Efficiency Measurement in Australian Local Government: The Case of New South Wales Municipal Water Services

Australian local government has experienced a series of reforms directed at increasing economic efficiency. An important element in the reform program has been the development of a number of partial indicators of local government service delivery in the states and territories. This paper attempts to augment this literature on performance measurement in Australian local government by using data envelopment analysis (DEA) with holistic indices of allocative and technical efficiency in New South Wales (NSW) municipal water services. It also seeks to incorporate qualitative indicators into efficiency measures. “Best-practice” councils are identified and the underlying causes of municipal water service efficiency are analyzed.