Reshaping Australia's Local Government: Finance, Governance and Reform

RESHAPING AUSTRALIAN LOCAL GOVERNMENT

RESHAPING AUSTRALIAN LOCAL GOVERNMENT FINANCE, GOVERNANCE AND REFORM

Edited by

Brian Doller y, Neil Marshall and Andrew Wor thington

UNSW PRESS

A UNSW Press book Published by University of New South Wales Press Ltd University of New South Wales Sydney NSW 2052 AUSTRALIA www.unswpress.com.au © UNSW Press 2003 First published 2003 This book is copyright. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. While copyright of the work as a whole is vested in UNSW Press, copyright of individual chapters is retained by the chapter authors. Inquiries should be addressed to the publisher. National Library of Australia Cataloguing-in-Publication entry: Reshaping Australian local government : finance, governance and reform. Bibliography. Includes index. ISBN 0 86840 653 8. 1. Local government - Australia. I. Dollery, Brian. II. Marshall, Neil, 1950- . III. Worthington, Andrew. 352.140994 Printer BPA

CONTENTS

List of contributors Foreword 1

ix xiii

INTRODUCTION

Brian Dollery, Neil Marshall and Andrew Worthington

Outline of the book PA RT A 2

I N T E R N AT I O N A L C O N T E X T

L O C A L G O V E R N M E N T : R E F O R M I N C O M PA R AT I V E PERSPECTIVE

3

11 13

Janice Caulfield

United Kingdom Australia New Zealand Germany The Netherlands Switzerland Sweden North America Japan Other OECD countries The data Analysis Conclusion PA RT B

1

4

FINANCE

FINANCING LOCAL GOVERNMENT IN AUSTRALIA

20 21 21 22 23 23 24 24 25 26 28 28 32 35 37

Andrew Johnson

The nature of the problem

38

VI

4

•

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

The genesis of the problem Commonwealth financial assistance grants Managing the problem Conclusion

41 53 59 62

LOCAL GOVERNMENT FINANCIAL REPORTING

64

Christine Ryan

5

External reporting Conclusion

64 77

A M A L G A M AT I O N A N D V I RT U A L L O C A L

79

GOVERNMENT

Paul May

Characteristics of Australian government Tensions between efficiency and democratic representation Pursuing the economic panacea: optimum size Virtual governments Chasing the pot of gold Conclusion PA RT C 6

80 85 87 89 91 96

G OV E R N A N C E A N D M A N AG E M E N T

99

REASSERTING LOCAL DEMOCRACY?

101

Rosemary Kiss

7

What is community? Community and local government legitimacy Local government, democratic representation and the franchise Conclusion

105 107 111

MANAGEMENT REFORM IN LOCAL

117

GOVERNMENT

8

115

Geoff Baker

Top-down management reform — the role of the States and the Commonwealth Local government and the new public management Conclusion

118 124 137

THE ROLES AND RESPONSIBILITIES

139

OF CHIEF EXECUTIVE OFFICERS AND COUNCILLORS IN AUSTRALIAN LOCAL G O V E R N M E N T : A C O R P O R AT E G O V E R N A N C E PERSPECTIVE

Neil Marshall

The context of corporate governance The public sector

140 141

CONTENTS

Corporate structure in local government The role of councillors The role of chief executive officers Some corporate governance perspectives Conclusion PA RT D 9

•

VII

142 144 147 152 155

POLICY REFORM

157

POLICY NETWORKS AND LOCAL GOVERNMENT 159 Joe Wallis

Local government involvement in multi-organisational partnerships (MOPs) Overcoming co-ordination problems through alternative governance mechanisms The capacity of councils to supply local governance Conclusion 10 LOCAL GOVERNMENT EFFICIENCY MEASUREMENT

11. LOCAL GOVERNMENT FAILURE

Brian Dollery

Taxonomies of local government failure A new taxonomy of local government failure Conclusion FUTURE DIRECTIONS

171 175 176

LOCAL GOVERNMENT

179 181 186 188 195 198 212

213 215 228 229

12 FUTURE DIRECTIONS FOR AUSTRALIAN

231

Brian Dollery and Neil Marshall

The achievements of Australian local government Future directions References Index

161

Andrew Worthington

The theory of efficiency measurement Efficiency measurement techniques Problems in measuring local government efficiency Studies measuring efficiency in local public services Determinants of local public sector efficiency Conclusion

PA RT E

160

232 238 251 268

CONTRIBUTORS

Geoff Baker has worked on reform of the legislative framework for local government in Queensland since 1989. His roles have included being instructing officer for the development of Queensland’s new Local Government Act in 1993. He was appointed to the Queensland Government’s Senior Executive Service in 1994. He has also had parttime academic roles at a number of universities in Queensland since the early 1990s. He is currently undertaking further postgraduate studies at the Australian Graduate School of Management. Janice Caulfield is Research Assistant Professor in the Department of Politics and Public Administration, University of Hong Kong, where she teaches public sector management and public policy analysis. Her current research interests include performance and accountability in the public sector, public sector reform and development administration. She is co-editor with Helge O. Larsen of Local Government at the Millennium, which was published in 2002 by Leske and Budrich. Brian Dollery is Professor in the School of Economics at the University of New England, Armidale, and Visiting Professor in the International Graduate School of the Social Sciences, Yokohama National University, Yokohama, Japan. He has previously held academic positions at the University of South Africa, Rhodes University, East Carolina State University, the University of Cape Town and Creighton University. Brian has published extensively on the economics of Australian local government and is a founding member of the University of New England’s Centre for Local Government. Together with Neil Marshall, Brian coedited Australian Local Government: Reform and Renewal in 1997.

X

•

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Andrew Johnson is the Director of Finance and Administration of Guyra Shire Council in New South Wales. Andrew holds an MBA degree from the University of New England (specialising in local government) and is a chartered public accountant. He is presently working on a doctorate at the University of New England dealing with the financial problems confronting contemporary local government in Australia. Rosemary Kiss is Senior Fellow in the Department of Political Science at the University of Melbourne. She served as an elected councillor for some years in Melbourne and is a past member of the Victoria Grants Commission. She has published widely in the area of local government. Along with Peter Johnstone, she co-edited the 1996 volume, Governing Local Communities — The future begins. Neil Marshall is Associate Professor in the School of Social Science at the University of New England and teaches in the areas of Australian politics, public policy and public sector management. He has published a number of articles and edited volumes in these areas, including the 1997 book Australian Local Government: Reform and Renewal, which he co-edited with Brian Dollery. Neil is a founding member of the Centre for Local Government at the University of New England. Paul May has 29 years experience in local government. He spent 23 years working in planning departments at Manly, Shellharbour and Eurobodalla Councils in New South Wales. For thirteen of those years Paul occupied senior management positions. In 1997 he established Planning Initiatives, his own consultancy practice specialising in local government policy, research and urban and rural planning. Paul assisted Professor Kevin Sproats on the Inquiry into the structure of local government in eight council areas in the inner city and eastern suburbs of Sydney. He is presently completing a PhD with the University of Technology, Sydney, that involves examining approaches to regional governance. Christine Ryan is Senior Lecturer in the School of Accounting at the Queensland University of Technology, Brisbane. She has published a number of papers on accounting standards and the Australian public sector. Joe Wallis is Senior Lecturer in the Department of Economics at the University of Otago, Dunedin, New Zealand. Joe holds a PhD in economics from Rhodes University and has previously held academic positions at Rhodes University and the University of Cape Town. He has

C O N T R I B U TO R S

•

XI

co-authored Market Failure, Government Failure, Leadership and Public Policy and The Political Economy of Local Government (both with Brian Dollery). Joe has also written extensively on organisational leadership and the public sector during periods of comprehensive public sector reform. Andrew Worthington is an Associate Professor in the School of Economics and Finance at the Queensland University of Technology, Brisbane. Andrew has a PhD in financial economics from the University of Queensland and has previously worked in both economics and finance at the University of New England. He has published widely in the area of public sector economics, and especially on the measurement of efficiency in the public sector. Andrew has also produced considerable research output on the efficiency and productivity of the Australian financial sector. The past year has been personally difficult for him and he especially thanks his family and friends for their loving support during this time. He dedicates his contribution to the fond memories of his wife Leanne Michelle Cummings.

FOREWORD

As we enter the new millennium with new global configurations the need for strong structures of governance at the sub-state and local levels is increasingly important. Despite the reform initiatives of the latter years of the twentieth century, in this country local government structures remain largely as they were at the beginning of the century. There may be fewer of them, and they may be providing a different range of services more efficiently, but by and large they still reflect their antecedents. Local governments are not universally valued highly by citizens. Too often they are seen as havens for self-seeking politicians and over-regulating bureaucrats. A recent publication by the United Nations Centre for Human Settlement (2001) raised challenges for governance in our cities, including: •

to ensure the benefits of globalisation are shared more equally;

•

to redress the unbalanced emphasis on economic growth and accumulation of wealth by placing renewed emphasis on social justice and environmental sustainability;

•

to develop enabling strategies that include support for the exercise of citizenship;

•

to provide local government with more political legitimacy, responsibilities and resources;

•

to develop co-operative partnerships between government, private sector and civil society;

•

recognition that the complementarity of civil society and government is at the core of good governance.

XIV

•

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

In October 2000 I was commissioned by the New South Wales Government to conduct an Inquiry into the structure of local government in eight council areas in the Inner City and eastern suburbs of metropolitan Sydney (Sproats 2001). At the end of that Inquiry in May 2001 I came to the firm judgement that local government structures in the area should be recast to provide fewer, better resourced, more strategically focussed councils. The very few voluntary attempts at structural reform in NSW up to that time had involved simplistic amalgamations of two or more adjoining councils. But the Inquiry found that restructuring needed to be substantially broader than simply achieving scale. It also highlighted the imperative of more strategically focused attention to the characteristics and aspirations of suburbs at one level and regions at another level. In general I found that while the present structures of councils had provided services and facilities to their communities with varying levels of satisfaction, there were significant inadequacies in their fundamental operations. These related especially to: •

deficient strategic planning;

•

inadequate formulation and communication of policy and sustained commitment to it;

•

minimal regional perspective and focus;

•

poor inter-governmental cooperation;

•

unresolved aspects of the roles and functions of mayors and councillors;

•

inability to manage cross boundary issues, particularly on several key region-level sites;

•

inequitable distribution of, and access to, resources.

A voluntary approach had proven to be not sophisticated enough to achieve this scale and scope of reform. I argued that recasting was needed, recasting of what local government was, what it did, and how it did it. No significant change has yet emerged from either local or state governments as an outcome of the Inquiry. Equally, I have lamented at the limited debate on the big questions of transformation of local government and recasting of council structures. I am delighted that the editors of this volume have drawn together academics and practitioners to address some of the issues raised in the international forums and those to emerge from my local Inquiry. Strong, highly valued local government in Australia is essential. The contributions here provide substance to the debate. Professor Kevin Sproats University of Western Sydney

1 INTRODUCTION Brian Dollery, Neil Marshall and Andrew Worthington

Scholars have invested a vast amount of effort into the theoretical and empirical analysis of government in representative democracies. Despite this impressive literature, local government can nevertheless justly be described as the poor cousin of its more exalted state and federal relatives in terms of the attention it has drawn from the research community. At least three factors may explain the existence and persistence of this unfortunate state of affairs. In the first place, in many advanced economies expenditure by local government often comprises a relatively small proportion of total public sector outlays and thus it may have been construed as somewhat less deserving of scholarly inquiry than relatively larger provincial and central governments. This certainly appears to have been the case in Australia where around 730 municipalities outlay $13 billion, representing some five per cent of total government expenditure or about 1.6 per cent of gross domestic product (NOLG 2001). Secondly, even when local government expenditure in absolute terms is high — and $13 billion can hardly be deemed negligible in the Australian context — the constitutional fact that local governments are typically statutory creatures of higher tiers of government generally implies that they are manipulated and constrained by state and federal governments. Most scholars of government have thus focused on these higher levels of governance in their attempts to account for the behaviour of local governments. The constitutionally subordinate nature of local government in Australia is vividly illustrated by the fact although both the Commonwealth and state and territory governments are enshrined in the Australian Constitution, local government has no constitutional standing at all. Thus all local authorities in Australia derive

2 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

their powers and functions exclusively from state and territory legislatures through state acts and regulations. Finally, and perhaps in large part due to its residual status, in many countries local government has a historically inchoative and metamorphic character in more or less constant flux. For instance, in his analysis of British local government, Stewart Bailey (1999, p.4) has noted that ‘the ill-defined status of local government combines with changing perceptions of local autonomy, accountability, equity and the need for macroeconomic control, causing the relationship between central government and local government to be in a continuous state of change’. The federal nature of the Australian polity adds further complexity to this characteristic of local government since each of the eight states and territories can bestow different roles and functions on their systems of local governance at mere legislative whim. Thus the capricious and quixotic character of municipal governance seems to have discouraged scholars from investing time and energy in its investigation. Despite the comparative paucity of research directed at local government in Australia and elsewhere, municipal managers and elected representatives are nevertheless obliged to formulate and implement policy in an increasingly complex environment. It need hardly be stressed that this onerous task is made even more difficult without the guidance that could be derived from disinterested scholarly inquiry. There is thus an urgent need for accessible published research to inform policymaking. The present volume seeks to meet this need by presenting the views of a range of scholars on questions of concern in contemporary Australian local government. The complexities of Australian local governance and its multi-faceted nature mean that no single academic discipline is capable of providing an adequate conceptual basis for a thorough coverage of all its dimensions. For instance, the statutory service obligations imposed on local authorities in Australia, with their continued, if diminishing, emphasis on ‘services to property’, necessarily imply a strong engineering focus to tackle thorny questions surrounding the development and maintenance of physical infrastructure, like roads, sewerage systems and water reticulation. Urban planning and related disciplines also offer insights into these questions. A second area of concern involves the prudent and imaginative management of financial, human, physical and other assets held by councils. Law, and various business specialties, such as accounting, auditing, economics, finance and management, can shed light on perceived problems in this area. Similarly, local governments have been increasingly

INTRODUCTION

• 3

drawn into the provision of ‘services to people’ and have thus fallen into the realm of policy analysis, social work and sociology. Economic development and the allied problems of urban growth, environmental and heritage management require additional sources of expertise. The democratic dimension of local government, as well as its relationship to other tiers of governance under the federal constitution of Australia, raise issues intrinsically bound up with political representation and fiscal federalism, and thus call for the specialised knowledge of political scientists. Finally, the turbulent nature of the local government policy milieu and the increasing demands placed on it by both citizens and higher levels of government require an advanced awareness of the nuances of policy formulation deriving from economics, policy analysis, public administration and several other social sciences. These considerations bespeak the necessity of a multidisciplinary approach to contemporary Australian local government. Accordingly, in this book we have sought to draw upon the expertise of contributors from a wide range of academic disciplines. Since our focus falls on the socio-economic rather than engineering aspects of current local government, the authors in this volume write from a social science and business discipline perspective. It is hoped that the result is a policy-orientated view of Australian local government in the twenty-first century that combines state-of-the-art conceptual developments in the various disciplines with contemporary policy dilemmas. Our aim has been to provide decision makers in local government with a sound analytical basis for policy formulation and implementation. The complexities of local government and its relative neglect by scholars imply that various caveats should be appended to any analysis of Australian local government. While the terms ‘local government’, ‘municipality’, ‘council’, and ‘local authority’ are used synonymously throughout this book to describe democratically elected sub-central governments with legal jurisdiction over spatially limited areas, they nonetheless all describe a tier of government characterised above all else by diversity. After all, while some municipalities serve large populations in big cities with budgets measured in billions of dollars, their much more modest cousins may attend jurisdictions with a mere handful of people. Similarly, whereas some local authorities embrace areas comprised largely of commercial and industrial activity, others preside over widespread rural constituencies. Moreover, under current intergovernmental financing arrangements, councils with different demographic and geographic characteristics face different funding regimes.

4 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Compounding these complications, a given municipality with identical spatial and socio-economic characteristics will confront different financial circumstances in different Australian states. The high degree of diversity in Australian local government is thus cause for caution in extrapolating policies in a ‘one-size-fits-all’ manner. A second caveat attaches to the policy role assigned to local government. It is possible to identify two diametrically opposed approaches to the question of appropriate policy making at the local government level. In the first place, elected representatives and municipal managers can adopt a ‘minimalist’ position and seek to reduce the gap between rising expectations on the part of the public and higher tiers of government and their limited ability to meet these expectations by sticking to their historical ‘core’ functions of ‘services to property’. Alternatively, councils can pursue a more ‘activist’ posture and attempt to play a catalytic role in the economic and social development of their communities by expanding ‘services to people’. While the constitutional status of Australian local government undoubtedly places heavy constraints on the capacity of councils to determine independently their policy stance, scope nevertheless exists for at least some choice. It should be stressed that the selection of a policy role along the ‘minimalist’/’activist’ continuum derives at least as much from ideological imperatives as ‘pragmatic’ considerations and thus depends partly on ethical factors immune to rational analysis.

OUTLINE OF THE BOOK With these considerations in mind, the text is divided into five main sections. Part A sets the scene by providing an overview of the salient characteristics of Australian local government and locating Australian local government in the wider context of international local governance. Part B focuses on the financial environment in which local government operates. It explores some of the critical issues and problems and suggests possible solutions. Part C deals with governance and management: it examines the changing conceptions of governance and management over the past decade and investigates their implications for councils. Part D provides an analysis of policy reform in Australian local government. In particular, the question of policy formulation and policy networks is considered, the issue of efficiency measurement and improvement discussed and the problem of local government ‘failure’ investigated. Part E concludes the volume by distilling its major themes and considering future directions. A full index and bibliography are included.

INTRODUCTION

• 5

In Chapter 2 Janice Caulfield considers the extent of recent managerial reforms in Australian local government from an international perspective. She attributes the global growth of the New Public Management (NPM) since 1980 to the requirement for local authorities to cope with a declining resource base and the need to respond to rising public expectations for improved services. The particular focus of the chapter is upon explaining the cross-national variations evident in the implementation of the NPM; why some countries have become leaders while others have lagged behind. She suggests that fiscal autonomy — the degree of discretion which local authorities have over their sources of finance — may be a critical variable in explaining outcomes. To test this hypothesis, Caulfield discusses the scope and substance of the NPM reforms across eleven nations and assesses their level of advancement in terms of eight established benchmarks. Each country’s level of NPM development is then combined with indicators of fiscal autonomy. The chapter concludes that systems with low levels of fiscal autonomy are likely to be at the forefront of the NPM reform. Yet the reverse proves not to be true; nations with high levels of fiscal autonomy were also found to be NPM leaders. In these cases, however, the initiators of reform were central governments rather than the local authorities themselves. In Chapter 3, Andrew Johnson examines the economic dilemma confronting contemporary local government in Australia. He argues that municipalities face not only rising expectations from their key constituencies for more and better local services, but also heightened demands from both state and Commonwealth governments to assume greater responsibilities for service delivery and infrastructure maintenance. At the same time, municipalities encounter severe restrictions on their revenue-raising capacity. The inevitable result of escalating costs and constrained funding is a growing ‘community expectations/funding gap’ that threatens the very future of efficient and responsive local government in Australia. After considering the nature of the financial problems afflicting Australian local government, Johnson examines a number of significant expenditure pressures, including the devolution of functions from higher tiers of government, ‘raising the bar’, cost shifting, increased community expectations and inefficiency in municipal operations, as well as the Commonwealth Financial Assistance Grant system. Various methods of ‘managing the problem’ are outlined, not least dampening expectations, improved efficiency and transparency, and financial assistance from higher levels of government to accompany the devolution of responsibility.

