpointed the areas where our leaders are incredibly stretched, while also showing a clear roadmap for new opportunities and future trends,” said Clare McCartin, Managing Partner at Davidson, “it has led significant discussions and provided a much-needed spotlight on the reality facing our leaders.”

This year’s Index delves into eight key themes that are shaping the public sector:

• Shared Services
• Artificial Intelligence (AI)
• Technology
• Customer and Community
• Financial Sustainability and Growth
• Leadership Learning and Innovation
• Organisational Cultural Transformation
• Sustainability and Preparedness

Community resilience and wellbeing have consistently been top priorities for local governments, particularly in response to crises like natural disasters and the pandemic. By 2023, this focus had solidified into a nationwide strategy, with stronger connections with First Nations communities. In 2024, resilience and wellbeing were the top engagement priorities in every state. This reflects a sustained commitment to building long-term resilience, improving community engagement, and enhancing socio-economic wellbeing.

Attracting and retaining talent, alongside fostering leadership and a positive organisational culture, have remained critical challenges. These areas were the highest-ranked priorities in both 2023 and 2024, with a strong emphasis on leadership capability and organisational culture. As competition for talent intensifies, councils must create environments that attract and retain top talent through leadership development and a focus on employee wellbeing.

The public sector is going through a significant change of the guards. The Index reveals a significant turnover among local government CEOs, with many long-serving leaders retiring. This shift is creating a considerable knowledge gap and increasing the competition for top talent. As a result, 87% of CEOs express concern about leadership talent gaps in the coming year.

Another key finding that has been identified in the fourth edition, is that CEOs appear more sceptical than last year about the rapid adoption of AI and whether it will affect their council’s way of working, with most CEOs taking a longer-term view of the changes. In 2023, nearly 70% of CEOs acknowledged AI’s growing impact on councils, although it was initially a lower priority for governing risk. By 2024, more CEOs anticipated AI’s impact within five years, yet over half admitted their councils were not adequately prepared. This gap presents both a risk and an opportunity for councils to invest in AI readiness, enhancing service delivery, decision-making, and efficiency.

The Index also highlights the shift to hybrid work models, a defining feature of workforce dynamics in local governments accelerated by the pandemic. By 2022, nearly 50% of councils had implemented hybrid arrangements, with few requiring full-time office attendance. This trend continued into 2024, with 62% of staff working three or four days from the office. Councils that effectively manage the transition to hybrid work will be better positioned to attract and retain talent, improve employee wellbeing, and enhance productivity.

“While some of the key challenges remain each year, such as the pressures associated with rate capping in some states, successful integrations of shared services and the continual pursuit of innovative thinking to do more, with less; exciting new trends and opportunities have also been identified.”

Clare McCartin, Managing Partner of Search and Advisory at Davidson