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.     

Did the Big Stick Work? An Empirical Assessment of Scale Economies and the Queensland Forced Amalgamation Program

In 2007, the Queensland Government imposed forced amalgamation with the number of local authorities falling from 157 to just 73 councils. Amalgamation was based inter alia on the assumption that increased economies of scale would generate savings. This paper empirically examines pre- and post-amalgamation (2006/07 and 2009/10) for scale economies. For the 2006/07 data, evidence of economies of scale was found for councils with populations up to 98,000, and thereafter diseconomies of scale. Eight percent of councils in 2006/07 (ten councils) – representing 64% of the state’s population – exhibited diseconomies of scale. For the 2009/10 data, the average cost curve remained almost stationary at 99,000 residents per council, but almost 25% of all councils (thirteen councils) were now found to exhibit diseconomies of scale. The compulsory merger program thus increased the proportion of Queensland residents in councils operating with diseconomies of scale to 84%.     

Municipal Mergers in New Zealand: An Empirical Analysis of the Proposed Amalgamation of Hawke’s Bay Councils

Local government policymakers across the developed world have frequently employed municipal amalgamation to improve the operation of local councils, and New Zealand is no exception. This paper empirically examines claims made in Potential Costs and Savings of Local Government Reform in Hawke’s Bay that the merger of the five local authorities in the Hawke’s Bay Region of New Zealand would generate significant cost-savings. We empirically test for the existence of scale economies in a single merged Hawke’s Bay council and find that no cost-savings can be expected. This removes a key argument for a forced Hawke’s Bay amalgamation.     

Does Size Still Matter? An Empirical Analysis of the Effectiveness of Victorian Local Authorities

Efficiency approaches to the question of whether population size matters to optimal local government have proved largely inconclusive. However, recent exploratory empirical work employing an effectiveness approach – as proxied by citizen satisfaction survey data – offers a promising way forward. The present paper seeks to build upon an earlier cross-sectional analysis of Victorian local government by employing longitudinal data over a three-year period – 2008 to 2010 – for Victorian local authorities. The greater depth of data confirmed the positive associations with population density but suggests that negative linear relationships dominate over parabolic associations for population size. This result underlines the need for the collection of more local government citizen satisfaction data by Australian local government systems, given its potentially fruitful application in tackling contentious questions in contemporary local government policy debates.