Financial Health in Australian Local Government: The Application of a Funding Assessment Model to Brisbane and Sydney City Councils

Local government financial viability measurement in an accrual budgeting environment poses complex challenges. Financial measures frequently generate conflicting results. A rating scale to assess financial management, constructed originally for South African municipalities (Dollery & Graves, 2009), represents a useful tool to analyze financial health trends. Applying a “Likert-like” scale to financial performance measures to assess “funding compliance”, the model in this article assists municipalities to avoid financial difficulties. To demonstrate the applicability of this model, we apply the model to the Brisbane City Council and the Sydney City Councils. Results show that the model represents a valuable aid to financial management decision-making.     

Financial Sustainability as a Driver for Transparency and E-Democracy: A Comparative Study in Italian and Spanish Local Governments

Today expectations of accountability and trustworthiness in governing entities is greater than ever before. The process of change has been given impetus by new information and communication technologies resulting in e-government and e-democracy. This research aims to analyze transparency and democratic participation in Italian and Spanish LGs. The web pages of Italian and Spanish LGs with more than 100,000 inhabitants are analyzed using twenty determinants of fiscal transparency and eight determinants of e-democracy. Results show considerable similarity between Italian and Spanish LGs with regards to the disclosure of financial information, while the adoption of e-democracy tools requires further development in both countries.     

A New Predictor of Local Financial Distress

The development of predictive models for financial distress is a recurring topic in both private and public contexts, although currently its repercussions are greater in the public sphere, where efforts are being made to define new warning systems for fiscal crises. The present study thus aims first to show the similarities and differences between the absolute and relative models based on a 10-point scale, in order to subsequently combine the positive aspects of both proposals to find a system that can determine local fiscal distress in a more robust way.

The results obtained show that the optimum predictive system is a slight variant of the model proposed by Kloha et al. (2005) Kloha, P., Weissert, C. S. and Kleine, R. 2005. Developing and testing a composite model to predict local fiscal distress. Public Administration Review, 65(3): 313–323. [Crossref], [Web of Science ®] , [Google Scholar]. This variant consists of the inclusion of two indicators of financial independence proposed by Zafra-Gómez et al. (2009a) Zafra-Gomez, J. S., López-Hernández, A. M. and Hernández-Bastida, A. 2009a. Developing an alert system for local governments in financial crisis. Public Money &; Management, 29(3): 175–82. [Taylor &; Francis Online], [Web of Science ®] , [Google Scholar] for which an alert threshold has been empirically determined.     

Risk Factors and Drivers of Financial Sustainability in Local Government: An Empirical Study

The current international crisis in public finances has made financial sustainability a key issue for governments. Although the European Union (EU) and other international organisations have recommended governments to monitor demographic and economic variables, few studies have considered the influence of these variables on financial sustainability. This paper seeks to identify and analyse the drivers and risk factors that influence the financial sustainability of local government. The findings identify both risk factors (unemployment and population aged under 16 years) and drivers (budgetary outcome) of financial sustainability, which may constitute a useful basis for decision-taking by managers and policy-makers.     

Popular Financial Reports as Fiscal Transparency Mechanisms: An Assessment Using the Fiscal Transparency Index for the Citizen User

Popular financial reports (PFRs) are intended to increase transparency by providing financial information to a non-technical, citizen audience. We examine the extent to which PFRs are meeting the goal of transparency by developing a 23-criteria fiscal transparency index for the citizen user (FTI-CU) and applying it to a sample of PFRs (popular annual financial reports and citizen-centric reports) issued by local governments in the U.S. These criteria are organized into five areas: comprehension, access, financials, appearance, and community-focused. The analysis finds that, while there are areas for improvement, the PFRs rated the highest in the access and appearance criteria.     

Budget Transparency in Local Governments: An Empirical Analysis

The aim of this paper is to shed additional light on the determinants of budget transparency in local governments. Our work is based on a Likert-type survey questionnaire specifically designed to measure budget transparency in small municipalities. The questionnaire is based on the IMF's revised Code of Good Practices on Fiscal Transparency (2007). Results from 33 Galician municipalities are used to assess its internal consistency and to test a battery of hypotheses on the determinants of budget transparency. While several previous findings of the literature are confirmed, some new results are also obtained.     

Determinants of Government Effectiveness

The direct relationship between government effectiveness and the population's well-being has generated a growing interest about the explanatory factors of governance quality. Thus, the aim of this study is to determine the determinants of government effectiveness, in relation to the organizational environment and political and internal characteristics of public administrations. For this, we used a sample composed by 202 countries observed between 2002 and 2008. A World Bank governance indicator represents the government effectiveness. We estimated a panel data dependence model by the Generalized Method of Moments estimator to avoid heterogeneity and endogeneity problems. Furthermore, a CHAID algorithm provides a classification of governance quality according to the predicted determinants.

