Developing an Economic Model to Harness AI for Local Government

Challenge

Artificial intelligence presents a significant opportunity for Western Australia’s local government sector  but realising that opportunity requires credible, evidence-based economic justification. WALGA partnered with The Strategy Group to conduct robust analysis to quantify the potential value of AI adoption across WA’s 139 Local Governments. Without clear economic modelling, it would be difficult to advocate for strategic investment, prioritise initiatives, or build sector-wide confidence in AI-enabled transformation.

Approach

Conducting an economic impact analysis to quantify sector value of AI adoption

The Strategy Group conducted a comprehensive economic impact analysis to quantify the five-year value of AI adoption across the Local Government sector. The core methodology combined:

• Peer-reviewed research on AI productivity impacts

• Official government workforce and financial data

• Comparable technology benchmarks

• Conservative modelling assumptions to ensure defensibility

The analysis assessed value creation from AI across three distinct mechanisms:

1. Efficiency Gains: Direct time savings from automation and augmentation of routine tasks

2. Workforce Capacity Reinvestment: Redirecting freed capacity to high-value activities

3. Prevention: Reductions in workplace injuries and associated costs through safer, AI-enabled processes and systems

All projects were intentionally conservative to support confident advocacy and policy engagement

Outcomes

Grounding the AI opportunity for Local Government in a conservative economic model

The analysis identified almost $500 million in potential economic value over five years for Western Australia’s local government sector along. When extrapolated nationally, AI adoption across Australia’s 537 local governments represented a $4.3 billion opportunity over five years.

These findings provided WALGA with:

• Credible, evidence-based figures to support sector advocacy

• A compelling case for strategic digital investment

• A quantified foundation for sector-wide AI adoption initiatives

• Increased confidence among stakeholders and decision makers