A Critical Evaluation of Virtual Local Government in Australia

The vigorous debate surrounding local government amalgamation in Australia remains unresolved. In an attempt to break the current stalemate Percy Allan (2001) has proposed a model of 'virtual local government' that seeks to combine the service appropriateness and effectiveness purportedly associated with demographically small councils with the service efficiency of large municipalities. This paper attempts to place his model in the context of the literature on the theory of public sector policy reform. It then goes on to examine virtual local government in the light of new institutional economics, public choice theory and the characteristics of Australian local government.     

Do Municipal Mergers Improve Technical Efficiency? An Empirical Analysis of the 2008 Queensland Municipal Merger Program

Municipal mergers remain an important instrument of local government policy in numerous countries, including Australia, despite some concerns surrounding its efficacy. We consider the claim that amalgamations enhance the technical efficiency of the merged entities by examining the 2008 Queensland compulsory consolidation program that reduced the number of local authorities from 157 to 73 councils. To test the claim, we conduct locally inter‐temporal data envelopment analysis over the period 2003–2013 inclusive. Our evidence suggests that (1) in the financial year preceding the mergers, there was no statistically significant difference in the typical efficiency scores of amalgamated and non‐amalgamated councils and (2) 2 years following the mergers, the typical technical efficiency score of the amalgamated councils was well below the non‐amalgamated cohort. We argue this may be attributed to increased spending on staffing expenses, although comparatively larger operational expenditure also served to diminish efficiency.     

A Critical Evaluation of Australian Mineral Resources Rent Tax

An embryonic literature exists on policy failures by the Australian Government, which has examined inter alia the Home Insulation Program, the Green Loans Program, the Building the Education Revolution, and the macroeconomic stimulus package following the global financial crisis. This article contributes to this literature by considering the introduction of the Mineral Resources Rent Tax (MRRT) and its subsequent performance in terms of revenue. We evaluate the implementation of the MRRT using theoretical insights from the policy analysis literature and attempt to draw some broader public policy “lessons”.     

What’s in a Name? Assessing the Performance of Local Government Classification Systems

Local government classification systems are employed in many countries for regulation, grant transfers and other public policy purposes. Given the pivotal role these classification systems play in public policy, their accuracy is a matter of some importance. Classification systems take several forms typically consisting of groupings of municipalities based on factors such as degree of urbanisation, population size and the like. However, to date none of these classification systems have been tested for homogeneity with respect to environmental constraints or validated against external data. This paper employs the classification system for New South Wales (NSW) local authorities as a representative case study to demonstrate that a wider range of external constraints should be considered for the robust classification of local councils.     

Economies of scale and Brazilian local government expenditure: evidence from the State of Paraná

ABSTRACT

Controversy surrounds local government reform, particularly efforts directed at reducing the number of local authorities to secure economies of scale. We examine whether economies of scale exist in local government outlays by analysing the expenditure of 398 municipalities for the Brazilian state of Paraná using a 16-year panel dataset covering the period 2002–2017. We find evidence that municipal expenditure is characterised by substantial scale economies. However, given the strong correlation between population size and population density, it is important to ascertain whether the influence of population size on municipal expenditure is due to variations in population density or not. When local government areas are divided into sub-groups based on population density, evidence of scale economies remains with the majority of councils operating below optimal size. Municipal consolidations may thus lead to lower per capita expenditure.     

An empirical analysis of municipal efficiency and local resident satisfaction by council type in Victorian local government

Although a voluminous empirical literature has examined local government efficiency, much less attention has focused on municipal effectiveness and almost no effort has been directed at the relationship between efficiency and effectiveness. In this paper, we seek to add to the latter nascent literature by investigating the relationship between operational efficiency and local resident satisfaction for three different municipal categories (metropolitan, regional, and rural councils) in the Victorian local government system over the period 2014–2015 to 2017–2018 using data envelopment analysis and an advanced regression model. We find that although a strong relationship exists between efficiency and satisfaction for metropolitan and regional councils, the same is not true of rural councils.     

The political determination of intergovernmental grants in Australia

Intergovernmental grants have been conventionally explained on the basis of either equity/efficiency and/or institutional considerations. This paper seeks to model Australian intergovernmental grants by including both traditional public finance variables and public choice influences; that is, grants are used by federal government politicians to purchase political capital, thereby enhancing their own chances of reelection. The models employed in this paper are tested for six Australian states for the period 1981–82 to 1991–92 using unsystematic grant transfers. The results provide support for these public choice considerations, and highlight the importance of incorporating institutional factors and controlling for misspecification in the error structure in estimates of this type.     

Leadership and Economic Theories of Nonprofit Organizations

Economic theories of nonprofit organizations (NPOs) have modified standard economic assumptions to explain altruism and nonprofit entrepreneurship but have neglected their dependence on leadership due to the traditional reluctance of economists to consider phenomena associated with preference change. The relevance of Hermalin's (1998 ) model of leadership by example and Casson's (1991 ) theory of leadership through moral manipulation are considered within an NPO context where leaders seek to influence stakeholder commitments to the organization's quest. The propositions Elster (1998 ) advanced with regard to the relationship between the emotions and decision making are then applied in a theory that explains how NPO leaders can develop a culture of hope that maintains the quality control and product differentiation advantages claimed for these organizations. It is argued that policymakers should consider the dependence of NPOs on the quality of leadership when choosing the organizational mechanism for social service delivery.