The results show that government effectiveness is initially explained by the organizational environment, related to economic development and educational status. Later, and according to countries’ income distribution, political constrains and some organizational characteristics, such as gender diversity and government size, may improve governance quality.     

Variants of transparency: an analysis of the English Local Government Transparency Code 2015

Transparency policies and initiatives at the local level have expanded around the world but our academic understanding is still limited. Few studies have systematically analysed transparency practices at the local government level. This paper develops an analytical framework to examine local government transparency practices based on the literature. The framework is used to analyse the English Local Government Transparency Code 2015. The study shows that the Code delivers openness to a partial extent but has not yet met all criteria for transparent practices. The findings could contribute to the development and improvement of transparency practices at local governments.     

What about Financial Sustainability of Local Government!—A Critical Review of Accountability,Transparency, and Public Assurance Arrangements in England during Austerity

Austerity strained the financial sustainability of governments and ability of policy-makers to address policy challenges, and so having appropriate accountability and transparency arrangements to assure the public they were getting value for money took on renewed urgency. Comparing and contrasting findings from a critical review of policy developments in English Local Government during the Conservative led coalition central government 2010–2015 with those from related studies on accountability and transparency more generally, the article offers key themes for practitioners and policy-makers seeking to build stronger democratic systems of governance that go well beyond the UK jurisdiction.     

Institutional Arrangements and State and Local Financial Forecasting

Abstract

The articles in this symposium present various consequences that effectively result in changes from adopted budgets during the implementation phase, which derive from institutional structure. The institutional structures referred to include such attributes as internal policy, procedural methodology, longevity in office, and reward and incentive systems related to performance outcomes

For local governments, structural influences studied include changes in leadership in the executive and legislative branches, longevity in office of budget administrators, and differences related to mayor-council vs. council-manager forms of government. Internal policies reported on cover methodology used to forecast revenues such as quantitative methods versus informed judgment, budgetary controls and spending policy related to mandated spending beyond local government control, and procedures for benchmarking within the agency as well as with peer groups and professional standards.

Consortia of governments are referenced regarding performance evaluation as is the process for gaining consensus between the executive and legislative branches, including expert outside opinion. Other influences on performance outcomes reported on are those tied to the risk-reward system built in to the institutional structure, which includes risk tolerance of the individuals who make pension fund investments.     

The Centre Decides and the Local Pays: Mandates and Politics in Local Government Financial Management in China

Abstract

In China, ‘the centre decides and the local pays’ means the central government decides on policies but requires its local subordinates to provide the financial resources. The politics of this practice implies that local government has to take different strategies to cope with the unfunded mandates with various consequences. As an empirical study framed by Niskanen’s rational choice theory and Dunleavy’s ‘bureau-shaping’ model, this paper examines how the unfunded mandates impact local government behaviour. Its main focus is the question of how the local officials respond, the extent to which they comply or resist and the techniques they use to adapt to these mandates. This paper finds when deciding how to pay the bill for the centre, local officials have to take a number of principles into consideration. They need to stick to the people-orientated principle and to finance money for salaries and operation to the extent that they can; they also have to see if the mandates are strictly implemented or popular among local people.     

Endogenous Determinants for Renegotiating Concessions: Evidence from Local Infrastructure

The engagement of local government in public–private partnerships (PPPs) for the provision of infrastructure and public services is a global trend. Light rail services, water systems, waste management systems, schools, sport centres and social housing are simply a few examples of sectors in which the private sector is becoming more actively involved with local authorities. Most of these engagements are conducted through the use of mixed companies and contractual concessions. However, both of these uses suffer from a major shortcoming – renegotiations. Contracts are often renegotiated within a few years of being signed, and some evidence reveals that the results might not protect the public interest. This article aims to understand how and why renegotiations of local concessions occur by examining the specific characteristics of contracts (endogenous determinants). To illustrate the discussion, a case study of a light rail system is analysed, exemplifying the effect of a contractual renegotiation. The authors argue that contractual renegotiation can be useful in decreasing contract incompleteness, but a poorly designed contractual clause can allow for opportunistic concessionaire behaviour.     

