Corangamite and Moyne Shire Councils and Warrnambool City Council will share $4.5 million to improve the quality, effectiveness and affordability of services to their ratepayers.
Minister for Local Government Adem Somyurek announced the funding as part of the $20 million Rural Councils Transformation Program.
Corangamite Shire Director Corporate and Community Services David Rae said the funding would allow the three Local Governments to better serve their communities by addressing the increasing technology demands and costs.
The funding follows two years of hard work amongst the councils and will help modernise and transition the delivery of ICT services to the "cloud".
"It's great to work in collaboration with our neighbours in Moyne and Warrnambool," Mr Rae said. "The three Councils appreciate this funding from the State Government which will fully fund the project.
"We've put in a lot of work to create an innovative model which will give us an even better way of doing business.
"This funding will allow us to combine the core technology platform of each council—into a shared service model.
"It will ultimately allow us to reduce the duplication of systems across the councils and meet the increasing demands of our communities and workforce."
Mr Rae said the Councils' systems were coming under pressure as more community members used online services, regulations grew more complex, and cyber security increasingly became a priority.
"This adds up to greater demand on our small ICT teams, so we've worked out a smarter way of doing things.
"Sharing common processes will help us to collectively address cost pressures. Similarly, our residents and communities will benefit through improved levels of services."
Moyne Shire Council Director of Community and Corporate Services, Kevin Leddin said he looked forward to working with Corangamite and Warrnambool councils to implement the project.
"The project is a great example of collaboration between councils and our effective partnerships delivering real outcomes for our rate payers. "
Warrnambool City Council CEO Peter Schneider thanked the Victorian Government for recognising and funding the innovating solution.
"We have a very positive relationship with our neighbouring municipalities, and by working together in this venture, we can achieve great economies of scale," he said.
"While municipalities often come together on regional advocacy issues, collaborating on internal systems such as ICT is much rarer, and I think it shows a real willingness by all three councils to find innovate ways to provide better services to their communities."
