Controversy surrounds structural reform in local government, especially on the question of whether efforts aimed at reducing the number of local authorities enhance the effective operation of the newly created consolidated local government entities. However, the weight of extant conceptual and empirical evidence suggests that while amalgamation typically improves the capacity of local government, it is not only costly, but also has other deleterious consequences. Local council collaboration through resource sharing and joint service provision aimed at capturing the advantages attendant upon scale, but without the adverse democratic and economic effects of consolidation, represents the main alternative form of structural change which still retains local government activity within the public sphere. This paper considers the foundations of shared services, including the embryonic theoretical literature and available empirical evidence, as background to considering the problem of developing policies to promote inter-municipal collaboration.