6 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

In Chapter 4, Christine Ryan deals with the financial reforms undertaken in Australian local government over the past decade and the current state of financial reporting by councils. A cornerstone of these reforms lay in the shift away from cash-based accounting methods to accrual accounting. The accounting standard set out in AAS 27 Financial Reporting by Government has been mandated by almost all local government regulators in Australia and obliges municipalities to report on an accrual basis and value assets at current cost. A major feature of AAS 27 is its assumption that local government authorities have general-purpose users: that is, users who wish to know about the financial affairs of councils and who do not normally have access to financial information. A second important attribute of AAS 27 resides in the fact that it uses the same framework to develop private and public sector accounting standards. Ryan questions the appropriateness of both of these characteristics for Australian local government. She argues that the massive diversity of local government in respect of size, asset base and geographic location may mean that a ‘one-size-fits-all’ financial model may not be optimal. In particular, one of the chief purported advantages of the application accrual accounting standards to local government was supposed to be comparability of financial information between different councils. Ryan examines how problems associated with the valuation of assets, depreciation and revenue recognition have complicated this goal. In Chapter 5, Paul May tackles the explosive issue of local government amalgamations in Australia. After reviewing the scale of Australian municipal consolidation from 1910 through to 2001, May conducts a detailed evaluation of the various factors underlying the case for fewer and larger local authorities: in particular, he develops a very useful distinction between ‘primary motivational factors’ and ‘secondary motivational factors’. The chapter then discusses tensions arising from the purported trade-off between economic efficiency and local democratic representation, a problem that goes to the heart of the controversy surrounding amalgamation. The related question of potential economies of scale and scope that may derive from larger local government is examined, together with the thorny empirical issue of whether it is possible to identify an ‘optimal’ size for local government. In contemporary policy debates some commentators have sought to avoid ‘all-or-nothing’ policy choices between larger, more ‘efficient’ councils and their smaller, more ‘responsive’ counterparts by proposing the concept of ‘virtual councils’. May explores this line of argument fully,

INTRODUCTION

• 7

pointing out its similarities with earlier ‘resource-sharing’ suggestions also aimed at reducing potential trade-offs between economic efficiency and democratic participation in local governance. In Chapter 6 Rosemary Kiss disputes the widely held perception that the local government reforms of the 1990s reinforced community participation and constituent involvement. Rather, she suggests, state legislative changes in fact weakened the democratic legitimacy of the third tier. There are two dimensions to her argument. First, the notion of ‘community’ has become so vague as to be meaningless. The concept can be easily redefined by committees of inquiry in terms of particular interests, or as circumstance demands. Moreover, community can be claimed by both state and federal agencies; it is no longer the preserve of municipalities. The extent to which the concept of community has become devalued, Kiss claims, is evident in the amalgamation programs of the 1990s where it seemed to count for little. Second, Kiss asserts that citizen participation cannot become a substitute for representative democracy. Councillors alone are responsible for making decisions and it is therefore vital that the manner of their election has integrity. Kiss demonstrates that this is not so. While other levels of government are based on citizenship and residence in an electoral district, local government in many states is subject to property-based, non-resident plural voting. Kiss concludes that local government in Australia will not be considered a sphere of democratic government until proper representative democracy is restored. In Chapter 7 Jeff Baker considers the nature of the managerial revolution that has substantially altered the way Australian local governments operate over the last decade or so. Baker explains how the traditional bureaucratic hierarchies on which councils were based in the early 1980s have given way to the precepts of the NPM. Municipal activity is now shaped by a corporate ethos embracing such features as corporate planning, performance measures, an emphasis on generic executive skills, and devolution of authority. He argues that the new management style has been shaped to a considerable extent by legislative changes and policy initiatives imposed by higher levels of government. Despite the influence of state and Commonwealth agencies, however, Baker points out that individual councils have themselves often taken the lead in terms of introducing new strategic initiatives. The second half of the chapter looks first at the Victorian experience, and then considers the impact of National Competition Policy (NCP) on the other states. Victoria is singled out for analysis because of the

8 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

radical nature of the reform program which was implemented, particularly compulsory competitive tendering. The manner in which NCP has affected the function of local governments in the other states and territories is explored in some detail by Baker. The chapter concludes with a discussion on the need to integrate efficiency concerns with democratic principles. In Chapter 8 Neil Marshall explores the nature of the relationship between chief executive officers (CEOs) and councillors in local government. This has been a problematic issue within the sector for a long time. State legislation enacted during the 1990s attempted to resolve the problem by clarifying the respective roles and responsibilities of elected members and senior management. Marshall argues that the outcome of this attempt was only partially successful and significant obstacles remain. The functions that councillors are expected to carry out have become very demanding and are simply beyond the capacities of many citizens to fulfill. Consequently, when in office, such people become heavily dependent upon the CEO for advice and direction. Normally this situation would place the CEO in a position of considerable power within the council. The move to contract appointments, however, has left the senior manager in a much more uncertain and vulnerable position. The overall outcome is that the relationship that develops between councillors and CEOs may be less than constructive and can create real difficulties for the operation of the municipality. Marshall suggests that one way of resolving this problem is to move towards a corporate governance model. Such an approach, he asserts, will not only improve effectiveness, but also help to strengthen democratic values. In Chapter 9, Joe Wallis examines the role of policy networks and policy entrepreneurs in the development and evolution of local government policy in Australia. Markets, hierarchies and networks can all be seen as alternative solutions to the horizontal coordination problems that arise when the relationship between local authorities and both central and state government agencies and non-government organisations is characterised by ‘resource dependency’. Under the federal system of government in Australia, the problems of resource dependency are exacerbated by a high degree of vertical fiscal imbalance, with the Commonwealth government accruing most revenue and then dispensing some of these monies to state and local governments. Wallis argues that policy networks might enable local governments to alleviate the resultant burdens of ‘doing more with less’ by involving themselves in ‘multi-organisational partnerships’. He considers the problems inherent

INTRODUCTION

• 9

in coordinating these implementation structures, before undertaking a comparative institutional analysis of markets, hierarchies and networks as alternative governance mechanisms. The analysis then focuses on the capacity of Australian local government to deploy each of these different mechanisms. In Chapter 10, Andrew Worthington examines the question of economic efficiency in Australian local government and its empirical measurement. After a brief outline of the theory of efficiency measurement, the chapter provides a synoptic review of the different techniques employed for the measurement of local public sector efficiency. The author then investigates the various ways in which public sector provision of services differs from that of the private sector and the implications these differences hold for the measurement of efficiency in local government. The chapter then provides a very useful survey of the literature on the empirical measurement of inefficiency in local public services, both in Australia and elsewhere. With this empirical evidence in mind, the discussion focuses on the determinants of local government efficiency. The chapter concludes with various caveats concerning the application and interpretation of efficiency measurement in the context of a highly differentiated local government system, such as that found in Australia. In Chapter 11, Brian Dollery draws on the generic phenomenon of ‘government failure’, or ‘the inability of public agencies to achieve their intended aims’, and seeks to apply this public choice approach to the problem of local government failure in Australia. The chapter begins with a review of the relevant literature on government failure in general and local government failure per se. He then develops a new five-fold taxonomy of local government failure that includes ‘voter apathy’, ‘asymmetric information and councillor capture’, ‘iron triangles’, ‘fiscal illusion’, and ‘political entrepreneurship’. In contrast to the conventional wisdom, which holds that government failure is likely to be more acute at higher levels of government, he contends that municipal councils are especially susceptible to local government failure, despite being ‘closer to the people’. Moreover, this can substantially impair their capacity to deliver and provide services efficiently. The typology developed by Dollery provides a very useful conceptual tool for Australian local government policy makers to employ in any analysis of actual councils. Finally, in Chapter 12 Brian Dollery and Neil Marshall draw together some of the broader insights which have emerged from the preceding contributions and ponder desirable future directions for the sector. The first part of the discussion assesses recent achievements in the areas

10 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

of management, democracy and finance, and considers some of the problematic issues that remain to be confronted. The second half of the chapter looks at possible ways of meeting these concerns. In particular, it is suggested that developing sound intergovernmental consultative bodies in the form of state–local government partnerships, and linking such structures to regional organisations of councils, offers a constructive way forward. So too is enhancing the efficiency and effectiveness of municipal service delivery by entrenching the principle of comparative advantage in all of its operations. The chapter concludes by emphasising the need to raise community awareness about the value of local government through wider public discourse and establishing relevant university studies.

PA R T A I N T E R N AT I O N A L CONTEXT

2 L O C A L G O V E R N M E N T: R E F O R M I N C O M PA R A T I V E P E R S P E C T I V E Janice Caulfield

An international survey of local government reveals a wide variety of organisation and governance models, but despite this diversity, reform trends of the last twenty years suggest a convergence in thinking about solutions to common problems. Key among these trends has been structural reforms which target jurisdictional arrangements and represent, in some cases, a significant departure from traditional approaches to local self-government and administration; and process reforms that focus on political and administrative action. Structural reforms include a reorganisation of functions between levels of government and a redrawing of boundaries, often to create a new space for regional level government, a feature of reform developments in several countries in recent times. No less significant have been the numerous changes in process, which include administrative and management reforms on the one hand, and political reform (electoral and leadership changes) on the other. Australian local governments have not escaped these global trends, and over the last twenty years have experienced wide-ranging reforms (in varying degrees in different states) embodying all of these dimensions, as the chapters in this volume testify. This chapter examines one aspect of the reforms, often described in the literature as ‘new public management’ or NPM, a powerful concept and set of practices which has gripped national governments in many countries world wide.1 Equally, in the closing decades of the twentieth century, new management and governance ideas had a wide appeal and impact on local government. Ideas about ‘institutional standards’ and ‘what is a good organisation’ became paramount and were encapsulated in the NPM doctrine. New public management can be summarised

14 •

I N T E R N AT I O N A L

CONTEXT

as a new instrumentalist view of bureaucracy and an approach centred on management rather than the traditional approach to administration based on public law. Hood (1996) has identified seven elements or ‘dimensions’ of NPM as follows: 1

variations in the degree of hands-on management (that is, the degree of active control of public organisations by visible top managers wielding discretionary power);

2

variations in the degree to which public organisations operate with explicit and measurable (or at least verifiable) standards of performance in terms of the range, level and content of services to be provided;

3

variations in the degree to which public organisations are controlled by output measures (particularly in pay-based, on-the-job performance rather than rank or educational attainment;

4

variations in the degree to which public organisations are disaggregated into separate self-contained units, rather than operating as a single aggregated unit;

5

variations in the degree to which organisations within the public sector formally compete with one another and with private organisations for the pursuit of particular tasks, rather than having semipermanent ‘ascribed’ roles;

6

variations in the degree to which organisations within the public sector conduct business or use management practices that are broadly similar to or different from those employed in the private corporate sector;

7

variations in the degree to which public sector management stresses discipline and parsimony in resource use.

Most usually portrayed in local government discourse as a ‘modernisation and efficiency’ agenda, its features are in most cases identical to those identified by Hood. To Hood’s list can be added an eighth dimension which has a particular resonance for local government. This dimension may be called ‘clientalism’ and refers to the recasting of citizens as clients, a popular and parallel development in NPM. Clientalism includes a range of techniques designed to engage the taxpayer as consumer of government services and thus, it is argued by the reformers, to impose a discipline on the provider of those services. The techniques used include public consultation, citizens’ charters, performance pledges, stakeholder engagement through partnerships and the like. Clientalism as a reform feature is not exclusive to the local government sector, but it has possibly been given greater emphasis at the local level because, in many countries, the bulk of public services are provided by local government.

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 15

What does the global trend to NPM tell us about the changing nature of local government? In a recent publication, Helge O. Larsen and myself made the case that there is a strong normative aspect to local government reform (Caulfield and Larsen 2002). Following Meyer and Rowan (1977), we argued that the quest for legitimacy is a dominant one for local government, but that legitimacy cannot be achieved by attending only to functional requirements and the technical environment. In their efforts to maintain legitimacy, local governments window dress in order to be in tune with the institutionalised norms and standards that are dominating in their environment. In this sense, the ‘reform movement’ itself illustrates a convergence, if only by means of a policy fashion. There is, however, a more practical set of explanations for the popularity of management reform and the direction it has taken. Local governments of the period since the global economic crisis of the 1970s have faced two conflicting pressures. The first is declining revenues; intergovernmental transfers and the ability to tax have diminished while demands for increased services have continued to grow. The second has been rising expectations on the part of citizens for improved public services. This has been described as an ‘equalling up’ of public expectations derived from experience of private sector services and imported into public sector contexts (Pollitt and Bouckaert 2000). For the reformers, the solution has been to organise government in such a way that more can be achieved for less or at least a belief in the possibility. In this respect, there has been a notable convergence across countries of problems faced and solutions available, especially those with an NPM flavour. The aim of this chapter is not to describe the reform experience of other countries in great detail, but rather to offer a comparative look at developments and consider how cross-national variations in the uptake of NPM might be explained and what this can tell us about local government systems more generally. Such a perspective implies, in the first instance, attention to methodology, which means identifying suitable variables and indicators of comparison. There have been several attempts made by others using the comparative method to explain the widespread adoption of NPM at the national level. With the exception of some casual comparative observations, however, no systematic crosscountry comparisons of NPM’s development within the local government sector have so far emerged (Bekke et al, 1996; Pollitt and Bouckert, 2000; Schedler and Proeller 2002). What this kind of analysis requires is the development of some cross-national indicators of reform and the identification of a set of independent variables that have

16 •

I N T E R N AT I O N A L

CONTEXT

a universal application and against which a ranking of countries according to their NPM status can be measured. To achieve these aims, I have borrowed from the work of Christopher Hood (1996), who adopted a similar method in testing hypotheses about new public sector management in relation to national governments. However, unlike Hood, who was able to look for answers in a much greater available range of statistical information (such as GNP figures and individual country responses to OECD questionnaires), local government data that allows for systematic cross-national comparison is more limited. Notwithstanding these limitations, there is data available in a sizeable number of country-specific case studies which describe new managerial reforms at the local level. The picture drawn from these studies shows considerable diversity among local government systems in the adoption of NPM, but a diversity that reveals within it clear patterns of development. For example, in the Anglo speaking countries it is national governments that have typically been the ‘leaders’ in NPM development (or at least the initiators of reform), while in other national jurisdictions it is local government that has lead the way (most Continental countries for example). These country variations give us an opportunity to examine public management reform and speculate whether it is, indeed, a converging process or is contingent on national factors. Various theories have been advanced for what drives reform: economic hardship, imitation, competition between governments and, as suggested above, the need to seek legitimacy in an environment of public distrust. While these are plausible arguments, for purposes of cross-national comparison they are difficult to measure. An important variable in local government, which may act as a benchmark and help shed light on the question of why one local government system is a ‘leader’ in managerial reform while another remains a ‘laggard’, is that of local autonomy2. The concept of autonomy arose from notions of political separateness in local government, its adherents arguing that because local government is closest to its citizens, it is in the best position to represent their interests. While this ‘grass roots’ notion of democracy assumes an autonomy and freedom from interference by higher tiers of government, in practice this has rarely been the case. Any examination of central-local relations, be it administrative or financial, shows real limits to local autonomy. In all countries, centrallocal relations are at the heart of the local government reform experience, if not directly at least implicitly. Reform agendas are often imposed on local government by national and regional governments,

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 17

and for this reason local government has typically been seen as highly subordinated. On the other hand, local autonomy continues to be an important legitimising principle for local government, and recent structural reforms have lead some commentators to see the intergovernmental relationship as one of ‘negotiated partnership’ rather than as centrally directed (Baldersheim, 2002). Local government reformers too, have seen local democratic vitality as a necessary corollary of managerial and boundary reforms (Marshall and Sproats 2002). The question then becomes one of how to measure local autonomy. While autonomy may be represented along several dimensions (constitutional, political, financial), finding adequate and comprehensive cross-national data which can be measured is extremely difficult. One, immediately available source comes from the OECD, which collects local government finance statistics on an annual basis (OECD Revenue Statistics for Sub-central Governments). A widely used indicator of fiscal autonomy has been the degree of discretion local government has over its revenue source. This is typically measured by the size of a local government’s ‘tax share’ of its total budget. It is recognised by the OECD, however, that fiscal autonomy is a more complex matter and that ‘tax share’ in itself is not a completely satisfactory indicator of financial autonomy. Accordingly, autonomy is seen to be greatest in countries where local governments are free to determine both the taxable base and the rates of a particular tax, without any aggregate limits on revenues, base or rate enforced by the central government (OECD 1999a). The OECD has established five categories of tax autonomy, in descending order as follows: 1

local government sets tax rate and tax base

2

local government sets tax rate only

3

local government sets tax base only

4

tax sharing arrangements (a) local government determines revenue-split (b) revenue-split can only be changed with consent of local government (c) revenue-split fixed in legislation, may unilaterally be changed by central government (d) revenue-split determined by central government as part of the annual budget process

5

central government sets rate and base of local government tax

18 •

I N T E R N AT I O N A L

CONTEXT

While some work has been done on these more sophisticated measures of fiscal autonomy (OECD 1999b), the comprehensive data set still relies on the simple measurement of ‘tax share’. There are, however, two other revenue categories from the OECD annual data which help to give a more complete picture of fiscal autonomy. These are: (a) non-tax sources of revenue (fees, charges etc.) (b) grants from central government

Non-tax sources of revenue, while still only a relatively minor part of local government budgets, have been of growing importance for many countries in recent times. The problem of declining local revenues in the 1990s was partly ameliorated in some countries by a substantial increase in fees and user-charges. In North America, user-charges are viewed as both highly efficient and politically acceptable on the presumption that, unless the service provided is a pure public good or the policy intent redistributive, then local services should be charged for (Bird and Slack 1991). Countries which have relied most heavily on ‘non-tax’ forms of income are Finland, the Netherlands, United Kingdom, Ireland, Austria, Germany, and Switzerland. In Finland, non-tax revenue more than doubled between 1980 and 1995. In Norway, the Netherlands, France and Spain there was also growth, although not of the same magnitude. To the extent that they have been able to expand their non-tax source of revenue, local governments in these countries have demonstrated residual powers of fiscal autonomy. By contrast, in Sweden and Iceland there was a marked decline in non-tax revenue as a proportion of own-source revenue over the same period. In the United Kingdom and New Zealand, there was also a marked decline, but in these latter cases, privatisation of local government enterprises has been a major contributing factor (Stoker 1999; Martin 1991). Central government grants, on the other hand, have negative implications for local autonomy, although this will vary depending on the form in which the grant is given, for example, tied or untied, and the formula used for distributing the grant. The proportion that grants represent in the total local budget is also an important factor. Intergovernmental transfers constitute at least 30 per cent and more of local budgets in most countries. Belgium, Canada, Denmark and Spain depend for close to half their revenues on grants, whereas for Norway, France and the United States grant income is around 40 per cent. The most heavily grant dependent countries are the United Kingdom, The

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 19

Netherlands and Ireland, where approximately 70 per cent of revenue comes in this form. Australia, Austria, New Zealand, Sweden and Iceland receive 20 per cent or less of their revenues in grants. Grants are not to be confused with stable tax-sharing arrangements (where a central government will act in an agency capacity in the collection and remission of taxes), but are rather monies allocated on the basis of discretionary choices made by central government (Smith 1996). Regardless of the form in which grants come, they remain a controversial aspect of local fiscal autonomy. An over reliance on funding from central government can undermine planning and weaken local policy capacity. Programs established on the promise of grants have collapsed when funding is scaled down. Grants have also been used by central governments to regulate local taxing powers. Following a shift to block grants in Sweden, for example, local authorities found that central government used the grant to punish councils that increased the tax rate beyond a centrally determined level3. In the United Kingdom, grants have been used to impose sanctions on local councils that do not conform to centrally determined spending levels (Barnett 1998). Some commentators have portrayed central government grants as ‘a violation of the right to local self-determination’ (Netherlands Scientific Council Report 1990). The proposition of this chapter is that fiscal autonomy, as an important measure of local autonomy more generally, may be a significant factor in the adoption of NPM reforms by local governments, and thus help to explain cross-national variation. The chapter proceeds first with a discussion of NPM reforms within selected countries considered the most advanced in NPM development. Second, these countries and selected others from the OECD are ranked in terms of their local government systems’ development of NPM. Third, each will then be compared to its level of autonomy, measured in fiscal terms. The first part of the analysis draws on specific cases to identify which of the five elements of NPM (listed above) have been implemented. The countries are then ranked as having high, medium or low NPM development. This is determined by how many of the dimensions of reform each country’s local government has emphasised. Those countries with six or more elements are ranked ‘high’ on NPM development, those with two to five elements are ranked ‘medium’ and those with one or less are ranked ‘low’ (Table 2.1). The size and tasks of local authorities within a single country may vary, considerably, which in turn may affect how far individual authorities have implemented reform. For the purpose of this chapter, however, internal variation is not a consideration, save to say

20 •

I N T E R N AT I O N A L

CONTEXT

that most countries reveal a dominant pattern. The countries selected for analysis are drawn from the OECD member states but, due to limitations in the data available, do not include all member countries. The countries represented here are those for which data is available on both NPM development or not, and available revenue statistics. The revenue data, which is presented in the second part of the analysis, takes two points in time, 1980 and 1995, and not only shows the degree of fiscal autonomy that pertains for each country, but allows us to see what change has occurred in the fifteen year period. This period roughly coincides with the decade of most intense reform. It may be the case that low-ranking countries will have developed NPM post 1995 but, for the purpose of this chapter, it is the period in which the first wave of NPM reform occurred and should indicate better than later periods if there is a causal relationship between the variables.

