A Factor Analytic Assessment of Financial Sustainability: The Case of New South Wales Local Government

© 2016 CPA Australia Financial sustainability in local government remains a pressing problem which has seen a host of public policy interventions, including compulsory consolidation and performance monitoring through financial sustainability ratios. In September 2014, the New South Wales (NSW) Government announced a reform program centred on increasing scale in local government to make councils ‘fit for the future’. We apply factor analysis to the financial ratios informing the NSW Government's reform initiative to identify the underlying factors for observed financial performance data. We find evidence indicating that three independent underlying factors account for the adopted measures of financial sustainability. The public policy implication arising from this study suggests that the reforms imposed by the NSW Government on NSW municipalities may only meet with limited successa

Summary Execution: The Impact of Alternative Summarization Strategies on Local Governments

Performance management in the public sector, including local government, has become far more pervasive in recent decades. Often performance indicators are summarized into a single score to enhance understanding and ease dissemination. However, the summation of performance indicators caries a risk that the rating assigned may largely be an artefact of the summarization strategy rather than an accurate representation of municipal performance. We employ the recent evaluation of New South Wales’ municipal performance to demonstrate that the performance indicator compilation strategy is indeed a major determinant of the ratings assigned to local councils. Moreover, we illustrate how ratings may exert a constitutive effect on municipalities by altering organizational behavior. A number of policy lessons are drawn from our empirical analysis, including significant methodological considerations and the need for higher levels of transparency

The Price of Democracy?: Political Representation Structure and Per Capita Expenditure in Victorian Local Government

Local government systems across the world face acute and ongoing fiscal challenges. In Australia, the regulatory response has focused squarely on council consolidation. This has, unfortunately, meant that comparatively little attention has been paid to alternate, less disruptive methods for enhancing municipal sustainability. One such possibility lies in modifying the structure of local political representation. We conduct a number of estimations on a four-year panel of Victorian municipal data to test whether the “law of 1/n” has empirical support at the local government level. Our results clearly show that the number of geographically defined fragments, or wards, within a given municipality is a statistically significant determinant of local government expenditure. A number of public policy recommendations follow from the empirical evidence that might be broadly applicable to other municipal systems

Is There a Case for Mandating Directly Elected Mayors in Australian Local Government? Lessons from the 2012 Queensland Local Government Elections

© 2015 Institute of Public Administration Australia. A 'semi-executive' model for Australian mayors, inclusive of direct election, is presently being explored in the Australian local sector (see, in particular, Sansom, 2012). This paper takes advantage of the differences across Australia's federation to examine the recent experience of directly elected mayors in Queensland, especially the results of local government elections held in 2012. It is argued that several factors contributed to the high turnover rates of both mayors and councillors, including the 2012 Queensland state election and the 2008 amalgamation process. However, the requirement for directly elected mayors was an important factor contributing to what the Local Government Association of Queensland (LGAQ, 2012, 12) described as a 'significantly high' proportion of 'corporate knowledge' being lost. Moreover, the direct election of mayors, in particular those charged with 'semi-executive' authority, is fraught with problems and thus should not to be implemented in all Australian local government systems

Religion and Life Satisfaction Down Under

© 2014, Springer Science+Business Media Dordrecht. We investigated the association between religious involvement and life satisfaction using panel data from the 2004, 2007, and 2010 waves of the Household, Income and Labour Dynamics in Australia (HILDA) survey. Our study provides strong evidence of an association between attendance at religious services and life satisfaction in the Australian social context. While social resources mediate this association, there appears to be a remaining direct influence of attendance at religious services on life satisfaction. To unravel this association, there is a need to disentangle and separately assess the influence that ‘religious social resources’ and ‘secular social resources’ may have on life satisfaction

A generic approach to conceptualising economic development in Australian local government

Australian local government faces severe financial distress. Several solutions have been suggested to this problem. However, the potential of local economic development to strengthen local government sustainability has been neglected in the Australian context. Given both the immense diversity characteristic of Australian local government, as well as the complexities inherent in local economic development, mainstream theoretical approaches do not provide a satisfactory conceptual basis upon which to consider the potential contribution of local economic development to local government sustainability. This paper seeks to address this conceptual shortfall by presenting an approach to the complexities and paradoxes in local economic development in the Australian institutional context by developing an augmented and modified series of metaphors adapted from Bingham and Mier (1993)

Peas in a Pod: Are Efficient Municipalities also Financially Sustainable?

© 2016 CPA Australia Are efficient councils financially sustainable? We argue that an efficient council may not necessarily be financially sustainable. Our subsequent empirical analysis finds limited evidence in favour of an ‘efficiency–sustainability’ nexus. Thus, policies aimed at improving a council's efficiency may not automatically enhance their financial sustainability. Public policy makers have principally focused on improving the operational efficiency of local government on the presumption that this will result in a more financially sustainable sector. We argue that it is erroneous to assume that an efficient local government entity will necessarily be more fiscally sustainable. To test this argument, we apply an innovative method for empirically testing the association between financial sustainability and operational efficiency to the New South Wales local government system. Our results suggest limited positive associations between financial sustainability measures and municipal efficiency

Institutional vehicles for place-shaping in remote Australia

© 2015 Taylor & Francis. Some communities in remote Australia represent the most impoverished people in the country, with the problem especially acute amongst Aboriginal and Torres Strait Islanders. Effective remedial intervention is often undermined by the absence of democratically elected, local government institutions. Place-shaping as a developmental process enables local people to become agents of change, and thereby self-determine and shape their places for the future. This paper considers the different institutional structures which could underpin place-shaping in remote settlements. Drawing on a range of governance structures, an emphasis on less traditional entities and polity-forming bodies may better serve the interests of remote people

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

© 2017 Institute of Public Administration Australia 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

Vertical consolidation and financial sustainability: evidence from English local government

Proponents of the vertical consolidation of lower-tier units into a smaller number of single-tier local governments suggest that it improves the financial sustainability of governments by generating economies of scale and scope. However, critics suggest that such structural change is beset with disruptive and unanticipated costs that outweigh any potential efficiency savings. I investigate the validity of these contrasting arguments by analysing the expenditure and fiscal health of English county councils before and after the consolidation of the lower-tier units within several counties that took place in 2009. Levels of financial sustainability are modelled using a difference-in-difference estimator for the years 2003–2012. The results suggest that in the short run the consolidated governments have been able to realize administrative economies, but their fiscal health has weakened. These findings appear to be robust to the possibility of selection effects. Theoretical and practical implications are discussed