Financial Discrepancies in Political Party Funding by Indonesian Local Government Authorities

Through different forms of decentralization variables, this study investigates Indonesian local government authorities' 2006 financial accountability reports in terms of local government authorities' contributing funds to political parties. Audit results by the Supreme Audit Body reveal that many articles were violated by these authorities in regard to the distributing, administrating, and reporting of assistance funds from them to political parties. Each rupiah committed by the 221 local government authorities involved in this study violated, on average, 1.8 articles, indicating a low level of compliance.

Critically, the study finds that administrative, fiscal, and political decentralization decreases discrepancies. The less administratively decentralized provincial authorities, where decision making is a level of government farther from the people, are more likely than non-provincial local government authorities to make discrepancies with political party legislation and regulations. Fiscally decentralized local government authorities, who earn a higher fraction of their revenue from local sources, also tend to have fewer discrepanciesFinally, politically decentralized authorities with a higher percentage of elected officials from the decentralized supporting ruling coalition, also have fewer discrepancies.     

An Evaluation Analysis of E-government Development by Local Authorities in Australia

Local governments play an important role in moving forward towards the vision of a connected and responsive e-government. This research develops a set of evaluation criteria for evaluating local council's websites. By examining the current status of the local government websites, this research provides an overview of the level of sophistication of the e-local government development in Australia. The local governments in Australia have not developed truly sophisticated e-government services. The majority of the local government websites are primarily informational and they provide one way communication of information from government to citizens.

To identify the factors affecting the level of sophistication of local council's websites, a single case study approach is employed in this research. Top leadership support and management capacity and organisational and technical challenges are considered important for e-government development. User-centric website design and bridging the digital divide also play a role in the successful implementation of e-government.     

Understanding the Accumulation of Local Government Savings: A Dynamic Analysis

Government savings can be a conundrum that perplexes taxpayers. Excessive savings indicate that taxpayers either pay unnecessarily high taxes, or they do not receive adequate returns on services. Insufficient savings leave government officials little financial flexibility. The Great Recession and its aftermath have renewed interest in understanding government savings. This article uses dynamic panel modeling to analyze the determinants of municipal discretionary savings. Results show that risk factors are the primary drivers of municipal savings, and high-risk factors have greater impact on the amount of savings. This finding confirms organization theory’s view of savings as a crucial buffer against risk.     

Minor Parties and Independents in Times of Change: Scottish Local Elections 1974 to 2007

This article explores the electoral performance of minor party and Independent candidates in Scottish local elections from 1974 to 2007. This is a period which began with a major restructuring of local government and ended with a change in the electoral system from first-past-the-post to the single transferable vote. It encompasses a second restructuring in the 1990s, the consolidation of the Scottish National Party as an electoral force, and the creation of the Scottish Parliament. Throughout the period, while there have been ebbs and flows, Independents and minor parties have remained significant players in local electoral politics in Scotland.     

Transparency for Results: Testing a Model of Performance Management in Open Government Initiatives

Government transparency continues to challenge existing frameworks for understanding organizational performance. Transparency has proven difficult to measure and results assessing its impacts are mixed. This article sets forward a model of performance-based accountability in open government initiatives. Data come from the Open Government Partnership’s (OGP) database of over 1,000 transparency initiatives across 50 countries in 2013. Ordered logistic regression estimates the effect of management practices on three different measures of transparency performance, and the results broadly support the model. Expert interviews from two country cases offer insight into how performance management is used in the context of transparency reforms.     

Local Government Reforms in (Seven) European Countries: Between Convergent and Divergent,Conflicting and Complementary Developments

In selecting the United Kingdom/England, Germany, Sweden, France, Italy, Spain and Hungary as comparative cases, and in focusing on three institutional tracks (local leadership, internal administration and external operation), this article first discusses, on the one hand, whether local government has been institutionally strengthened, and on the other, whether governance-type actor networks have expanded in the countries under consideration and whether, across-countries, this developments has shown convergence or divergence. Secondly, it addresses the question of whether the two currents (strengthening of traditional local government and expansion of local governance networks) are conflicting or complementary.     

The Implications of the Lyons Report into Local Government in England for Structural Reform in Australian Local Government

The Lyons Inquiry into English local government presented its Final Report in 2007. It has significant implications for local government jurisdictions beyond England. This article considers the import of the Lyons Inquiry for reform to Australian local government. It is argued that the Lyons Inquiry adds weight to other work that questions the traditional reliance on amalgamation as the chief instrument of Australian local government reform. In particular, the “place-shaping” thesis developed in the Lyons Inquiry shows that the Australian emphasis on structural reform has been misdirected. Further, the Lyons Report offers a range of policy options besides municipal amalgamation.