UNITED KINGDOM Recent British experience of NPM has perhaps held most interest for Australian local government reformers. The ‘Best Value’ regime, introduced by legislation in the British Parliament in 1999, carried much promise as a more inclusive approach to reforming the local government sector than did the previous Conservative government’s Compulsory Competitive Tendering (CCT) regime, which was subsequently deemed a failure (Stoker 1999). Inclusiveness, however, amounted to little more than central-local consultation in an environment of financial incentives held out by the national government, both of reward and punishment for compliance or non-compliance. Moreover, Best Value ‘runs wider and deeper’ than did CCT (Audit Commission 1998, cited in Martin 2002). There is no doubt that local government in the United Kingdom has gone furthest and perhaps faster than other national local governments in implementing new public management. Best Value includes at least seven dimensions on the NPM scale, including performance management, output controls (national performance audits), disaggregation (e.g. housing trusts), competition (competitive tendering), private sector management practices (e.g. benchmarking), cost cutting and clientalism. On this last dimension, British local government now has a legal duty to consult with all manner of groups who have ‘an interest in any area within which the authority carries out functions’ (HMSO 1999: clause 3.2, cited in Martin 2002). Thus, New Labour seeks to control local government just as vigorously as did the Conservatives before them (Peters 1998).

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 21

AUSTRALIA In Australia, an early and perhaps most visible sign of NPM development in local government was the emphasis placed on hands-on management (Hood’s dimension one) or to use the popular idiom, ‘letting the managers manage’. Council ‘town clerks’ became ‘general managers’ whose job it was to think strategically, be proactive and most radical of all, in some states following legislation, assume the role of chief executive officer of the council (Jones 2002). These early changes in leadership were designed to facilitate other NPM type reforms, including the introduction of performance management, competitive tendering (one Australian state, following the United Kingdom lead at the time, made it compulsory), adoption of National Competition Policy requirements, and resource parsimony (Marshall and Sproats 2002; Aulich 1999; Johnston 1997). Corporate management models were widely adopted along with output measures based on structural efficiency principles, which traded pay increases for more flexible work practices. There was considerable variation between and within states as to how quickly and how radically NPM was adopted by local government. Nevertheless, the principles have been universally applied to the extent that local government in Australia can been seen a leader in the managerial revolution. Clientalism too has been an important element of local government reform, notably through its incorporation in corporate planning exercises (Marshall and Sproats 2002). Other developments have included public forums, precinct committees and customer charters. While the federal government has no direct legislative control over local government in Australia, it has exercised considerable influence in the reforms through Commonwealth-state cooperative mechanisms (see Chapter 7 in this volume).

NEW ZEALAND In New Zealand, local government reform has been extensive but with a greater emphasis placed on structural adjustment than on managerialism per se. The economic orientation of wider public sector reform was pursued no less aggressively at the local level where market discipline was held up as the panacea. The emphasis here was on cost transparency and accountability where subsidies were interpreted as creating allocative inefficiencies. A belief by the reformers in market discipline led to substantial privatisation and corporatisation of government activity. The development of Local Authority Trading Enterprises, as part of the

22 •

I N T E R N AT I O N A L

CONTEXT

structural reforms, meant the disaggregation of units previously part of the local authority into separate commercial units. Within these units, the other elements of NPM were rigorously implemented. Legislative change in the mid 1990s strengthened the financial accountability and transparency of local authorities by effectively doing away with central government subsidies and forcing a greater use of user pays mechanisms. The development of a system of ‘top managers’ within councils was also an important aspect of the reforms, ensuring a clear separation of governance and management roles. (Drage 2002; Howell 1997). In parallel with the experience in other Anglo countries, the New Zealand reforms placed a heavy emphasis on clientalism. The principle of public participation and scrutiny of local government was advanced by the reformers themselves and encouraged an active engagement by academics and commentators on the value of deliberative democracy (Cheyne 1999).

GERMANY What sets the European Continental countries apart from the Anglo countries is that in almost all cases where NPM reforms have been implemented locally, they have developed at the grass roots, so that national governments have been followers and/or facilitators rather than leaders in the reforms. Germany is a case in point where the principle of local selfadministration provides considerable scope for local authorities to regulate their own affairs. It was the German municipal association of management reform, the KGST, which pushed NPM type reforms in response to a ‘constellation of factors’ (Wollmann 2002)4. These included fiscal pressures, actors’ perceptions of problems and search for solutions, and the ‘takeover’ of discourse by NPM modernisers within the sector. The key initial focus of reform was on internal reorganisation, specifically, disaggregation and autonomisation designed to increase managerial responsibility and break the legalistic, hierarchical mould of Weberian bureaucracy for which local government in Germany is traditionally known (Loffler 1995). The second, related step was to shift the budget emphasis from input controls to output controls with the introduction of global budgeting. This shift in focus was accompanied by a set of performance measures or ‘indicators’ of local government ‘product’ intended to make transparent local government resource expenditures (Wollmann 2002). The managerial reforms were followed by reform of ‘social administration’, that is, participatory procedures and the establishment of ‘citizen centres’. Some city authorities have actively engaged their citizens in developing the city’s mission statements (Schedler and Proeller 2002).

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 23

THE NETHERLANDS Reform of German local administration was inspired by the experience of the famous Dutch case of the city of Tilberg which radically reformed its local administration in the 1980s along private sector lines of decentralised ‘holding companies’. The Netherlands was a leader in the reform movement in Continental Europe, not just locally but public sector wide. National reforms focused on ‘functional decentralisation’ in the pursuit of efficiency gains and a rationalisation of public expenditures. Locally the emphasis was on a ‘concern division model’ (holding structure), and contract management. Thus, disaggregation into separate, self-contained units, hands-on management and internal markets formed the core elements of NPM as it developed in Dutch local government. A later reform development was involvement of the citizenry in such areas as service delivery and neighbourhood management, although this was less an NPM reform than (in part at least) a reaction to it (Schedler and Proeller 2002).

SWITZERLAND Switzerland, like Germany, is a federal state wherein the ‘cantons’ equate with the lander, and it was at this cantonal level where NPM reforms first took hold, eventually spreading to the municipal level. Schedler and Proeller (2002) found, as in the German case, that the reformers came from the ranks of public administrators where a core group perhaps supported by one or two politicians led the development of NPM. The major focus of the reforms has been on strengthening the hand of managers vis-a-vis political leaders, or at least redefining roles and responsibilities. ‘Results-oriented Public Management’ was the term given to the Swiss reforms, but implementation, with some exceptions, has tended to be confined to human resource management. Nonetheless, concerns underlying the pressure for reform such as opaque outputs and impacts, inflexibilities caused by a lack of market pressure and political over-control of operative decisions remain important drivers for reform (Schedler and Proeller 2002). Privatisation has not been a feature of the Swiss reforms. Internal variation that is perhaps worthy of note is that which follows the linguistic division of the country. The French speaking areas of Switzerland, as is the case with Belgium (see below) have been less inclined to adopt NPM strategies than have the German speaking areas.

24 •

I N T E R N AT I O N A L

CONTEXT

SWEDEN Among the Northern European countries Sweden stands out as a leader in NPM reform. In common with its Nordic neighbours, the Swedish system of municipal government carries a major responsibility for social welfare. The expansion of welfare state services according to Montin and Amna (2000) ‘can be re-conceptualised as a municipal welfare expansion’. Swedish local government enjoys a strong level of autonomy, constitutionally and financially, from the central government but has been described as an integrative central-local government system (Kjellberg, 1988). Fiscal stress and deficit budgets, following economic recession in the early 1990s, and high unemployment unquestionably contributed to the development of NPM in local government. However, privatisation reforms (including contracting out) had commenced in the late 1980s and followed a pattern of decentralisation which began some years earlier with the ‘free commune experiment’ (Baldersheim and Stahlberg 1994; Haggroth et al. 1999). A major thrust of the ‘third wave’ of reforms (encapsulated in the new 1991 Local Government Act) was to delegate to a professional class of managers greater decision-making power and hands-on management, while strengthening the role of political officials in strategic decision-making (Montin and Amna 2000; Kleven et al. 2000). Management by Objectives (MBO) and Results Oriented Management (ROM) were tools adopted towards this end. Performance measurement and benchmarking are more recent developments in Swedish municipalities, and the Association of Local Authorities has developed methods for measuring the attitudes of local residents toward municipal services. Another development has been the privatisation of some portions of the social services such as housing and nursing care (Haggroth 1999).

NORTH AMERIC A Reform of local government in the United States in the 1990s followed a long established political ideal in American politics, which may be encapsulated in the phrase ‘small is beautiful’. While the ideas of NPM first found voice and a willing audience in the United States, especially at federal and state levels5, what characterises local government administrative reform of the period was large-scale cut-backs and privatisations. Many traditional functions of local government were either sold-off to the private sector or contracted out using a variety of forms, including the use of franchises, grants, vouchers or agreements

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 25

(Hrebenar 1998). Couched in politically acceptable jargon, ‘load-sharing’ meant contracting out services such as waste-disposal, traffic management systems and airports. An alternative concept, ‘cost-sharing’, was adopted by some city governments who privatised their jails and even tax-collection agencies. These reforms were in large measure a response to tax revolts by the public, the first documented example of which is the infamous Proposition 13 introduced by the State of California in 1978 (O’Sullivan 1995). Concerns about ‘public choice’ also led to other reforms in some local jurisdictions such as the voucher system for locally run schools (Hrebenar 1998). Later reform development placed more emphasis on ‘resizing’ than ‘downsizing’ and introduced ‘managing for results’ as key concepts of NPM reform. To some extent this softer approach reflected a change in reform policies nationally, following a change in political leadership from the Reagan/Bush administrations to the Clinton/Gore government; a trend mirrored in Britain following the change from a Conservative to a Labour leadership. Unlike in Britain, however, local government in the United States appears to have more choice in adopting NPM reforms. This is, in part, explained by their different political systems, that is, federal and unitary, but perhaps more so by a tradition in American politics of non-intervention by higher levels of government (Norris 1997). Thus, the uptake of performance management by local government is highly variable and has been described as ‘evolutionary’ rather than ‘revolutionary’ (Bernstein 2001). Notwithstanding, there is no doubt that governments at all levels in the United States, local governments included, have been leaders in the field of NPM development. While Canadian reforms at the national level have been ‘middling’ (Hood, 1996), Canadian municipalities have not embraced NPM as have their Anglo speaking cousins. Where reform has happened it has been a local response to a particular problem such as in service delivery. The city of Montreal’s ‘single window’ initiative for example, while improving customer relations, was not part of a wider NPM style ‘clientalism’ (Seidle 1995). Quite dramatic reforms have occurred in Canada’s local government sector of late, but these have been jurisdictional changes, for example, the return in force of the unicity, combined with municipal consolidations (Collin et al. 2002; Sancton 2002).

J A PA N Japanese local government presents a quite different case, which, in NPM terms, cannot be considered a leader of reform. Nonetheless it

26 •

I N T E R N AT I O N A L

CONTEXT

deserves a mention here a) because it is experiencing for the first time some genuine reform effort to strengthen the sector, and b) it reflects a pattern not dissimilar to its Asian neighbours, especially Korea. Despite a long history of a centralist state, decentralisation reforms in recent times have facilitated an entrepreneurial spirit at the local level and greater citizen involvement in policy appraisal processes (Akizuki 2000). Although Japan’s local government has constitutional recognition which, in theory, guarantees it political independence and administrative autonomy, it has been tightly controlled by central government since 1947, both in a legal (national law over-rides) and financial sense (58 per cent of the local budget comes in the form of a direct grant) (OECD 1999b). What are known locally as ‘agency delegated functions’, where central government ministers have a mandate to direct local government action, have characterised Japanese post-war local government (Koike 1998). Global shifts and economic pressures in the late 1980s and early 1990s led to a number of national enquiries that resulted in the enactment of The Law for the Promotion of Decentralisation. Currently local governments in Japan are responsible for more than half of total government services (Nakamura 2002). Financial arrangements in the intergovernmental system, however, remain largely unreformed, leading some analysts to scepticism about the decentralisation efforts (Kitahara 1998; Dairokuno 1998). Continuing fiscal pressures and local budget deficits, especially in large city governments, have been the major influences on a grass-roots search for new ways of managing. The Mie Prefectural government led the way in introducing NPM type reforms that were locally interpreted as ‘client centred’. Key strategies in the reforms were to create a more transparent and responsive administration based on freedom of information and performance review (Nakamura 2002). Other reform ideas, including performance pay, benchmarking and outsourcing, have entered the discourse in Japan’s local government but are yet to be developed. Mie remains the exceptional case in Japanese local government reform.

OT H E R O E C D C O U N T R I E S France, Spain, Belgium, Italy, Norway and Finland are countries in which NPM reforms have either not been developed, or have been developed in a minimal way, being looked on with either scepticism or caution (Schedler and Proeller 2002; Larsen and Offerdal 2000).6 Belgium’s pattern of development is more variable wherein the Flemish

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 27

speaking part has been more enthusiastic about NPM reform than has the Walloon (French speaking) area. In the Nordic countries some attention has been given to ideas of ‘total quality management’ and there has been development at the local level in this direction. More recent development towards the use of internal markets and adoption of purchaser-provider models has also been a feature, but one that has developed unevenly across municipalities. While efforts have been made to encourage greater participation by citizens in local government, clientalism is not favoured because of the widespread belief that it undermines representative democracy (Kleven et al. 2000).

&RUSRUDWH3UDFWLFHV

5HVRXUFH'LVFLSOLQH

&OLHQWDOLVP

1HZ=HDODQG

&RPSHWLWLRQ

;

)XQFWLRQ'LVDJJUHJDWLRQ

$XVWUDOLD

;

;

;

;

;

;

;

;

;

;

;

;

;

;

;

2XWSXW0HDVXUHV

8.

3HUIRUPDQFH0HDVXUHV

&RXQWU\

+DQGVRQ0DQDJHPHQW

TABLE 2.1 NPM DEVELOPMENT BY COUNTRY

;

;

;

;

;

;

;

*HUPDQ\

;

;

;

;

1HWKHUODQGV

;

;

;

;

;

6ZLW]HUODQG

;

;

;

6ZHGHQ

;

;

;

;

;

;

;

;

;

86$ -DSDQ 1RUZD\

;

;

; ;

;

; ;

;

;

28 •

I N T E R N AT I O N A L

CONTEXT

T H E D ATA Measuring local government fiscal autonomy must rely on the simple measure of local government tax used by the OECD although, as discussed earlier, some work has been done by the OECD on a more sophisticated interpretation of local tax. In figures 2.1 and 2.2, I have combined ‘tax’ with ‘non-tax’ sources of income (e.g. fees and charges) as these are locally generated and represent a residual power of local government to act autonomously. The combined values are represented thus as ‘own-source’ revenue. Figure 2.2 compares this category with ‘total revenue’ for local government country by country for the year 1995, measured as a per cent of GDP. The difference between the two categories, that is, ‘total’ and ‘own-source’ represents the proportion of central government grants in the budget, and thereby each country’s level of fiscal dependence. This dependency is more starkly portrayed in Figure 2.1, which shows own-source revenue as a per cent of total local revenue. Figure 2.1 also shows the degree of change in own-source revenue for each country over the fifteen-year period 1980 to 19957. It should be noted that the variation between countries in terms of their relative income (Figure 2.2) reflects variation in functional responsibilities. For example, the Nordic countries’ much larger budgets reflect their vastly greater responsibility for welfare provision. Variation in budget size is not of particular interest here8, but rather the level of fiscal autonomy, or ‘own-source’ revenue as a percentage of ‘total income’ on the one hand, and on the other, changes that occurred over the period. In Table 2.2, these indicators of autonomy are combined with each country’s level of NPM development. Countries whose own-source revenue is above seventy-five per cent are rated as having ‘high’ fiscal autonomy, while countries whose own-source revenue is less than fifty per cent are rated as having ‘low’ fiscal autonomy. Countries that fall between these values are given a rating of ‘medium’ autonomy.

A N A LY S I S The cross-variable data presented in Table 2.2 shows patterns that may be consistent with the proposition that the level of fiscal autonomy a country’s local government has is a significant factor in the development of NPM strategies. The data from the United Kingdom, Ireland, The Netherlands and Belgium and to a lesser extent, Germany and the United States, suggest that countries with low fiscal autonomy are more inclined to search for strategies to alleviate stress from fiscal dependency. All of

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 29

FIGURE 2.1 LOCAL GOVERNMENT OWN SOURCE, 1980 AND 1995 (AS A PERCENTAGE OF TOTAL REVENUE)

SOURCE

OECD Revenue Statistics (selected years).

