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Productive efficiency and the Australian local government grants process: an empirical analysis of New South Wales local government

Worthington, Andrew & Dollery, Brian (2000) Productive efficiency and the Australian local government grants process: an empirical analysis of New South Wales local government. Australasian Journal of Regional Studies, 6(1), pp. 95-121.

Abstract

This paper addresses the role of the Australian local government grants system in promoting efficiency, and examines whether or not the intergovernmental grants process, along with institutional, structural and environmental characteristics, exerts an influence on the efficient provision of local public services. Data envelopment analysis (DEA) is used to obtain measures of technical and scale efficiency across three local government functions; namely, library services, waste management services, and planning and regulatory services. When grant relativities are regressed against these efficiency indices using simultaneous equation tobit models, the results generally indicate that the desired objective of effort (or policy) neutrality is maintained. However, failure to address issues of optimal scale size, amongst others, may force local councils to provide an inappropriately funded scale of operations. The findings also suggest that deviations from the distribution of financial assistance solely on the basis of horizontal equalisation may be a further influence on inefficient outcomes in the local public sector.

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ID Code: 2647
Item Type: Journal Article
Additional URLs:
Keywords: Intergovernmental grants, data envelopment analysis, technical and scale efficiency, local government
Subjects: Australian and New Zealand Standard Research Classification > STUDIES IN HUMAN SOCIETY (160000) > POLITICAL SCIENCE (160600) > Political Science not elsewhere classified (160699)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Public Economics- Taxation and Revenue (140215)
Australian and New Zealand Standard Research Classification > STUDIES IN HUMAN SOCIETY (160000) > POLICY AND ADMINISTRATION (160500) > Public Administration (160509)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Copyright Owner: Copyright 2000 (please consult author)
Deposited On: 24 Nov 2005
Last Modified: 05 Jan 2011 23:25

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