Something is shifting across Australian and New Zealand councils, and it goes deeper than budget pressures and workforce shortages. A new Gallup report reveals what’s really driving the gap between councils that are struggling and those finding a way through.
The pressures facing local government are well known. More being expected, less made available, and a community growing less patient.
A new report from Gallup, Local Government at a Turning Point: Evidence and Insights from Councils Across Australia and New Zealand, which draws on in-depth interviews with council leaders across Australia and New Zealand combined with international workforce and wellbeing data, found something more interesting than a sector in crisis.
It found a sector actively adapting, and the difference between councils managing well and those under the most strain often comes down to things that don’t show up in a budget – leadership behaviours, cultural decisions and how organisations treat the people inside them.
A mandate that keeps growing
Australian councils manage around 32 per cent of the nation’s public infrastructure and 75 per cent of local roads on a fraction of national tax revenue.
That structural mismatch has always existed, but leaders interviewed for the report describe it as widening. State and federal responsibilities are increasingly absorbed at the local level, often without commensurate funding or consultation.
Community sentiment is shifting too. Gallup’s data shows resident satisfaction with local areas has declined in recent years, particularly among younger people, with affordable housing emerging as one of the strongest single drivers of dissatisfaction.
Separate Gallup global research from The World’s Most Important Problem: What People Need Leaders to Hear in 2026 underscores the scale of that challenge: Australia ranks among the top three high-income nations for residents citing housing affordability as their country’s biggest problem, with satisfaction with affordable housing falling to just 25 per cent in 2025.
For chief executives and general managers, this creates a particular kind of pressure. They’re held accountable for outcomes they don’t fully control while managing governance obligations, political scrutiny and operational delivery.
Several leaders described reform fatigue: the exhaustion of implementing new systems and compliance requirements without the capacity to absorb them properly. Burnout is becoming more common as vacancies load pressure onto remaining teams, and technical roles in engineering, planning and building remain especially hard to fill.
What effective leaders actually do
Faced with constraints they cannot simply spend their way out of, the councils reporting stronger outcomes share something more fundamental: a distinctive approach to leadership. The report identifies four behaviours that characterise effective council leaders in the current environment, and none of them require a budget line.
The first is consistent visibility. Leaders who regularly show up alongside their workforce, not for the photo opportunity but for the conversation, build a more accurate picture of what is actually happening inside their organisations.
“I want to make sure that, at least fortnightly, I’m embedded in a frontline team,” said the Chief Executive Officer (CEO) of a large metropolitan council.
“Whether I’m washing dishes or picking up rubbish behind the admin building, it’s not about the task itself. It’s about the conversations I’m having with staff while we do it.”
The second is psychological safety modelled from the top. Leaders who openly acknowledge their own mistakes and who visibly stand alongside staff when well-intentioned decisions go wrong build cultures where staff take initiative rather than waiting for direction.
The third is active investment in external networks: coaches, mentors and peer forums that provide the objective perspective the role itself precludes.
And the fourth, and perhaps the most foundational, is a visible, sustained commitment to public service purpose, particularly when the organisation comes under political pressure.
The findings also surface a striking connection in the data: councils whose leaders rate employee engagement highly also tend to rate community trust highly. The workforce experience doesn’t stay inside the building.
“We have a workplace in which 80 per cent of employees are living and working in the same local government area. Every one of those people speaks to their family. We rely on the fact that people say the council’s a great place to work,” the CEO said.
Building from the inside out
When councils couldn’t reliably find the talent they needed on the open market, the most effective response was to build it internally.
In practice, this starts with how decisions are handled day to day. Leaders who consistently ask staff for their view before offering their own find that leadership potential surfaces and staff who are trusted with real decisions begin demonstrating capacities that would otherwise never be visible.
“The only way to really identify leadership potential is to give people a go,” said the CEO of a regional council.
Stretch assignments and acting roles are widely used to test that potential, but with a deliberate cultural shift in expectations. The goal is not flawless performance from day one, but a willingness to step up.
Recruitment has shifted too: several leaders now hire explicitly for values and public service orientation ahead of technical credentials, reasoning that character is harder to develop than capability, and that values-aligned staff are both more likely to stay and more likely to invest in others.
One large metropolitan council described an intensive leadership development pipeline, paired with strengths-based assessment, reporting that about 90 per cent of participants had gone on to occupy leadership roles.
Another used twice-yearly talent planning to identify excellence and target development support. Together, these practices make retention less dependent on winning every contest in the external labour market.
Communication, recognition and the trust dividend
Two practices appeared consistently in councils with stronger engagement.
On communication, leaders described it not as an occasional event but as a consistent discipline, regular, honest and transparent about the reasoning behind decisions even when those decisions were unpopular. When staff knew exactly when they would next hear from leadership, that predictability reduced speculation and kept energy focused on delivery.
On recognition, the most effective examples worked at two levels: immediate enough to catch great work in the moment, and visible enough to create shared moments across the organisation. One council’s staff awards program generated over 400 nominations for 13 awards in its third year with the significance lying not just in the event, but in the volume of peer-to-peer recognition it produced. As one leader put it, sustained recognition turns compliance into relationships.
Technology: opportunity and caution
Artificial Intelligence (AI) and automation are entering the conversation across the sector, but the leaders Gallup interviewed said they see them not as a subsitute for staff, but primarily as a way to give stretched teams breathing room, such as by automating development application workflows, streamlining asset management and accelerating customer service responses.
Where adoption is working, leaders make tools available and let confidence build through peer learning rather than mandates. But the report also captures where caution is warranted. Resident data, the development pathways of junior staff, and the pace at which organisations can absorb change were all named as risks requiring deliberate attention.
Purpose as the constant
Across all the pressure and complexity, one theme runs consistently through the report, local government remains deeply purpose-driven work.
Leaders described the sector in terms of community impact and public value, and many said that sense of purpose continues to motivate staff even when financial and operational conditions are difficult.
“Everything we do inside our council is designed to try and align to the purpose of enhancing our community’s way of life… every decision we’re making is designed around the residents and making the lives of people who live here better every day,” another CEO said.
Gallup’s broader research finds that how people feel about their local services, housing, healthcare and education are the strongest predictor of confidence in institutions.
Trust is built, or lost, locally first. The councils that invest in their workforce culture, communicate clearly and stay anchored to public purpose are not just managing an internal challenge. They are shaping the conditions under which communities trust the institutions that serve them.
The full Local Government at a Turning Point: Evidence and Insights from Councils Across Australia and New Zealand report sets out what that looks like in practice and what the data says about the distance still to travel.
To view the full report, visit gallup.com/workplace