FIGURE 2.2 LOCAL GOVERNMENT OWN SOURCE AND TOTAL REVENUE, 1995 (AS A PERCENTAGE OF GDP)

OECD Revenue Statistics (various years). Japan’s ‘total revenue’ is a missing value in the OECD data but see discussion on Japan in this chapter.

SOURCE NOTE

30 •

I N T E R N AT I O N A L

CONTEXT

these countries are leaders in NPM reforms. It can therefore be argued that low levels of autonomy, combined with country-specific externalities, work in favour of reform. In The Netherlands, it was severe economic recession in the 1980s (together with economic doctrine) that drove the momentum for change both nationally and locally. The United Kingdom’s reforms, also public sector wide, were driven largely by political ideology. Even under New Labour the reform program has been no less doctrinal or pervasive, except that the current government apparently has no objection to the public sector per se. In both Germany and the United States, reform has been driven by local entrepreneurial managers whose perceptions of their local governments as rigid, inefficient and unresponsive lead to change. In the United States, however, NPM reforms began much earlier and have consistently been promoted by the federal government with special purpose grants, technical guidance and the like. Canada and Spain are the notable exceptions to the pattern where relatively low levels of autonomy have not resulted in the embrace of NPM style reform. It is probable that in Canada’s case, the reform emphasis on amalgamations (imposed by provincial governments) has provided a substitute or alternative reform path. Spain’s fiscal dependency is a new phenomenon (in 1980 Spain had a high level of autonomy), brought on by the introduction of a multi-level system of government and a corresponding increase in central government funding. The inverse of the argument, that high fiscal autonomy will equate with low NPM development, is not, however, supported by the data. In Australia, New Zealand and Sweden (and to a lesser extent Switzerland), high fiscal autonomy coexists with an active program of reform. The difference between the Anglo and Continental countries in this group is that the latter were, for the most part, grass roots initiatives in response to, in Sweden’s case, economic crisis and fiscal stress in the municipalities, and in Switzerland by entrepreneurial local managers keen to free up rigidities in the system. By contrast, Australian and New Zealand reforms were driven from the centre, in New Zealand, by an economic doctrine which was systematic in its application both nationally and locally. In Australia, the NPM reforms were top-down and public sector wide, but mediated by a federal system that allowed for considerable variation. Like Sweden, an economic crisis in New Zealand was the critical influencing factor. The Australian reforms are better characterised as being influenced by policy fashion at the national level (e.g. national competition policy), and a combination of concerns at state level (see Chapter 7).

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 31

To summarise, looking across the spectrum from low to high local government autonomy, the picture presents one of extremes, that is, it is in countries whose local governments have either high or low levels of autonomy where NPM has been most keenly developed. The trend in fiscal autonomy in OECD countries from 1980 to 1995 is predominantly one of improvement. Of the sixteen countries represented in Table 2.2, five lost ground but only two, the United Kingdom and Spain, are of any real import. As described above, the Spanish data presents a somewhat distorted picture resulting from the introduction of regional-level governance. In the United Kingdom, central government take-over of the business tax and forced privatisations of local enterprises during the period of the reforms explain this country’s dramatic fall in local fiscal autonomy. Norway, Germany and Switzerland experienced a slight decline in autonomy over the period, but with the exception of the United Kingdom, perhaps not a lot can be read into the trend data for these countries. There is the possibility that a weakened fiscal position may have made them more vulnerable to directions from central government to reform. Certainly evidence drawn from the case studies would support this notion. Even in Germany’s case where reform was initiated at the grass roots, pressure from above is evident in the literature (Wollmann 2002). On the other hand, many countries with high to medium NPM development show a strengthening of their fiscal autonomy. This may be a direct result of the reforms and/or including the introduction or extension of user-pays services. Certainly, the dominant trend indicates there was concern in many countries at the start of the 1980s about the status of local government and the need to reform. Simple measures of fiscality are perhaps limited in explaining reform variation. The type and mix of taxes used, and the degree of freedom a local government has to decide the base and rate of the tax are important factors which may need further clarification before any real claims can be made about autonomy. The Anglo countries, for example, rely heavily for their revenue on property taxes and experience, at times, quite severe, rate capping by central governments. The Continental countries rely primarily on income tax (with the exception of The Netherlands whose main tax is also from property), which has the advantage of being elastic and progressive, except in times of high unemployment (as was the case in Sweden during the reform period), when it can have severe impacts on local government revenue.

32 •

I N T E R N AT I O N A L

CONTEXT

TABLE 2.2 NPM DEVELOPMENT BY COUNTRY BY FISCAL AUTONOMY BY CHANGE 1980–1995

&RXQWU\

130 'HYHORSPHQW

)LVFDO $XWRQRP\

&KDQJHLQ )LVFDO$XWRQRP\ ²

8.

+LJK

/RZ

²

$XVWUDOLD

+LJK

+LJK



1HZ=HDODQG

+LJK

+LJK



*HUPDQ\

+LJK

0HGLXPDQGE

²

1HWKHUODQGV

+LJK

/RZ



6ZHGHQ

+LJK

+LJK



86$

+LJK

/RZPHGLXP



&DQDGD

/RZ

/RZPHGLXP



-DSDQ

/RZ

/RZ

QD

1RUZD\

0HGLXP

0HGLXPG

²

)LQODQG

0HGLXP

0HGLXP



%HOJLXP

0HGLXP

/RZ



6ZLW]HUODQG

0HGLXP

+LJK

²

)UDQFH

/RZ

0HGLXPDQGE



6SDLQ

/RZ

0HGLXPORZ

²

0HGLXP

0HGLXPORZ



'HQPDUN

The numbers in parentheses in column 3 ‘Fiscal Autonomy’ refer back to the OECD qualifications of tax autonomy in the earlier part of the chapter. In Germany and France, tax autonomy varies between types of authority and explains two separate values. This data was not available for all OECD countries, including Australia and North America.

NOTE

CONCLUSION This chapter has not attempted to evaluate whether the aims of the reformers have been achieved in countries where New Public Management has been developed. There is evidence, especially as NPM reforms have been implemented at the national level, that there have been numerous unintended consequences, paradoxes, contradictions and the like (Christensen and Laegrid 2001). Increasingly, evidence from the local government reform experience has revealed similar problems of inconsistency (the reversal of CCT policy in Britain and Victoria is one example).

LOCAL

GOVERNMENT: REFORM

IN

C O M PA R AT I V E

PERSPECTIVE

• 33

On the other hand, these problems do not appear to have diminished NPM’s appeal as a solution to making governments more transparent, client oriented, and generally more efficient in their operations. In an environment of resource constraints the reforms have had a particular appeal for local governments. We should remember that NPM is just another wave of reform, albeit a very profound one. Those elements which are likely to endure are ones that are successfully welded onto previous reform effort. Administrative reform is a dynamic process and new ideas of a post-managerial nature have already begun to emerge, for example ideas of ‘new governance’, voluntarism and the like. The chapter has attempted to put NPM reforms as they have occurred in Australia, in a global context. To do so, however, required an analytical framework that sets some benchmarks against which countries could be measured. Fiscal autonomy was the one chosen for this exercise. A somewhat mixed pattern has emerged to explain the uptake of NPM cross-nationally in these terms. The proposition was put that countries which have low levels of autonomy would be more likely to be leaders in NPM reform. This was found to be generally true, with the exception of Canada’s local government, which has followed an alternative path to reform. The inverse proposition that countries whose local government sectors have high fiscal autonomy would be ‘laggards’ in NPM reforms was found generally not to be true. Countries with high fiscal autonomy (including Australia) were also found to be leaders in NPM reforms. However, with the exception of Sweden, the initiators of reform in these countries have been central governments. The ‘leaders’ in NPM reform thus measure both high and low on fiscal autonomy, in other words, it is a pattern of extremes. The chapter raised a number of methodological problems associated with cross-country comparisons. How fiscal autonomy is measured was raised as an issue requiring further research and clarification. For example, the absence of data using more sophisticated measures such as levels of tax autonomy will be a problem for future research. It may be the case that other dimensions of autonomy, such as constitutional autonomy, need also to be taken into account. The context in which administrative reform takes place is critical too, especially the intergovernmental environment and its various dimensions (two which emerged in this chapter are resource constraints, and whether central governments can direct local governments to reform their administrations). Work would need to be

34 •

I N T E R N AT I O N A L

CONTEXT

done to develop ways in which these more qualitative considerations might be usefully measured. Better data is certainly called for if a multidimensional picture of local government reform trends internationally is to be more fully explained. E N D N OT E S 1 2

3 4 5 6 7 8

The transition to NPM has been described as a ‘paradigm shift’ from public administration and its traditional doctrines to public management which relies on notions of public choice and individualism (Ingraham 1996). Alternative descriptors perhaps more appropriate for local government are ‘beacons’ and ‘coasters’. This terminology was adopted by the United Kingdom National Audit Office to describe variation in development of NPM within the United Kingdom local government system. ‘Leaders’ and ‘laggards’ is used by Hood (1996) to describe national governments but is also derived from NAO usage. Swedish local government has a constitutional right to set tax rates. The German variant of NPM was called ‘New Steering Model’ or NSM. Indeed, an extremely influential book, Osborne and Gaibler’s Reinventing Government (1991), which is often attributed with starting the NPM revolution, gives most attention to individual local government reform initiatives. Of the Nordic countries, Denmark is higher up the NPM scale than either Norway or Finland but not as high as Sweden (Kleven et al. 2000). Italy and Japan are missing from Figure 2.1 because of unavailable data for this category in the Revenue Statistics. For a broader discussion on fiscal variation between OECD member states’ local governments see Caulfield 2002.

PA R T B FINANCE

3 FINANCING LOCAL GOVERNMENT IN AUSTRALIA Andrew Johnson

Local authorities, through the services they provide, impinge directly or indirectly on the lives of most of their citizens, whether by setting housing standards, providing water, disposing of effluent and garbage, or maintaining roads. Local government plays a key role in delivering these and many other services. Australian local government is currently under financial pressure from all sides. Councils are facing increased expectations from their communities to deliver more services, including those beyond the traditional focus of local government. State and federal governments’ expectations of local government have also never been greater, with municipal authorities being used increasingly to implement the policy objectives of these higher tiers of government. At the same time as councils are confronting these increased expectations, they are finding that they have limited means of raising sufficient income to meet the higher expectations. Community expectations of local government are increasing at an alarming rate while at the same time councils are battling with increased costs and restrictions over their revenue-raising ability. This has resulted in a ‘gap’ between the community’s expectations of municipal authorities and the amount of funds available to meet these expectations, which we may call ‘the community expectation/funding gap’. This chapter seeks to outline the economic dilemma confronting contemporary Australian municipal government by considering how local government can use its limited resources to meet the relatively unlimited demands of the public it serves. The objective of this chapter is thus to discuss some of the financial pressures facing local govern-

38 •

FINANCE

ments in Australia and how they may best be overcome. It is not the intention of this chapter to debate the merits or otherwise of these increased public expectations, but rather to focus on the limited resources available to councils and the restrictions that they face in attempting to meet these expectations. The chapter itself is divided into five parts. The first considers the nature of the financial problems facing contemporary local government in Australia; in particular, their aging infrastructure and increased community expectations. The second discusses some of the constraints facing local government, including the devolution of responsibility, ‘raising the bar’, cost shifting, increased community expectations and various other problems within the sector. Part three provides an overview of the Commonwealth Financial Assistance Grant and its role in funding the operations of local government while part four puts forward some recommendations for managing the funding situation facing local government. Some brief conclusions are then drawn in the final section.

T H E N AT U R E O F T H E P R O B L E M The nature of the problem facing local government is analogous to the basic economic dilemma confronting society: That is, how can local government reconcile the difference between the unlimited wants or demands that are placed on it by the community and other levels of governments, and the limited resources that it has available to meet these unlimited demands. The position of local government, as we will see below, is further complicated by its limited and restrictive revenueraising options and the increase in the magnitude of costs that are ‘passed down’ to local government (from the higher tiers of government) without matching (or indeed any) corresponding revenue. In essence, local government is currently facing strong financial pressures in which it is unable to meet the increasing needs of the community it serves as well as controlling large amounts of infrastructure that will need replacing or renewing in the near future. Thus the gap between what the community and other levels of government demand from councils, together with councils’ assets renewal requirements, when compared to the funds that local government has to meet these demand, is growing at an alarming rate. A significant proportion of council-controlled infrastructure was constructed by local government during the post-World War II era from grants provided by state and federal governments. Very little of this infra-

FINANCING

LOCAL

GOVERNMENT

IN

AUSTRALIA

• 39

structure was developed from council-generated funds. At present many of these assets are in poor condition and require replacement from councils’ existing revenue stream, including swimming pools, bridges, halls, roads, etc. However, local government does not have the financial capacity to replace these assets or bring them up to a satisfactory standard, without the sustained assistance of state and federal governments. There are a number of studies available that seek to quantify the cost of renewing council assets. For instance, a 1998 Victorian government report titled Facing the Renewal Challenge, which considered current replacement cost and long-term consumption of roads, bridges, footpaths, drains, parks, recreation facilities and public buildings, estimated that there was an annual infrastructure deficit, on these assets, of $233 million per year. This situation is highlighted in Figure 3.1, which shows the current and anticipated expenditure on asset renewal, the amount that councils can actually fund, and the resultant funding gap. FIGURE 3.1 VICTORIAN COUNCILS ASSET RENEWAL EXPENDITURE PROFILE

SOURCE

Adapted from AMQ Int. Dec 1998, p.9, Figure 1.1.

40 •

FINANCE

In a similar vein, another report, commissioned by the South Australia Local Government Infrastructure Management Group in 2001, entitled A Wealth of Opportunity, indicated that South Australian councils’ infrastructure maintenance was being under-funded by $105 million (or 19 per cent of revenue). The report found that the situation was far worse for rural councils, which needed to quadruple their current expenditure on infrastructure maintenance. These councils currently spend less than $20 million a year on asset maintenance, but require some $64 million to be sustainable in the long term. In much the same way, in 1999–2000 Western Australian councils recorded a road infrastructure deficit of $59.8 million per year. Community expectations of local government are also increasing at an exponential rate. Communities are increasingly looking towards local government to meet their expectations of government, even in areas that councils have traditionally not tackled. This may be a result of a widespread view that local government is the best vehicle to implement community requirements and the most accessible form of government for the community to be able to provide direct input into the services provided, and enable them to have more of a ‘say’ in how things are run in their area. It may also be a result of the centralisation policies of most state and federal government agencies that have seen many public agencies leave rural regions for consolidation in metropolitan areas. Local government is in the unique position of being located in over 720 communities throughout Australia. It is the level of government that is the ‘closest to the people’; it is most directly influenced by, and has the most interaction with, its constituents. Due to the centralisation of most state and federal agencies, these higher levels of government have regarded councils as the most efficacious vehicle for implementing their policies, particularly when they require ‘on the ground’ implementation. In particular, there has been a myriad of legislation deriving from state and federal parliaments which local government has been required to implement on behalf of these governments, usually with no additional finances being provided to assist councils. Local government is struggling to fund its basic services, let alone implement the policies of other levels of government and is increasingly examining cost reduction measures. The questions that should be asked are: Why is local government facing this problem? How did this situation arise? These and other questions will be considered in the next section.

FINANCING

LOCAL

GOVERNMENT

IN

AUSTRALIA

• 41

THE GENESIS OF THE PROBLEM In broad terms, there are four main reasons for the current financial dilemma of Australian local government. As outlined by the Commonwealth Grants Commission (CGC 2001, pp.52–53) they are: •

Devolution — where a higher sphere of government gives local government responsibility for new functions;

•

‘Raising the Bar’ — where higher tier of government, through legislative or other changes, increases the complexity of, or standard at which, local government services must be provided, and hence increases the cost;

•

Cost Shifting — characterised by two types of intergovernmental conduct. Firstly, where local government agrees to provide a service on behalf of another sphere of government, but funding is subsequently reduced or stopped, and local government is thereafter unable to withdraw from service provision because of community demand for the service. Secondly, where some other sphere of government ceases to provide a service and local government is obliged to take over; and finally

•

Increased Community Expectations — where the community demands improvements in existing local government services.

In addition to these imposed problems, local governments themselves are also partly responsible for their own plight. A majority of councils are perceived to be inefficient, they often lack scale in their operations, a large number have deteriorated into an extremely poor financial position, and strategic and long-term planning is generally lacking. A number of councils are also reluctant to set their rates and other charges at realistic and sustainable levels. Public services need to be delivered at the most appropriate level of government, taking into account the scale of operations and the differential level of services required by specific circumstances. In many cases local government is the most appropriate body to implement these services. However, in most situations, the service (and its cost) is shifted from other levels of government onto local authorities, without any corresponding transfer of income to provide the required service. To overcome these additional costs, local government has tended to initially reduce reserve funds, then decrease the amount of infrastructure maintenance, and finally diminish the services that they provide. In general, there tends to be little scope to maintain existing service levels, let alone provide further services in order to meet expanding community needs.

42 •

FINANCE

‘ R A I S I N G T H E B A R ’ A N D D E VO L U T I O N O F R E S P O N S I B I L I T I E S

We have argued that state and federal governments are increasingly using local government as a vehicle for implementing their own policies and political objectives. This is typically achieved by introducing new legislation and/or regulations that local government is required to implement on behalf of the higher tiers of government, or where the requirements of existing legislation, which local government administers, are changed to provide for more strenuous compliance. In both cases, the costs associated with the increased legislation are usually met from existing council revenue. By way of example, Table 3.1 provides a summary of the expanded role that councils are being asked to play in meeting the requirements of various acts and regulations in New South Wales. In most cases, no additional funds have been provided. From this example, it seems clear that state agencies are continuing to respond to pressures on their own resources, and to community demands for action on issues of concern, by devolving responsibilities to local government. This is a worldwide phenomenon at a time when central governments are seeking to do ‘more with less’ (LGSA 2001, p.10). What steps can be taken to remedy this increasingly untenable state of affairs? It can be argued that in a society in which public accountability of elected representatives is paramount, all bills introduced into parliament should, prior to being introduced, be required to have a mandatory cost and benefit analysis prepared as part of the Bill. The cost and benefit analysis should be made available for public comment. At least the following issues should be addressed: The costs involved in implementing the requirements of the Bill (once off and recurrent costs); responsibility assigned for meeting the costs associated with the Bill; identification of the beneficiaries of the Bill; and an estimate of the magnitude of the benefit of the Bill. A cost and benefit analysis along these lines should improve the accountability and transparency of proposed policies and lead to better decision-making. It would enable the community to appreciate the ‘true’ cost of legislation as well as the incidence of the burden of these costs and benefits. COST SHIFTING

In principle, cost shifting can take a number of different forms. In the first place, a higher tier of government can provide local government with grants to undertake a new function. Over time, through lack of adequate indexation of the grant, municipalities receive reduced grant

FINANCING

LOCAL

GOVERNMENT

IN

AUSTRALIA

• 43

TABLE 3.1 RECENT ADDITIONAL IMPOST ON NSW LOCAL GOVERNMENT

$FW5HJXODWLRQ

5ROHRI&RXQFLO

3URWHFWLRQRIWKH (QYLURQPHQW 2SHUDWLRQV$FW 

7KLV$FWLQYROYHVWKHGHYROXWLRQRIUHVSRQVLELOLW\IRUWKHHQYLURQPHQWDOUHJXODWLRQ RIXQVFKHGXOHGSUHPLVHVDQGDFWLYLWLHVWRORFDOFRXQFLOV

/RFDO*RYHUQPHQW $PHQGPHQW(6'  5HJXODWLRQ

7KLVDPHQGPHQWUHTXLUHVWKHSUHSDUDWLRQRIFRPSUHKHQVLYH6WDWHRI(QYLURQPHQW 62( 5HSRUWVHYHU\IRXU\HDUVDQGWKHFRQVLGHUDWLRQRIFRPSUHKHQVLYHDQG LQWHULP62(UHSRUWVLQWKHFRXQFLO·VPDQDJHPHQWSODQ)XUWKHUWKHUHDUHUHTXLUH PHQWVIRUFRXQFLOVWRXQGHUWDNHFRPPXQLW\FRQVXOWDWLRQLQWKHGHYHORSPHQWRI WKHLUPDQDJHPHQWSODQ

6WRUPZDWHU 0DQDJHPHQW 3ODQQLQJ

&RXQFLOVDUHEHLQJUHTXLUHGWRGHYHORSVWRUPZDWHUPDQDJHPHQWSODQVE\PHDQV RIDVHFWLRQGLUHFWLYHIURPWKH(3$:KLOHWKHDLPVRIWKHVWRUPZDWHUPDQDJH PHQWSODQQLQJSURJUDPDUHVXSSRUWHGWKHSODQQLQJSURFHVVZLOOXQGRXEWHGO\LQGL FDWHWKDWPDVVLYHDPRXQWVRIH[SHQGLWXUHZLOOEHUHTXLUHGWRDGGUHVVVWRUPZDWHU PDQDJHPHQWLVVXHVRQDORFDODQGFDWFKPHQWEDVLV&RXQFLOGUDLQDJHFKDUJHV DUHVWLOOVXEMHFWWRUDWHSHJJLQJ

/RFDO*RYHUQPHQW $SSURYDOV  $PHQGPHQW 6HZDJH 0DQDJHPHQW  5HJXODWLRQ

7KLVDPHQGPHQWSXWVLQSODFHUHTXLUHPHQWVIRUWKHLQVSHFWLRQRIRQVLWHVHZDJH WUHDWPHQWV\VWHPV:KHUHDVLWKDVUHFHQWO\EHHQGHIHUUHGIRUD\HDUZKLOH WKHUHVRXUFLQJLVVXHVDUHUHVROYHGWKHUHLVVWLOOREYLRXVO\DQDVVXPSWLRQWKDW FRXQFLOVKDYHWKH¶H[FHVVFDSDFLW\·WRXQGHUWDNHWKLVUROH

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

:KLOHGHWDLOVDUHDWSUHVHQWXQFOHDULWGRHVDSSHDUFHUWDLQWKDWWKH$FWZLOOLPSRVH PRUHVWULQJHQWUHTXLUHPHQWVRQGHYHORSPHQWVDQGDFWLYLWLHVWKDWPD\DIIHFW0DULQH 5HVHUYHV&RXQFLOVZLOOWKHUHIRUHEHUHTXLUHGWREHPRUHYLJLODQWWRWKHVHSRWHQWLDO HIIHFWV7KLVZLOOLQYROYHPRUHGHWDLOHGFRQVLGHUDWLRQRIGHYHORSPHQWDSSOLFDWLRQVLQ WKHFRDVWDO]RQHDQGJUHDWHUUHVRXUFHVGLUHFWHGWRWKLVWDVN

&RPSDQLRQ$QL PDOV$FW

7KHUHTXLUHPHQWIRUFRXQFLOVWRSUHSDUHFRPSDQLRQDQLPDOVPDQDJHPHQWSODQV HGXFDWHWKHFRPPXQLW\DQGHQIRUFHWKHSURYLVLRQVRIWKH$FWZLOOUHTXLUHPRUH UHVRXUFHV

/RFDO*RYHUQPHQW $PHQGPHQW&RP PXQLW\DQG6RFLDO 3ODQV 5HJXODWLRQ 

7KLVUHTXLUHGFRXQFLOVWRSUHSDUHDVRFLDOSODQE\-XQHLWLVWREHXSGDWHGHY HU\ILYH\HDUV,WLVDOVRWREHFRQVLGHUHGLQIRUPXODWLRQRIWKHDQQXDOPDQDJHPHQW SODQDQGWKHUHDUHDGGLWLRQDOUHSRUWLQJUHTXLUHPHQWVWRWKH'HSDUWPHQWRI/RFDO *RYHUQPHQW7KLVSODFHVDGGLWLRQDOGHPDQGVRQVFDUFHUHVRXUFHV

SOURCE

LGSA Jan 2001, p.15.

44 •

FINANCE

funding in real terms, thus forcing councils to use their own revenue to allow them to continue to provide the service in question. Secondly, councils have been obliged to provide a service which would normally be offered by a higher tier of government (such as law and order or health services), but where that higher tier is either reluctant or unwilling to provide the required service. The final situation involving cost shifting occurs where government agencies, facing financial pressures, seek to recover an increasing array of fees, charges, licence contributions and other monies from councils in order to fund the agency’s operations. COST SHIFTING IN GRANT INCOME

Councils receive around 13 per cent of their income from current grants and subsidies as well as a substantial amount of grant funding for capital projects. Grant funding thus forms a significant proportion of the total income of municipal authorities and is accordingly critical to their ability to provide a number of services. Figure 3.2 indicates that since the introduction of Commonwealth Financial Assistance Grants to local government in 1974–75, Australian local government revenue from all sources has grown by around 10 per cent per annum. More specifically, the revenue from user charges has grown most rapidly (13 per cent per annum), followed by other revenue (11 per cent), financial assistance grants (10.8 per cent), municipal rates (9.4 per cent), and (with the least growth) revenue received from the state government (6.6 per cent). These trends indicate that there has been a greater reliance on user charges and other income to fill the gap left by reduced grant funding and, to a lesser extent, reduced dependence on rate income. A common characteristic of most grants is their lack of adequate indexation. In cases where indexation is applicable, the method of indexation used has tended to bear little relationship to the increase in the cost of providing the actual service. Table 3.2 serves as a salient example of the problem. Table 3.2 indicates that out of the forty-eight categories of special grants received by Victorian local government, only sewage and aged/disabled housing grants have increased as a proportion of councils’ expenditure. This trend points towards a general decrease on the cost coverage of grants, which have been provided to municipal authorities to enable them to perform specific functions on behalf of the granting body. The reduced cost coverage of the grants generally results in

FINANCING

LOCAL

GOVERNMENT

IN

AUSTRALIA

• 45

FIGURE 3.2 LOCAL GOVERNMENT REVENUE SOURCES 1974–75 TO 1997–98

SOURCE

Adapted from Commonwealth Grants Commission June 2001, p.51.

the municipalities being required to fund more of the service from their general revenue, thus leaving fewer funds available to meet other legitimate community expectations. This represents a cost shift from the granting body (usually the state government) to local government. The reduction in cost coverage of grants illustrated in Table 3.2 is not a result of increased costs of councils in providing the service, but rather a reduction in grant funding provided in real terms. The special purpose grant funding to Victorian local government has fallen substantially in real terms from 1995–96 to 1999–2000, with over half the functions experiencing double-digit declines. This situation is common to local government across Australia. Moreover, these reductions in grants have not led to a commensurate reduction in expenses for these functions. [Victorian] councils’ expenditure for libraries fell from $99.6 million to $97.8 million and childcare fell from $146.0 million to $135.6 million in the same years (MAV 2001, p.12). Successive [Victorian] state governments have not demonstrated a penchant for maintaining equity in the distribution of specific purpose programs where local government is a major recipient and service provider. State government funding programs affecting local government

46 •

FINANCE

TABLE 3.2 VICTORIAN SPECIAL PURPOSE GRANTS AS PERCENTAGE OF EXPENDITURE (EX DEPRECIATION)

)XQFWLRQ

²

²

6WDII5HVLGHQFHV$JHG'LVDEOHG+RXVLQJ





$QLPDO&RQWURO/RFDO/DZV/LWWHU&RQWURO





$JHG 'LVDEOHG





&RXQFLO'UDLQDJH





3UHVFKRROV7HDFKHU6XSHUYLVHG3OD\&HQWUHV





6SRUWV&RPSOH[HV )DFXOWLHV





&KLOG&DUH3OD\&HQWUHV





3XEOLF+DOOV &LYLF&HQWUHV





0DWHUQDO &KLOG+HDOWK'HQWDO&OLQLFV0RWKHUFUDIW1XUVLQJ





)LUH3URWHFWLRQ





$JULFXOWXUDO6HUYLFHV





/RFDO5RDGV %ULGJHV





(QYLURQPHQW3URWHFWLRQ





3DUNV*DUGHQV 5HVHUYHV





0 for any i, then the group in question is termed ‘privileged’, and will in general succeed in collective action. Alternatively, if Ai < 0 for all i, then the group is ‘latent’, and will fail in collective action unless additional individual incentives can be brought to bear. Firstly, selective incentives may exist which induce successful collective action as a byproduct of private incentives. In these cases, groups or organisations supplying collective goods simultaneously provide separate negative or positive incentives to group members or intended group members. And secondly, political entrepreneurship may be present where some individual or subset of a group finds it in their larger self-interest to provide collective goods to groups. Typically, politicians at the higher levels of government have worked their way through the party political ranks, as it were, to attain their level of office. A potted survey of politicians who have recently held high office in Australia provides support for this proposition. For example, Kim Beazley, Peter Costello, Tony Abbott, John Howard and Bob Hawke, to mention a few, all began their political careers in student politics. The behaviour of local government politicians can be analysed fruitfully using the concept of political entrepreneurship. Councils can be conceived of as breeding grounds for political entrepreneurs to not only capture the attention of political party officials at higher levels of government, but also of prospective voters in federal and state seats. The actions of political entrepreneurs in themselves cannot necessarily be seen as a cause of government failure. A political entrepreneur, by working toward the collective goals of a council, may induce the efficient delivery of public services. However, since ‘allocative inefficiency arises from the excessive provision of public goods as politicians pursue strategies designed to maximise their chances of re-election rather than policies which would further the common good’ (Dollery and Wallis 1997, p.37), we can hypothesise that if a municipal political entrepreneur seeks to advance her political career at higher levels of governance, her actions regarding public expenditure are likely to be correlated with capturing the attention of voters and party officials rather than the allocatively efficient provision of public goods. It can be argued that the problem of political entrepreneurship is likely to be felt more acutely at the local government level for at least three reasons. Firstly, since local government is typically the lowest level of government in a federation, with a large number of elected representatives, the proportion of political entrepreneurs is likely to be higher at this level than any other. Secondly, due to the high degree of voter apathy, and

228 •

POLICY

REFORM

comparative lack of interest by the media in local government, a politician will need to embark on grandiose and eye-catching projects to become known by voters. Similarly, a local government political entrepreneur may find it expedient to deliver ‘change’ even if the current policy stance is efficient. Finally, since state and federal jurisdictions are typically larger in area and population than local government wards, political entrepreneurs may need to provide public goods that have a benefit region much larger than that of the local government they represent.

CONCLUSION I have presented a taxonomic view of government failure in local government which draws strongly on the generic typologies which have been developed by theorists operating in the broad public choice tradition. Moreover, I have sought to argue that cogent reasons exist which suggest that government failure in general, and agency failure in particular, are likely to be more acute in municipal government than its counterparts at higher tiers in a federalism. This conclusion is in contrast to views of both Bailey (1999) and Boyne (1999), who seem to believe that since inter-governmental competition is greater at the local government level it may be less susceptible to government failure. If local government failure is indeed more pronounced, then we should inquire as to whether it can be differentiated in kind from government failure at federal and state levels; that is, does it consist of a different mix of allocative inefficiency, productive inefficiency and distributional inequity. Without a detailed empirical examination of this problem, it is difficult to speculate with any degree of precision. However, it does seem likely that allocative inefficiencies may well be more evident since the relatively small size of municipal budgets makes trade-offs between alternative bundles of local public goods more acute. If local government is indeed more prone to government failure than state and federal governments, then this also raises interesting questions about the design of appropriate governance mechanisms for municipalities. For example, the amalgamation of small local government structures into larger units could moderate the extent of local government failure. Similarly, the case for competitive tendering and ‘out-sourcing’ may be stronger at the municipal level of government than its higher counterparts. Moreover, uniform national standards of service delivery could be imposed on local governments to oblige them to provide minimal levels of local public goods.

PA R T E FUTURE DIRECTIONS

12 FUTURE DIRECTIONS FOR AUSTRALIAN LOCAL GOVERNMENT Brian Dollery and Neil Marshall

This volume set out to examine some of the major contemporary issues confronting Australian municipalities at the start of the twenty-first century. Preceding chapters have considered various dimensions of Australian local government from several disciplinary perspectives, with individual contributions examining a range of concerns and policy dilemmas in some detail. Whereas these contributions offer specialist analyses of particular areas, the collection as a whole also provides a useful review of the transformation of the local government sector in recent years. This final chapter now attempts to draw together some of these insights and place them in the broader thematic context of future local governance in Australia. The chapter itself is divided into two main parts. In the next section we seek to assess the achievements of Australian local government over the recent past, especially in the areas of management, democracy and finance. By contrast, the final section concludes this volume by considering future directions that might assist in overcoming some of the problems raised. In particular, we discuss the potential significance of developing sound intergovernmental consultative bodies, encouraging the growth of regional organisations, enhancing the efficiency and effectiveness of local government service delivery by entrenching the principle of comparative advantage in all of its operations, and stimulating more discourse and inquiry into local governance.

232 •

FUTURE

DIRECTIONS

THE ACHIEVEMENTS OF AUSTRALIAN LOC AL GOVERNMENT M A N AG E M E N T

One of the most conspicuous achievements of local government over the past decade lies in the manner in which it has reformed its internal functions and processes. Councils have restructured their organisational frameworks to cater for the outsourcing of services, developed commercial capabilities to compete in the business arena, adopted an orientation towards outcomes as opposed to inputs, and introduced a range of corporate strategic practices. These activities, of course, are all features of the New Public Management (NPM) that has substantially influenced the operation of public agencies around the world. In Australia, the impact has been particularly comprehensive. So much so, in fact, that Caulfield (Chapter 2) suggests that Australian local government has emerged as an international leader in the extent to which it has adopted and implemented the new managerial style. To a considerable degree, the NPM was thrust upon councils by state legislation, and subsequently encouraged by both Commonwealth and state agencies. However, the exercise amounted to far more than a top-down imposition by higher levels of government. As Geoff Baker observes in Chapter 7, many local authorities were willing recipients of the new strategies and viewed them as critical tools with which to cope with rising community expectations and declining sources of revenue. Indeed, a number of councils across all states have used the precepts and techniques of NPM to respond creatively to the particular needs of their communities. Indicative of this situation is the nature of the awards made annually by the National Office for Local Government for innovative approaches in such areas as information technology, entrepreneurship and economic development (NOLG 2001, Appendix J). This is by no means a surprising result; Australian municipalities have a long history of being at the forefront of management in the public sector arena (Wettenhall 1988). In essence, the changes adopted by many councils appear to have been well-targeted and effective. In Queensland, for example, community attitude tracking surveys taken over the course of the 1990s reveal high levels of public satisfaction with local government’s activities. Significantly, respondents expressed greater confidence in the role of councils as service provider than the other spheres of government (LGAQ 2002, p.23). There are undoubtedly large variations in the

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 233

effectiveness and efficiency of the performances of individual municipalities, both within and between states, as Baker notes (Chapter 7). Nevertheless, it would seem that overall the sector has performed well. While local authorities will doubtless continue to refine their internal structures and seek to improve outcomes, such gains are likely to be marginal in the foreseeable future. Further significant increases in efficiency will probably only eventuate when there is much improved coordination and alignment of activities between state agencies and councils. This will involve rethinking the nature of intergovernmental mechanisms. In particular, it will necessitate attention being given to the principle of subsidiarity — that is, each function of government should be devolved (where possible) to the lowest level of government, where such action best serves the interests of the community. Another challenge facing local government will involve the continuing shift away from traditional hierarchical administrative structures that have characterised councils in the past. Increasingly, as Joe Wallis indicates (Chapter 9), managers will have to adjust to operating environments based on market competition and the interaction of policy networks. Change of this order will require the acquisition of fresh skills and expertise. How both the above issues might be addressed is taken up later. D E M O C R AC Y

The reform spotlight has fallen so heavily on management in recent years that the democratic dimension of local government has, to a considerable extent, been overshadowed. Some commentators would put the even stronger view that a strident preoccupation with obtaining improved economic performance has had a detrimental affect on civic values. In this volume, Rosemary Kiss (Chapter 6) argues in part that state reform programs — and particularly the impact of amalgamations — have substantially weakened the democratic legitimacy of municipalities. The concerns raised by Kiss certainly emphasise the need for serious and sustained debate about the functions of local government within the broader Australian polity. At one level this process should involve an examination of the constitutional status of the sector, its roles and responsibilities vis-à-vis the state, and the nature of its relationships with higher spheres of government. In common with issues of service provision, such questions need to be tackled in the context of a formal intergovernmental structure and supported by highly developed protocols. At a broader level, wide-ranging dialogue surrounding the nature of the democratic mechanisms which underpin the function of local

234 •

FUTURE

DIRECTIONS

authorities is surely also necessary. One of the salient features of the reform processes across all the states in the 1990s was the absence of serious discussion about the theoretical principles on which local government should be based. The whole question of representative and participatory democracy, and the linkage between the two concepts, needs to be properly explored. Dynamic communities require sophisticated political structures that involve elements of both representative and participatory democracy. The appropriate mix of measures necessary to achieve the constructive involvement of constituents will vary both between localities and between states. The question of governance, however, needs to move beyond traditional notions of representation and participation to embrace consideration of a wider range of issues. These will include corporate governance perspectives (which Marshall examines in Chapter 8) and matters that pertain to local government failure, such as ‘voter apathy’ and ‘iron triangles’ (discussed by Dollery in Chapter 11). Equally important is an understanding of the wider fragmented and fluid environment in which municipalities now operate. Councils share their regional space and responsibilities with a range of autonomous bodies, whose actions, either directly or indirectly, have a significant bearing on the cultural, economic, social life of the community. Such bodies comprise boards and committees appointed by state authorities, state and Commonwealth government departments, adjoining councils, as well as regional organisations. The ability of elected members and officials to achieve strategic goals will depend upon their capacity to interact, and negotiate successfully, with these agencies. Such activity further reinforces Wallis’ argument in his chapter: it will be necessary for participants to build sustainable policy networks across diverse interests in order to secure appropriate policy outcomes. The final section of this chapter examines ways in which dialogue of this kind might be fostered. L O C A L G OV E R N M E N T E C O N O M I C S

Considerable progress has also occurred over the past decade in economics of local government. In common with higher tiers of government in the Australian federation, public sector reform has drastically changed the way in which local government approaches its core functions. Moreover, microeconomic reform, and especially National Competition Policy, with its key ingredients of competitive neutrality and deregulation, has transformed the operation of the Australian economy. Local governments have thus had to adjust not only to a dif-

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 235

ferent internal regime, but also to new external realities. It is therefore not at all surprising that elected representatives and council managers alike have experienced severe difficulties coming to terms with an entirely new environment. Despite these difficulties, much has been achieved. In essence, the institutional structure and managerial practices of Australian local government changed almost beyond recognition. As we argued earlier, under the influence of NPM councils have become much less hidebound and bureaucratic and much more responsive to changes in their outside environment. Local government managers now have much greater latitude to act autonomously in terms of the NPM doctrine of ‘letting managers manage’, but also simultaneously face much more accountability with the establishment of separate cost centres, which link administrative responsibility with resource expenditure. Employment patterns within the municipal sector appear to have changed to accommodate these new developments. Executive positions are now widely advertised to attract ‘new blood’, and executive recruitment is often aimed at hiring individuals from outside of the organisation in order to stimulate fresh approaches to the problems confronting local government. Managerial remuneration has risen proportionately over the past decade, occasionally to the chagrin of constituents. Commensurate with the greater challenges facing councils, managers now possess greater institutional freedom to pursue alternative solutions. Substantial change in the external economic environment has also fostered an institutional revolution in Australian local government. Microeconomic reform has resulted in a much more flexible and deregulated market economy in Australia, with significant repercussions for the entire public sector, including local government. In essence, the principle of competition, with its purported benefits of enhanced economic efficiency, has been brought to bear on individual councils. Compulsory competitive tendering and outsourcing have become standard instruments in the policy armouries of local governments in their quest for greater efficiency. With the contracting out of service production and delivery now a viable possibility for municipal managers, the nature of Australian local government is shifting from service production and provision to service provision per se. The old nexus between service provision and service production has been severed. Councils are now charged with providing services, in the sense of paying for their production and delivery, and then arranging the best possible means of actually producing these services. Production may occur entirely

236 •

FUTURE

DIRECTIONS

through outsourcing to the most economical contractors, remain an integral part of a council’s activities through ‘in-house’ manufacture, or be divided through some kind of public-private partnership. Emphasis is on providing ‘best value’ to ratepayers on a case-by-case basis. The efficiency-inducing impact of this change can hardly be over estimated. Instead of the old doctrinaire insistence on council provision and production of municipal services, with all of its notorious waste and inefficiency, the introduction of actual and potential competition for the right to produce and deliver services means that not only those activities subjected to competitive tender become subject to market forces, but also goods and services still produced in-house will be affected by the possibility of outsourcing. Thus even people and capital resources still hired directly by councils themselves to produce and deliver services are obliged to become more efficient under the threat of outsourcing. The introduction of the competitive principle to municipal activities has necessitated profound institutional changes in the operations of Australian local government. The relevant Commonwealth and state government empowering legislation had to be thoroughly digested and applied in practice — no mean feat in itself. Tender and other procedures had to be developed and perfected to meet the new challenges. Managers had to streamline existing council operations to ensure that they could rise to potential competition by contractors from the private sector. This meant inter alia extensive training for employees and frequent restructuring of service departments. At the same time, the global revolution in information technology had to be accommodated and incorporated into day-to-day operations. It is to the great credit of those people in Australian local government that these sea changes were navigated with great skill on the whole. One of the most important changes that have taken place in the institutional milieu of Australian local government resides in the nature of financial reporting. Christine Ryan (Chapter 4) outlines the substantial changes that have accompanied the introduction of AAS27 Financial Reporting by Governments that now forms the framework for all public agency reporting in Australia, including local government. This methodology obliged municipalities to move from cash-based reporting to accrual-based reporting. The rationale for this change derived from the need to provide financial information in a form more accessible to the general public and to bring accounting practice more into line with that employed in the private sector. Whilst the complexities of the new reporting framework appear to have been admirably

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 237

mastered by many municipalities, Ryan nevertheless argues that two main conceptual problems remain unresolved. In the first instance, it is not at all clear that AAS27 is entirely suitable for the valuation of assets and the associated problem of asset depreciation in the public sector. And secondly, the question of revenue recognition is problematic. Ryan contends that, despite the progress that has been achieved in council financial reporting, these areas need to be revisited. In addition to the revolutionary transformation wrought by public sector reform, NPM and microeconomic reform, Australian local governments had to face at least three further sources of change. Andrew Johnson (Chapter 3) provides an excellent analysis of the triad of pressures brought to bear on councils by severe constraints on revenue raising, unfunded mandates from higher levels of government, and rapidly rising expectations from constituents. Johnson shows how the current financial crisis confronting Australian local government derives in part from the inability of municipalities to raise sufficient funds to adequately discharge their duties, especially in the area of infrastructure development and maintenance. Rate capping by state authorities, insufficiently indexed grants from state and Commonwealth governments, and a marked reluctance by the public to pay ‘realistic fees and charges’ have meant that the growth in local government income has been rapidly outstripped by the demands on its resources. This problem has been intensified over the past decade by the inexorable downward shift of responsibilities from higher tiers of government, which local government has been constitutionally powerless to resist. Moreover, not only have state governments, in particular, placed the burden of additional functions on the unwilling shoulders of councils, in many cases these responsibilities have been unaccompanied by additional resources, or at least insufficient resources. The need to augment and maintain a costly and aging physical infrastructure has further intensified upward cost pressures. Compounding these cost and revenue pressures has been a growing ‘expectations gap’ derived from changing public perspectives on the appropriate role of local government. Johnson argues persuasively that people are no longer satisfied by the traditional ‘services to property’ role of Australian local government and demand instead a new and more resource intensive ‘services to people’ orientation. A substantial and rapidly increasing divergence between the abilities of local governments and the desires of their constituent groups has resulted. One method of tackling the ostensibly intractable problem of inexorably rising costs and insufficient revenue resides in enhancing the

238 •

FUTURE

DIRECTIONS

efficiency of Australian local government. Andrew Worthington (Chapter 10) has demonstrated that tremendous progress has been made towards measuring efficiency in local government and establishing appropriate benchmarks against which to evaluate the operations of individual councils. We have seen that a number of reforms have sought to achieve the goal of greater economic efficiency. For instance, the managerial revolution in local governance, with its attendant internal changes to municipal operations, has been instigated in order to make councils more cost effective. Similarly, the introduction of the competitive principle also represents an attempt to boost the efficiency of municipal resource use by allowing managers to use the cheapest available organisational solution to service production and delivery. A third policy option has sought to improve municipal efficiency by enlarging individual councils through amalgamation. This policy is based on (the largely empirically unsubstantiated) proposition that substantial economies of scale and scope derive from municipal size. Thus councils with larger populations are deemed to be able to produce and deliver services at lower costs than their smaller counterparts. Although we will examine the question of amalgamations, as well as policy alternatives in the form of ‘virtual councils’ and resource sharing, later in this chapter, for the present we simply wish to emphasise the far-reaching nature of structural reform in Australian local government over the past decade. As Paul May has indicated (Chapter 5), amalgamation has not been applied uniformly across all state and territory jurisdictions in Australia. Indeed, a continuum exists from the drastic ‘forced’ amalgamations undertaken in Victoria at the one extreme, to the ‘voluntary’ and concomitantly leisurely pace of restructuring in New South Wales at the other extreme. Nevertheless, considered as a whole, amalgamation has served as one of the major sources of change in Australian local government and thus serves to illustrate further the massive transformation of the sector over the past decade. The fact the affected municipalities have overcome many of the hurdles involved in amalgamation again underlines how well the sector has coped with rapid change.

FUTURE DIRECTIONS S TAT E / L O C A L PA RT N E R S H I P AG R E E M E N T S

We have sought to stress the importance of developing suitable intergovernmental mechanisms if some of the issues that have been identified are to be successfully addressed. The benefits to be gained from

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 239

encouraging such activity have not been lost on state governments: indeed, over the past two or three years, they appear to have adopted a far more inclusive approach to the local government sector. All states seem to have exhibited an increasing willingness to collaborate with municipal leaders and have begun to construct more extensive consultative arrangements to facilitate interaction. However, the nature of this involvement varies significantly across jurisdictions. Tasmania undoubtedly leads the field in terms of its ‘whole-of-government’ approach to engaging its municipalities. In 1999, the State Cabinet approved the development of a system of Partnership Agreements with the local government sector. These agreements are intended to improve service delivery, and achieve specified social, economic and environmental objectives. The Agreements work at three levels. The first involves senior state agency managers negotiating with individual councils. Both parties attempt to identify priority issues of mutual concern, and find suitable solutions. Projects undertaken so far relate to tourism, information technology, sport and recreation, health, and heritage. Each individual Agreement is personally signed by the Premier. A similar process takes place at the regional level and comprises groupings of councils. Finally, at the State level, the Premier’s Local Government Council has been set up to consider state-wide matters, such as waste management and planning coordination. The Council consists of representatives of the Tasmanian Local Government Association and senior officials of state agencies (Scott 2002). South Australia has gone down a similar path to Tasmania, but is somewhat less advanced. The State’s decision to move in this direction followed a review in the late 1990s that examined the scope of interaction between state agencies and local governments. When it transpired that this activity was quite extensive, State Cabinet decided to launch ‘The State/Local Government Partnerships Program’ in 2002. The new venture was to be shaped and implemented by an appointed forum. Chaired by the Minister of Local Government, the forum comprises representatives from the South Australian Local Government Association, metropolitan and rural members of parliament, chief executive officers (CEOs) from state agencies, and senior managers from councils. The Partnership Program is intended to be a functional reform process directed at improving cooperation between state and local governments and addressing strategic issues of importance. Recently, the program has begun to operate on a regional basis, though this is not yet as clearly articulated as the Tasmanian approach (Proctor 2002, pp.7–9).

240 •

FUTURE

DIRECTIONS

Victoria has similarly embarked upon a strategy that contains some of the elements of the South Australian and Tasmanian approaches. In the wake of the 1999 election, the State government sought to regenerate a collaborative working relationship with the councils. An annual Regional and Rural Mayors Summit, chaired jointly by the Minister for State and Regional Development, and the Minister for Local Government, has been formed. The Local Government Consultative Council, which meets four times each year, has also been convened by the Minister for Local Government. Municipalities are represented in regional groupings and meet with relevant state agency officials on particular issues. Moreover, a bi-monthly forum consisting of council chief executives and officers from the Department of Local Government is held to consider matters relating to management (Digby 2002, p.4). However, the Victorian initiative is clearly still in its early stages of development. Current initiatives in Western Australia are even more recent. A year after the election of the Gallop Government in 2001, Cabinet outlined measures to introduce a State-local partnership arrangement based on a set of agreed principles. The model involves the Western Australian Local Government Association working with State authorities on policy formulation and decision-making in areas where both spheres of government are major stakeholders. A critical feature of the new framework is the establishment of a State and Local Government Council to oversee the partnership process. The Council consists of the Premier, Treasurer, key ministers, and local government representatives. Initial deliberations will focus upon building consultative protocols, and developing a number of shared policy projects (Burges 2002, p.20). It remains to be seen how the outcomes of these intentions will actually evolve over the next few years In contrast to the broad approach of these states, Queensland and New South Wales have chosen agency or issue-centred strategies. Queensland’s Department of Local Government uses the Integrated Planning Act 1999 to coordinate state and local planning. The Act provides for the establishment of Regional Planning Advisory Committees that encompass two or more local government jurisdictions. These Committees are not general planning forums. Instead they have been created to formulate policy relating to specific economic, social or environmental concerns. The Advisory Committees can make recommendations, but these can only be implemented through the voluntary co-operation of constituent councils. The Committees are not incorporated and have

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 241

no authority to manage funds. Their function is essentially that of planning and co-ordination. Seven such bodies have been established in Queensland since 1999 (Meppem et al. 2002, Appendix B). The Department of Urban Affairs and Planning in New South Wales has been given responsibilities similar to Queensland’s Department of Local Government; it employs the provisions of the Environmental Protection and Assessment Act to integrate the State’s planning procedures. Plan First (2001) brings together all the State’s environmental and related planning activities under one heading. Emulating the Tasmanian approach, Plan First operates at three broad levels. At the ground level, after due consultation with residents, individual councils prepare ‘whole of community’ land use strategies, which include economic and social perspectives. In regional terms, a forum consisting of community and business representatives, state agencies and members of parliament, generates cross-regional proposals. Finally, at the State level, the Department of Regional Affairs and Planning monitors and coordinates the relevant planning activities of all state agencies. The Minister presides over the entire process and may amend local and regional intentions to ensure they conform to State requirements. Plan First, however, differs from Queensland in so far as the local government sector is treated as only one participant among many. Clearly, of all the state strategies outlined above, the Tasmanian initiative would seem to offer the most potentially effective intergovernmental framework. Partnership Agreements embrace a ‘wholeof–government’ approach that provides for structured and equitable interaction between players. When supported by protocols and the imprimatur of the most senior echelons of the state government, agreements will possess a high degree of credibility. They also provide an appropriate forum in which to consider the issues raised in the previous sections: the need to reconsider the financial situation of local authorities, especially the unfunded mandate (this is taken up in more detail later in the chapter), and the respective roles and responsibilities of the two levels of government. There is obvious scope here, too, to apply the subsidiarity principle. Finally, a system-wide perspective such as this facilitates an honest appraisal of the extent of the disparities exiting between metropolitan and regional areas, and the best means of redressing them. However, significant obstacles stand in the way of developing inclusive partnership arrangements. Not least of these is the mutual suspicion that has existed between state and local governments in some states for many years, even decades. Recently, the National President of the Local

242 •

FUTURE

DIRECTIONS

Government Managers Association went so far as to observe that ‘we have seen some state governments regard local government with disdain’ (Oxley 2002, p.3). While this comment was directed largely at the Victorian reforms of the 1990s, it also reflects the frustration felt in some quarters at the sector’s long-standing subservience to state governments. Even in South Australia, where relations between local governments and state agencies have been relatively benign, breaking down adverse perceptions has required a determined effort. For instance, Proctor (2002, p.11) has noted that ‘while we can make a difference in the way individual public servants in state and local government relate to each other, it is a very slow process indeed achieving institutional change’. The creation of partnership agreements will clearly take patience and time and will need to be shaped by the particular political culture of the state involved. A second major obstacle confronting the emergence of comprehensive partnership agreements is the logistical difficulties involved in determining the shape of structural arrangements. How do officials align and co-ordinate dozens of state programs with 68 local governments, in the case of South Australia, or 156 in Queensland? No doubt one of the factors underlying the success of Tasmania’s approach is the relatively small size of the state, and the limited number of state agencies and councils (29 in all) involved. In the more populous jurisdictions that possess administrative and infrastructure frameworks of substantially greater complexity, the difficulties are significant. We suggest that one long-term solution to this problem may be to encourage the growth of Regional Organisations of Councils (ROCs). The benefits that these entities offer are taken up in the following section. R E G I O N A L O R G A N I S AT I O N S O F C O U N C I L S ( R O C S )

ROCs are voluntary groupings of neighbouring councils. Though not well known in the broader public arena, they have been an established feature of the Australian local government landscape for many years. The first ROC was established in Tasmania in 1922. Others were formed in all states over the course of the following decades. There was a sudden increase in the numbers established during the early to mid-1990s as a result of federal government support for regional development. By 1995, Northwood (1995, p.1) estimated that there were about 50 such bodies in Australia covering almost 45 per cent of councils, and around 75 per cent of the population. This number fell during the 1990s as a result of the amalgamation programs implemented by South Australia,

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 243

Tasmania and Victoria. In 2001, it is estimated that there were some 30 to 40 ROCs in operation (Marshall and Witherby 2002, p.1). The majority of ROCs consist of between five and fifteen councils (with the largest having 18). Size and population varies enormously; the Western Sydney Regional Organisation of Councils (WSROC), for example, is formed from 11 councils, covers 5851 square kilometres, and contains 1 500 000 residents. By contrast, the Murray Regional Organisation of Councils has only 10 members, but is spread over 63 257 square kilometres (some 7.8 per cent of New South Wales) and comprises just 45 532 constituents. The average ROC is financed by a set fee from member councils, supplemented by a pro rata contribution based on population or rates income. Participating councils appoint two or three individuals to sit on the ROC board. These representatives almost always include the mayor, along with another councillor and/or the CEO. Most ROCs are supported by administrative structures and specialist committees. Joining a ROC offers a number of benefits for participating councils. Firstly, meetings provide an opportunity to exchange ideas and consider issues of common interest. Such interaction also allows (often) disparate entities to foster a sense of cohesion and regional identity. Secondly, forums of this nature encourage the development of common policy on issues such as housing, soil and water management and records management. Because ROCs have access to expertise, data and experience that is drawn from across a range of councils, outcomes are more likely to be well informed. Thirdly, ROCs can assist in the coordination and rationalisation of activities across jurisdictions. Outcomes may range from a quite modest brochure for walking trails, for instance, to a set of complex environmental planning documents. Fourthly, ROCs facilitate resource sharing and joint purchasing arrangements. Such practices allow members to develop superior technical specifications addressed to their particular needs, and to provide for economies of scale in the use of expensive equipment. Smaller regional groupings benefit in this regard at least as much as the larger urban ROCs. Over a three and half year period in the late 1990s, for example, the Riverina Eastern Regional Organisation of Councils (2001, p.6) delivered savings of over $2.5 million to its 13 members through joint purchasing. Finally, and perhaps most importantly, ROCs function as regional lobbyists. When a group of councils can provide a united front on a particular issue, their views will usually carry much greater weight with the

244 •

FUTURE

DIRECTIONS

relevant federal and state authorities. Submissions are also more likely to be thoroughly researched and better argued. There is little doubt that some ROCs have become highly refined and knowledgeable in the techniques and strategies they employ. It is clear that many have achieved significant successes with their lobbying activities. Probably the most impressive outcome in this regard was the Western Sydney Regional Organisation of Council’s success in persuading the New South Wales government to appoint a separate Minister for Western Sydney. Certainly, there have been some very successful ROCs in Australia in recent years that have benefited from most or even all of these factors. Moreover, successes have not been confined only to the metropolitan areas. Several groupings of councils in regional and remote areas have formed highly effective organisations. It remains true, nonetheless, that the largest and most influential ROCs are situated around the capital cities. Not all ROCs succeed. Some are uninspired groupings that achieve only just enough to keep the entity intact. Others are disbanded after only a short period. A few experience a period of considerable achievement and then cease to exist. It remains uncertain, however, just what combination of characteristics is necessary to create a high-performing ROC. There is no clear mix of such variables as rates income, geographical size, population density, cultural homogeneity, length of time since establishment, or industry type, which might explain why some ROCs are more successful than others. Rather, it seems that the critical attributes which contribute to a successful ROC are the intangible factors of commitment, teamwork, regional vision, trust, openness, communication, leadership, and a willingness to cooperate. These last features, of course, correspond quite closely with Wallis’ notion of ‘network’ forms of governance where players interact in terms of shared values and operational understandings. Indeed, from this perspective, ROCs offer a framework for providing a stable, long-term structure for regional governance in Australia. ROCs evolve from the bottom-up, creating their own institutional arrangements and infrastructure requirements as they grow. This approach ensures that each grouping is attuned and adaptive to its particular regional needs. Because they emerge from the grass roots, ROCs are likely to enjoy a legitimacy and credibility in the eyes of constituents that an imposed level of government would take many years to achieve. In the context of this chapter we suggest that such a system of regional governance is a desirable development in Australia. ROCs offer

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 245

many of the benefits of larger, formal administrative structures while simultaneously preserving the autonomy and sense of community valued by individual local authorities. Moreover, the ROC concept remains equally applicable in an amalgamated local government environment: even the largest merged municipality is unlikely to cover a whole region. The post-amalgamation experience in Tasmania and South Australia indicates that the need for groupings of councils remain as strong as ever. Indeed, in both states new configurations of ROCs have begun to emerge. Possibly the most important characteristic of ROCs resides in the fact that they offer state governments a potentially very efficient and effective means of developing partnership arrangements. A ROC enables just a single point of contact for state agencies in areas such as health, housing and welfare. An arrangement of this sort facilitates a broad appreciation of regional requirements whilst at the same time catering for the needs of smaller areas. L O C A L G OV E R N M E N T E F F I C I E N C Y

As we argued earlier, much has been achieved in making Australian local government more efficient and effective. Managerial practice has improved sharply, institutional structures have been radically redesigned to promote efficiency-enhancing competition in the form of outsourcing and public-private partnerships, financial reporting has been strengthened, massive structural change has been absorbed, and in general councils are now much more client-focussed than in the past. Nevertheless, substantial problems remain to be satisfactorily resolved in future. In the first place, although Andrew Worthington cogently demonstrated that most of the technical obstacles to performance measurement have been overcome, fully transparent benchmarking has yet to materialise. This is in large part due to the fact that in many state jurisdictions, local governments still produce unaudited data on their own economic performance. Moreover, in some instances this data is tardy in forthcoming. Thus, despite significant econometric advances in the statistical measurement of economic efficiency, little reliance can often be placed on the results of benchmarking exercises because of flawed or incomplete data. In an era of public sector transparency, it is simply unacceptable that inefficient councils are permitted to disguise the fact that they lag behind their counterparts in service delivery. As Andrew Johnson has argued, local governments can hardly call for greater financial sacrifices

246 •

FUTURE

DIRECTIONS

from ratepayers and larger funding contributions from higher levels of government in the absence of reliable benchmarking data on their own performance. Moreover, it seems grossly inequitable that a ‘tail’ of poorly performing councils can wag the body of the ‘dog’ of municipalities genuinely attempting to lift their game. The long-run cumulative effect of a system of ‘self reporting’ that enables inept councils to conceal their inefficiencies will surely be a ‘race to the bottom’. There is thus an urgent need for state-based local government associations, such as the NSW Local Government and Shires Association, to ensure that accurate and timely data is employed in annual benchmarking exercises. This will have at least three beneficial effects. Firstly, public confidence in municipal performance appraisal will grow and with it the esteem in which local government is held. Secondly, state and Commonwealth governments will be reassured that the grant funds they transfer to local governments are diligently and efficiently expended. And finally, reliable benchmarking will enable individual councils to compare their own performance with like municipalities and adjust their behaviour accordingly. Various institutional possibilities for gathering accurate current data exist. Perhaps the ‘first-best’ option would be for local government representative bodies in each state and territory to lobby their provincial legislatures allow state departments of local government to collect and audit performance information under the force of law. Individual councils that fail to produce reliable information by an assigned date could be punished by a reduction in the level of their grants. Should this option be resisted by state authorities on cost or other grounds, then local government associations could simply collect the data themselves and submit it to external audit by public accounting companies. Whatever data collection and oversight procedure is employed, it is critical that it be transparent and trustworthy. Local government restructuring remains another concern. Although the process of local government consolidation is complete for all intents and purposes in some state jurisdictions, most notably Victoria and Tasmania, in other large states, like Western Australia and New South Wales, the prospects for restructuring have yet to be explored in detail. Proponents of municipal amalgamation have insisted that larger local governments can achieve significant economies of scale and scope with substantial cost savings. By contrast, opponents of amalgamation have typically disputed the existence of considerable scale and scope economies and pointed to practical problems faced by rural and

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 247

regional councils situated vast distances from their neighbouring municipalities. Available Australian empirical evidence on economies of scale and scope is mixed and extant international data moot (see, for example, Byrnes and Dollery, 2002). In his chapter, Paul May argues that concerns over any adverse impact the amalgamation of small councils into larger administrative units on democratic representation can be met with the creation of ‘virtual councils’. According to this view, existing small councils can maintain their current representational structure whilst at the same time pooling and sharing resources with adjacent municipalities by forming virtual councils. Under this kind of ‘have your cake and eat it’ arrangement, the purported advantages of low ratios between voters and elected representatives can be conserved while simultaneously enjoying the alleged benefits of any scale and scope economies that may arise. Whereas utopian schemes of this ilk appear at first sight to resolve many of the potential trade-offs between democratic participation and economic efficiency, as May argues, the crux of the matter surely lies not only in the division of any pecuniary benefits, but also the allocation of costs. It is hard to see how these problems will be resolved in the fractious ‘real world’ of Australian local government. A much more promising (and older) alternative to amalgamated large councils resides in resource sharing between adjacent small councils. Dollery (1997) has argued that the resource-sharing model enjoys both theoretical and empirical support. For instance, councils are statutorily obliged to fulfil a number of different functions, many of which will have different geographic zones or (‘benefit regions’) over which their benefits are spread. Thus street lighting typically benefits people in the immediate vicinity whereas large public parks may attract people from afar. Spillovers (or externalities) of the latter kind lend themselves to cost-sharing arrangements between jurisdictions whose residents are likely to benefit. Similarly, in cases where economies of scale can be demonstrated, such as domestic waste tip sites, adjacent councils can benefit by sharing these resources and bearing the associated costs on a per capita (or equivalent) basis. If resource sharing is undertaken on a case-by-case basis, then the political pitfalls of virtual councils can be avoided since no formal and binding long-term agreement has been made to agglomerate all council functions. Trial and error in particular and promising service areas can be employed to test for the existence of scale economies, and if they do not generate significant cost savings then the resource-sharing ‘experiment’ can be abandoned.

248 •

FUTURE

DIRECTIONS

The essential point we seek to make in regard to local government restructuring in Australia is that this ‘unfinished’ process requires a good deal more attention in future. Both the theoretical and empirical arguments that ‘bigger is better’ are not presently convincing. Moreover, structural alternatives to amalgamation are available, such as resource sharing and virtual local government. Additional discourse and inquiry are urgently required in this area. G E N E R AT I N G D I S C O U R S E A N D I N Q U I RY

We conclude this chapter, and the volume, by addressing one of the most problematic issues facing local government today: the low profile of the sector in the public consciousness. Unlike its state and federal counterparts there is very little informed dialogue about the functions, structures and purposes of Australian local government. The last — and only — time such dialogue took place with a national focus occurred during the early 1980s, following the establishment of the Advisory Council for Inter-Government Relations (ACIR) by (then) Prime Minister Fraser. The Council subsequently produced 13 discussion papers and three reports on local government. Balmer (1989, p.7) observed that the Council’s great achievement lay in the following: [T]he debate it generated in local government circles. Each discussion paper was circulated in draft form and comment on its contents was encouraged. As the reports themselves were developed, they too were widely circulated and seminars held to discuss their tentative proposals, as well as written comment obtained from government departments and other agencies. This process resulted in public servants from all three spheres of government and the elected members of local government developing a deeper understanding of its place within the federal system and its potential for a more widespread contribution to public life’. Undoubtedly the Council’s efforts did a great deal to lift the public image of local government across Australia and helped persuade premiers to formally recognise the sector in state constitutions. They also encouraged federal authorities to put national constitutional recognition of local government to referendum in 1988 (which then failed to carry). Given the changed political climate, it is unlikely that another body like the ACIR will emerge in the near future. Rather, the role of the state and national local government associations probably offers the

FUTURE

DIRECTIONS

FOR

AUSTRALIAN

LOCAL

GOVERNMENT

• 249

most likely possibility of promoting discourse. During the late 1980s and early 1990s the Australian Local Government Association (ALGA) set about revitalising the sector as a whole and, in particular, building a cohesive and co-ordinated stance on critical issues. The ALGA itself emerged as a forceful and influential lobby with a sophisticated and well-researched approach to policy development. The result was substantial success for the Association in persuading the federal government to support desired courses of action. During the late 1990s the ALGA has been redoubling its efforts to promote the importance of local authorities in national affairs. It has expanded its influence in critical forums and is now represented on 70 federal councils and committees. Such strategies have undoubtedly served to lift the profile of local authorities in professional circles around Australia. Many of the state associations have also worked hard to project local government more firmly into the community’s consciousness. Though these endeavours have certainly born much fruit, the raising of a national awareness of the achievements of councils continues to be hampered by the narrow territorial perspectives of some state associations. At the grass roots level, councillors and managers receive little information about what is taking place in other states. The partnership initiatives developed by Tasmania and South Australia, for example, though familiar to senior administrators in adjoining states, took a long time to filter down through the system. One of the benefits of having a federal structure is that it allows various jurisdictions to experiment with different approaches to policy issues. The outcomes of these experiments need to be widely disseminated for the benefit of the local government sector as a whole. Finally, the universities are well positioned to play a critical role in building local government’s public profile. They can contribute by offering courses that both recognise the distinctiveness of the sector, and provide appropriate training for municipal practitioners. As the sophistication and complexity of council activity increases, career-oriented managers are discovering — in line with their counterparts in other spheres of government — that they need to supplement their undergraduate degree with a post-graduate qualification. This has usually involved undertaking a Masters of Business Administration, or Masters of Public Policy/Public Management. The generic management skills imparted by qualifications such as these undoubtedly served local government well during the 1990s. It is doubtful, though, that they can continue to meet the evolving needs of

250 •

FUTURE

DIRECTIONS

the sector into the 2000s. Studies in business management are typically oriented towards the private sector, while public policy and public administration courses cater largely for more conventional government agencies. The specific requirements of local authorities, however, differ substantively not only from the private sector, but also increasingly from those of state and federal bodies. Characteristics which distinguish the operation of councils from other spheres of government have been alluded to in almost all the previous chapters contained in this volume. Two further examples are worth mentioning here. First, where there is a separation of roles between the legislature, executive and judiciary in state and federal of government, these roles are fused at the municipal level. This situation significantly alters the dynamics of institutional activity and the manner in which managers interact with elected members. Second, the strategic dimension of local government activity is especially difficult because managers have to adopt a ‘whole of community’ perspective. This involves attempting to embrace the competing demands of a spectrum of citizen interests, as well as delivering a diverse range of services. The complexity of this exercise in large urban municipalities probably exceeds that undertaken by any single state or federal government department. Practitioners need to understand and accommodate the nature of such activities if the local government sector is to function effectively and reach its full potential in the future. With local government growing in scope and maturity, and assuming an increasingly salient position as an economic driver in the national polity, it is time to develop university degrees designed specifically for needs of the sector. These courses would be constructed in close collaboration with industry bodies like the Local Government Managers Association, and offered at post-graduate level — perhaps as a Master of Local Governance. Serious engagement with the universities would bring the added benefit of generating increased academic interest in the sector (which is unfortunately very limited at the moment). Major research studies relating to local government serve to stimulate public debate about the role and direction of municipalities. Dialogue of this kind, in turn, can only promote the status and credibility of the sector as a whole.

REFERENCES

Access Economics (2001) The Case for Increased Financial Assistance to Local Government, prepared for the Australian Local Government Association, November 2001, Canberra. Advisory Council for Inter-Governmental Relations (1983) The Role of Local Government Councillors, ACIR, Hobart. Akizuki, K (2000) Intergovernmental relationships and local government reform in japan: a case of the integrative system, in E Amna and S Montin (eds.), Towards a New Concept of Local Self-Government? Fagbokforlaget. Albrow, M (1970) Bureaucracy, Pall Mall Press, London. Aldrich, JH (1997) When is it rational to vote? in DC Mueller (ed.), Perspectives on Public Choice, Cambridge, Cambridge University Press, pp. 373–90. Alford, J (1993) Towards a new public management model: beyond ‘managerialism’ and its critics, Australian Journal of Public Administration, 52, pp. 13648. Allen, P (2001) Secession: A manifesto for an independent Balmain local council, Balmain, Secession Movement Inc., Sydney. Ammons, DN (1986) Common barriers to productivity improvement in local government, in M Holzer and A Halachmi (eds.), Strategic Issues in Public Sector Productivity: The Best of Public Productivity Review 1975–1985, San Francisco, Jossey-Bass. Ammons, DN (1992) Productivity barriers in the public sector, in M Holzer (ed.), Public Productivity Handbook, New York, Marcel Dekker. AMQ International, Skilmar Systems Pty. Ltd, Jeff Roorda and Associates (1998) Facing the Renewal Challenge: Victorian Local Government Infrastructure Study, Victorian Department of Infrastructure Local Government Branch, Melbourne. Aulich, C (1999a) Bureaucratic limits to markets: the case of local government in Victoria, Australia, Public Money and Management Oct–Dec, pp. 37–43. Aulich, C (1999b) From convergence to divergence: reforming Australian local government, Australian Journal of Public Administration, 58, pp. 12–23. Aulich, C, Crofts, D, and Traill, R (1991) An evaluation of the Australian Commonwealth Government’s local government development program, Australian Journal of Public Administration, 50, pp. 122–27. Australian Accounting Standards Board (2002a) Project Summary-Review of AAS27 Financial Reporting by Local Governments.

252 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Australian Accounting Standards Board (2002b) Action Alert, February. Australian Bureau of Statistics (1971) Census of Population and Housing 1971, Bulletin 1: Summary of Population, Part 9. Australia, Reference No. 2.83.9, Australia. Australian Bureau of Statistics (1980) 1980 Year Book Australia, no 64, catalogue no. 1301.0, Canberra. Australian Bureau of Statistics (1982–83 to 1999–00), Taxation Revenue in Australia, catalogue no. 5506.0, Canberra. Australian Bureau of Statistics (1998) Government Finance Statistics 1997–98, catalogue no.55, Canberra. Australian Bureau of Statistics (2000) 2000 Year Book Australia, no 82, catalogue no. 1301.0, Canberra. Australian Local Government Association (1993) A Guide to Integrated Local Area Planning, ALGA, Canberra. Australian Local Government Association (1996) Annual Report, ALGA, Canberra. Australian Local Government Association (1997) Declaration on the Role of Local Government, National General Assembly, ALGA, Canberra. Australian Local Government Association (2001a) 2001–02 Federal Budget Submission, Canberra. Australian Local Government Association (2001b) The Federal Scene, a paper presented to the Local Government Financial Awareness Conference, May 2001, Parkes, NSW. Australian National Audit Office (1997) Applying Principles and Practice of Corporate Governance in Budget Funded Agencies, ANAO, Canberra. Axelrod, R (1984) The Evolution of Co-operation, Basic Books, New York. Bailey, S (1999) Local Government Economics: Principles and Practice, London: Macmillan. Baldersheim, H (2000) Subsidiarity at work: modes of multi-level governance in European countries, in J Caulfield and HO Larsen, Local Government at the Millennium, Leske and Budrich, Berlin. Baldersheim, H and Stahlberg K (1994) Towards the Self-Regulating Municipality: Free Communes and Administrative Modernisation in Scandinavia, Aldershot. Balmer, C (1989). Local government in the Federal system, in Australian Local Government Association, Australian Local Government Handbook, AGPS, Canberra. Banker, RD and Morey, RC (1986) The use of categorical variables in data envelopment analysis, Management Science, 32, pp. 1613–27. Banker, RD, Charnes, A and Cooper, WW (1984) Some models for estimating technical and scale inefficiencies in data envelopment analysis, Management Science, 30, pp. 1078–92. Barnes, T (2002) Evolution and future direction of local government. Paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, NSW, 14–17 February. Barnett, H (1998) Constitutional and Administrative Law, 2nd edition, Cavendish Publishing, London. Barr, JL and Davis, OA (1996) An elementary political and economic theory of the expenditures of local governments, Southern Economic Journal, 33, pp. 149–65. Barrett, PJ (2001) Corporate Governance—More than Good Management, Australian National Audit Office, Canberra. Barry, BM and Hardin, R (1982) Rational Man and Irrational Society?, Sage Publications, London. Barton, A (1999a) Public and private sector accounting—the non-identical twins, Australian Accounting Review, 9, pp. 22–31.

REFERENCES

• 253

Barton, A (1999b) A trusteeship theory of accounting for natural capital assets, Abacus 35, pp. 207–22. Barton, A (1999c) Land under roads—a financial bonanza or fool’s gold? Australian Accounting Review, 9, pp. 9–15. Barton, A (2000) Accounting for public heritage facilities—assets or liabilities of the government? Accounting, Auditing and Accountability Journal, 13, pp. 219–35. Beetham, D (1996) Theorising democracy and local government. in D King and G Stoker (eds.), Rethinking Local Democracy, Macmillan, Houndmills and London, pp. 28–49. Behm, A (2002) Exposure promises a new broom, The Australian, 4 April. Bekke, HA, Perry JL and Toonen TA (eds.) (1996) Civil Service Systems in Comparative Perspective, Indiana University Press, Bloomington. Bell, C and Newby, H (1974) Introduction, in C Bell and H Newby (eds.), The Sociology of Community, Frank Cass, London and Portland, pp. xliii–li. Bernstein, DJ (2001) Local government measurement use to focus on performance and results, Evaluation and Program Planning, 24, pp. 95–101. Bertelsen, J (2002) South East Queensland Regional Organisation of Councils (SEQROC): Regional Cooperation—Going from Strength to Strength, Paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, NSW, 14–17 February. Besanko, D, Dranove, D and Shanley, M (2000) Economics of Strategy, John Wiley and Sons, New York. Bird, R and Slack, E (1991) Financing local government in OECD countries: the role of local taxes and user charges, in J Owends and G Panella (eds.), Local Government: an International Perspective, North Holland, Amsterdam. Bishop Terry (1996) Financial reforms, in B Dollery and N Marshall (eds.), Australian Local Government: Reform and Renewal, Macmillan, South Melbourne. Bjurek, H, Hjalmarsson, L and Førsund, FR (1990) Deterministic parametric and nonparametric estimation of efficiency in service production: a comparison, Journal of Econometrics, 46, pp. 213–27. Bjurek, H, Kjulin, U and Gustafsson, B (1992) Efficiency, productivity and determinants of inefficiency at public day care centers in Sweden, Scandinavian Journal of Economics, 94, pp. 173–87. Black, and Hughes P (2001) The Identification and Analysis of Indicators of Community Strength and Outcomes, Report to the Department of Family and Community Services, February. Blacker, Y (1999) Local government reform in Victoria, Local Government Management, April, pp. 12–13. Blank, JLT (ed.) (2000) Public Provision and Performance: Contributions from Efficiency and Productivity Measurement, Amsterdam, Elsevier. Borzel, TJ (1998) Organising Babylon—on the different conceptions of policy networks, Public Administration, 76, pp. 253–73. Bottomley, R (1997) From contractualism to consitituionalism: a framework for corporate governance, Sydney Law Review, 19. Boulding, KE (1978) Ecodynamics, Sage, New York. Boyne, GA (1998) Public Choice Theory and Local Government, Macmillan, Basingstoke. Bradrach, J and Eccles, R (1991) Price, Authority and trust: from ideal types to plural forms, in G Thompson, J Frances, R Levacic and J Mitchell (eds.), Markets, Hierarchies and Networks: The Co-ordination of Social Life, Sage, London. Brennan, G and Buchanan, JM (1984) Voter choice, American Behavioural Scientist, 28, pp. 185–201.

254 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Breton, A and Wintrobe, R (1982) The Logic of Bureaucratic Conduct, Cambridge University Press, New York. Buchanan, JM, Tollison RD and Tullock, G (eds.) (1980) Toward a Theory of a Rent-Seeking Society, Texas University Press, College Station, pp. 3–15. Burke L and Walsh, G (1999) The new local government framework, in B Galligan (ed.), Local Government Reform in Victoria, State Library of Victoria, Melbourne, pp. 71–96. Burns P (1992) Accounting for asset renewal, IIR Conference, November 1992, Sydney. Burns P, AMQ International, Jeff Roorda and Associates and Skimar Systems (2001) A Wealth of Opportunities, prepared for the Local government Infrastructure Management Group, Adelaide. Byrnes, JL and Dollery, BE (2002). Do economies of scale exist in Australian local government? A review of the evidence, Urban Policy and Research (forthcoming). Cadbury, A (1992) Report of the Committee on the Financial Aspects of Corporate Governance, Gee Publishing, Oxford. Carlon T (2000) Measurement challenges and consequences in the Australian public sector, Australian Accounting Review, 11, pp. 63–72. Carnegie, G (1990) Timing and Frequency of Financial Reporting, Australian Accounting Research Foundation, Discussion Paper, No. 15, Australian Accounting Research Foundation, Melbourne. Carnegie, G, and Wolnizer, P (1995). The financial value of cultural, heritage and scientific collections: an accounting fiction, Australian Accounting Review, 5, pp. 31–47. Carnegie, G, and Wolnizer, P (1996). Enabling accountability in museums:, Accounting Auditing and Accountability Journal, 9, pp. 84–99. Carnegie, G, and Wolnizer, P (1997). The financial reporting of publicly-owned collections: whither financial (market) values and contingent valuation estimates? Australian Accounting Review, 7, pp. 44–50. Carnegie, G, and Wolnizer, P (1999). Unravelling the rhetoric about the financial reporting of public collections as assets, Australian Accounting Review, 9, pp. 16–21. Carter, N, Klein, R and Day, P (1995) How Organisations Measure Success: The Use of Performance Indicators in Government, Routledge, London. Caulfield, J (2002) Local government finance in OECD countries, in J Caulfield and HO Larsen (eds.), Local Government at the Millennium, Leske and Budrich, Berlin. Caulfield, J and Larsen, HO (2002) Local Government at the Millennium, Leske and Budrich, Opladen. Cetenic-Dorol, CJ (2000) An attitudinal response to role conflict in local government, Australian Journal of Public Administration, 59. Chang, KP and Kao, PH (1992) The relative efficiency of public versus private municipal bus firms: an application of data envelopment analysis, Journal of Productivity Analysis, 3, pp. 67–84. Chapman, R (1997a) Intergovernmental relations, in B Dollery and N Marshall (eds.), Australian Local Government—Reform and Renewal, Macmillan, South Melbourne, pp. 40–68. Chapman, R (1997b) The role of local government in Australia, in R Chapman, M Haward and B Ryan, Local Government Restructuring in Australasia, CPMP, University of Tasmania, Hobart, pp. 1–23. Chapman, R, Haward, M and Ryan, B (1997a) Local government restructuring, in R Chapman, M Haward, and B Ryan (eds.), Local Government Restructuring in Australasia, CPMP, University of Tasmania, Hobart, pp. 199–213. Chapman, R, Haward, M and Ryan, B (eds.) (1997b) Local Government Restructuring in Australasia, Series in Public Management and Policy, Centre for Public Management and Policy, Hobart.

REFERENCES

• 255

Charnes, A, Cooper, WW and Li, S (1989) Using data envelopment analysis to evaluate efficiency in the economic performance of Chinese cities, Socio-Economic Planning Science, 23, pp. 325–44. Charnes, A, Cooper, WW and Rhodes, E (1978) Measuring the efficiency of decision making units, European Journal of Operational Research, 2, pp. 429–44. Charnes, A, Cooper, WW, Lewin, AY and Seiford, LM (1993) Data Envelopment Analysis: Theory, Methodology and Applications, Kluwer, Boston. Chartered Institute of Public Finance and Accountancy (1995) Corporate Governance: A Framework for Public Service Bodies, CIPFA, London. Christensen, T and Laegreid P (eds.) (2001) New Public Management: the Transformation of Ideas and Practice, Ashgate, Aldershot. Coelli, T, Rao, DSP, Battese, GE (1997) An Introduction to Efficiency and Productivity Analysis, Kluwer, Boston. Coleman, J (1990) Foundations of Social Theory, Harvard University Press, Cambridge, Mass. Collin, J, Leveillee, JJ and Poitras, C (2002) New challenges and old solutions: metropolitan reorganisation in Canadian and United States city-regions, Journal of Urban Affairs, 24, pp. 317–33. Commonwealth Grants Commission (2001) Review of the Operation of the Local Government (Financial Assistance) Act 1995, Canberra. Considine, M (1988) The corporate management framework as administrative science: a critique, Australian Journal of Public Administration, LVII, pp. 4–18. Cook, WD, Kazakov, A and Roll, Y (1993) On the measurement and monitoring of relative efficiency of highway maintenance patrols, in A Charnes, WW Cooper, AY Lewin, and LM Seiford (eds.), Data Envelopment Analysis: Theory, Methodology and Applications, Kluwer, Boston. Cook, WD, Kazakov, A, Roll, Y and Seiford, LM (1991) A data envelopment approach to measuring efficiency: case analysis of highway maintenance patrols, Journal of Socio-Economics, 20, pp. 83–103. Cook, WD, Roll, Y and Kazakov, A (1990) A DEA model for measuring the relative efficiency of highway maintenance patrols, Informational Systems and Operational Research, 28, pp. 113–24. Coulson, A (ed.) (1995) Local Government in Eastern Europe. Establishing Democracy at the Grassroots, Elgar, Aldershot and Brookfield. Cubbin J, Domberger S and Meadowcroft S (1987) Competitive tendering and refuse collection: identifying the source of efficiency gains, Fiscal Studies 8, pp. 49–58. Dairokuno, K (1998) Better governance or just another functional adjustment: local government reforms in Japan, in A Nakamura (ed.), Local Governance and National Development, EROPA Local Government Center, Tokyo. De Borger, B and Kerstens, K (1996a) Cost efficiency of Belgian local governments: a comparative analysis of FDH, DEA and econometric approaches, Regional Science and Urban Economics, 26, pp. 145–70. De Borger, B and Kerstens, K (1996b) Radial and nonradial measures of technical efficiency: an empirical illustration for Belgian local governments using an FDH reference technology, Journal of Productivity Analysis, 7, pp. 5–18. De Borger, B, Kerstens, K, Moesen, W and Vanneste, J (1994) Explaining differences in productive efficiency: an application to Belgian municipalities, Public Choice, 80, pp. 339–58. Deller, SC (1992) Production efficiency in local government: a parametric approach, Public Finance/Finances Publiques, 47, pp. 32–44. Deller, SC and Halstead, JM (1994) Efficiency in the production of rural road services: the case of New England towns, Land Economics, 70, pp. 247–59. Deller, SC and Nelson, CH (1991) Measuring the economic efficiency of producing rural road services, American Journal of Agricultural Economics, 72, pp. 194–201.

256 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Deller, SC and Rudnicki, ER (1992) Managerial efficiency in local government: implications on jurisdictional consolidation, Public Choice, 74, pp. 221–31. Deller, SC, Chicoine, DL and Walzer N (1988) Economies of scale and scope in rural low-volume roads, Review of Economics and Statistics 70, pp. 459–65. Deller, SC, Nelson, CH and Walzer, N (1992) Measuring managerial efficiency in rural government, Public Productivity and Management Review, 15, pp. 355–70. Department of Transport and Regional Services (2001) 2000–01 Report on the Operation of the Local Government (Financial Assistance) Act 1995. Digby, P (2002) Victorian Local Government—Evolution over the past 10 years and Future Directions, Paper presented at the University of New England Conference The Cutting Edge of Change: Shaping Local Government for the 21st Century, 15–17 February. Dollery, BE (1997) Reforming Australian local government: forced and voluntary amalgamations?, Agenda, 4, pp. 445–53. Dollery, BE and Marshall, N (eds.) (1997) Australian Local Government: Reform and Renewal, Macmillan, Melbourne. Dollery, BE and Singh, S (1998) A note on the empirical analysis of Wagner’s law, Economic Analysis and Policy, 28, pp. 245–57. Dollery, BE and Wallis, JL (1997) Market failure, government failure, leadership and public policy, Journal of Interdisciplinary Economics, 8, pp. 113–26. Dollery, BE and Worthington, AC (1996a) The empirical analysis of fiscal illusion, Journal of Economic Surveys, 10, pp. 261–97. Dollery, BE and Worthington, AC (1996b) The evaluation of public policy: normative economic theories of government failure, Journal of Interdisciplinary Economics, 7, pp. 27–39. Domberger S, Meadowcroft S and Thompson D (1988) Competition and efficiency in refuse collection: a reply, Fiscal Studies 9(1), pp. 86–90. Downs, A (1957) An Economic Theory of Democracy, Harper Row, New York. Drage, J (2002) New Zealand’s local government: what of the future, in Caulfield and Larsen (eds.), Local Government at the Millennium, Leske and Budrich, Berlin. Elias, N (1974) Towards a theory of communities, Foreword, in C Bell and H Newby (eds.), The Sociology of Community, Frank Cass, London and Portland, pp. ix–xli. English, L (1999). Unsubtle differences, Editorial, Australian Accounting Review, 9, p. 2. English, L, and Guthrie J (2000). Emasculating accountability in the name of competition: reform of state audit in Victoria, paper presented to Conference on Government Accountability and the Role of the Auditor-General, University of Alberta, Edmonton, Canada, 15–16 September. Epstein, PD (1992) Measuring the performance of public services, in M Holzer (ed.), Public Productivity Handbook, Marcel Dekker, New York. Ernst and Young Management Consultants (March 1990) Local Government Rating and Revenue Raising in New South Wales, Report to the NSW Rating Review. Etzioni, A (1995) The Spirit of Community. Rights, Responsibilities and the Communitarian Agenda, Fontana Press, London. Faith, RL and Tollison, RD (1993) Expressive versus economic voting, in WM Crain and RD Tollison, Predicting Politics: Essays in Empirical Public Choice, University of Michigan Press, Ann Arbor, pp. 231–44. Färe, R, Grosskopf, S and Lovell, CAK (1994) Production Frontiers, Cambridge University Press, Cambridge. Farrell, MJ (1957) The measurement of productive efficiency, Journal of the Royal Statistical Society, 120, pp. 253–89. Felmingham, B and Page, B (1996) National competition policy and its implica-

REFERENCES

• 257

tions for local government, Australian Journal of Public Administration, 55, pp. 26–33. Frazer, E (1996) The value of locality. in D King and G Stoker (eds.), Rethinking Local Democracy, Macmillan, Houndmills and London, pp. 89–110. Fried, HO and Klein, JD (2000) Efficiencies in United States metropolitan areas, in JLT Blank (ed.), Public Provision and Performance: Contributions from Efficiency and Productivity Measurement, Elsevier, Amsterdam. Fried, HO, Lovell CA and Schmidt, SS (1993) The Measurement of Productive Efficiency: Techniques and Applications, Oxford University Press, New York,. Fukuyama, F (2001) Social capital, civil society and development, Third World Quarterly, 22, pp. 7–20. G4+1 (2001) G4+1 Communique No 10, January, FASB, Connecticut. Galligan, B (ed.) (1998) Local Government Reform in Victoria, State Library of Victoria, Melbourne. Ganley, JA and Cubbin, JS (1992) Public Sector Efficiency Measurement: Applications of Data Envelopment Analysis, North Holland, Amsterdam. Gerritson, R and Whyard, M (1998) Australian Local Government CEOs, The Australian Centre for Regional and Local Government Studies, University of Canberra, Canberra. Gibbs, M, Gooding, A and Jones, R (2002) Regions and the Role of ROCs in an Urban Context, Paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, NSW, 14–17 February. Gibson, J and Hanson, P (eds.) (1996) Transformation from Below. Local Power and the Political Economy of Post-Communist Transitions, Elgar, Cheltenham and Brookfields. Golany, B and Roll, Y (1993) Some extensions of techniques to handle non-discretionary factors in data envelopment analysis, Journal of Productivity Analysis, 4, pp. 419–32. Gramlich, EM (1977) Intergovernmental grants: a review of the empirical literature, in WE Oates (ed.), The Political Economy of Fiscal Federalism, Lexington Books, Lexington, pp. 219–39. Granovetter, M (1985) Economic action and social action: the problem of embeddedness, American Journal of Sociology, 91, pp. 481–510. Grattan, M (2002) Why it pays to please the minister, Sydney Morning Herald, 28 March. Gray, A and Jenkins, W (1993) Codes of Accountability in the New Public Sector, Financial Accountability and Management, 2, pp. 171–86. Green, D (1996) From Welfare State to Civil Society, New Zealand Business Roundtable, Wellington. Grindle, M (1996) Challenging the State: Crisis and Innovation in Latin America and Africa, Cambridge University Press, Cambridge. Grosskopf, S and Yaisawarng, S (1990) Economies of scope in the provision of local public services, National Tax Journal, 43, pp. 61–74. Guthrie, J (1998). Application of accrual accounting in the Australian public sector—rhetoric or reality?, Financial Accountability and management, 14, pp. 1–19. Guyra Shire Council (July 2002) Submission into the Inquiry into Local government and Cost Shifting, Guyra NSW. Haggroth, S (1999) Swedish Local Government: Traditions and Reforms, The Swedish Institute. Hallam, R (1995) Minister’s Review: Local Government in 1995, Victoria, Minister for Local Government. Hallebone, EL, Townsend, MA and Mahoney, ME (2000) Globalising policy changes: social impacts in two Australian rural towns, Journal of Family Studies, 6, pp. 214–30.

258 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Hampel, R (1998) Final Report—Committee on Corporate Governance, United Kingdom. Hatry, HP and Fisk, DM (1992) Measuring productivity in the public sector, in M Holzer (ed.), Public Productivity Handbook, Marcel Dekker, New York. Haward, M and Zwart, I (2000) Local government in Tasmania: reform and restructuring, Australian Journal of Public Administration, 59, pp. 34–48. Hawley, W (1973) Nonpartisan Elections and the Case for Party Politics, Wiley, New York. Hayes, K and Chang, S (1990) The relative efficiency of city manager and mayorcouncil forms of government, Southern Economic Journal, 57, pp. 167–77. Hepworth, A (2002) Adler banned for 20 years, Australian Financial Review, 31 May. Herr, R (1995) Review of the 1994 Local Government Elections—Report, Hobart. Hillery, G (1955) Definitions of community: areas of agreement, Rural Sociology, 20, pp. 111–23. Hindmoor, A (1998) The importance of being trusted: transaction costs and policy network theory, Public Administration, 76, pp. 25–43. Hirschman, AO (1970) Exit, Voice and Loyalty, Cambridge University Press, Cambridge. Hirschman, AO (1971) A Bias For Hope: Essays on Development and Latin America, Yale University Press, New Haven. Hjalmarsson, L and Veiderpass, A (1992) Efficiency and ownership in Swedish electricity retail distribution, Journal of Productivity Analysis, 3, pp. 7–23. Hodges, R, Wright, M and Keasey, K (1996) Corporate governance in the public services: concepts and issues, Public Money and Management, April–June. Holzer, M (1992) Public Productivity Handbook, Marcel Dekker, New York,. Holzer, M and Halachmi, A (1986) Strategic Issues in Public Sector Productivity: The Best of Public Productivity Review 1975–1985, Jossey-Bass, San Francisco. Hood, C (1991) A public administration for all seasons? Public Administration, 69, pp. 3–19. Hood, C (1996) Exploring variations in public management reform, in JH Bekke, Perry and T Toonen (eds.), Civil Service Systems in Comparative Perspective, Indiana University Press, Bloomington. Howell, R (1997) New Zealand local government reformers: did they achieve their objectives? Are there any lessons? in R Chapman, M Haward and B Ryan. (eds.), Local Government Restructuring in Australasia. Centre for Public Management and Policy, Hobart, pp.93–110. Hrebenar, RJ (1998) Political reform in the American states and cities, in Reforming Government: New Concepts and Practices in Local Public Administration. Comparative Studies of Public Administration, EROPA Local Government Center, Tokyo. Hughes, OE (1992) Public management or public administration?, Australian Journal of Public Administration, 51, pp. 286–96. Hughes, OE (1998) Public Management and Administration, 2nd edition, Macmillan, South Yarra. Independent Committee Against Corruption (2001) Corruption Resistance Strategies: Researching Risks in Local Government. Research Findings Summary, ICAC, Sydney. Independent Pricing and Regulatory Tribunal of New South Wales (1998) Benchmarking Local Government Performance in New South Wales, IPART, Sydney. Industry Commission (1997) Performance Measures for Councils: Improving Local Government Performance Indicators, AGPS, Melbourne. Johnson, RW and Lewin, AY (1984) Management and accountability models of public sector performance, in TC Miller (ed.), Public Sector Performance: A Conceptual Turning Point, Johns Hopkins University Press, Baltimore.

REFERENCES

• 259

Johnston, J (1997) Managing strategically, in BE Dollery and N Marshall (eds.), Australian Local Government: Reform and Renewal, Macmillan, South Melbourne. Johnstone, P and Kiss, R (eds.) (1996) Governing Local Communities—the future begins, Centre for Public Policy, University of Melbourne, Melbourne. Jones, MA (1981) Local Government and the People: Challenges for the Eighties, Hargreen Publishing, Melbourne. Jones, MA (1991) Queensland Local Government: Strategies for 2000, Woongarra Shire Council, Bundaberg. Jones, R (2002) Leading change in local government: the tension between evolutionary and frame-breaking reform in NSW, Australian Journal of Public Administration 61, pp. 38–53. Jordan, G (1990) Sub-government, policy communities and networks: refilling the old bottles, Journal of Theoretical Politics, 2, pp. 319–38. Jordan, G and Richardson, J (1979) Policy communities: The British and American Style, Policy Studies Journal, 11, pp. 603–15. Kane J and Bishop, P (2002) Consultation and contest: the danger of mixing modes, Australian Journal of Public Administration, 61, pp. 87–94. Karpin, D (1995) Enterprising Nation: Report of the Industry Task Force on Leadership and Management Skills, Australian Government Publishing Service, Canberra. Keating, M (1999) The public service: independence, responsibility and responsiveness, Australian Journal of Public Administration, 58. Kenis, P and Schneider, V (1991) Policy networks and policy analysis: scrutinising a new analytical toolbox, in B Marin and R Mayntz (eds.), Policy Network: Empirical Evidence and Theoretical Considerations, Campus Verlag, Frankfurt. Kerr, R (1999) Toward More Efficient and Democratic Local Government, New Zealand Business Roundtable, Hamilton. Kiss, R (1996) Conclusions: moving forward in governing local communities—the future begins, in P Johnstone, and R Kiss (eds.), Governing Local Communities—the future begins, Centre for Public Policy, University of Melbourne, Melbourne, pp. 109–22. Kiss, R (1997) Governing local communities—top down or bottom up? the case of Victoria, in R Chapman, M Haward and B Ryan (eds.), Local Government Restructuring in Australasia, Centre for Public Management and Policy, University of Tasmania, Hobart, pp. 45–73. Kiss, R (1999a) Local Government to Local Administration: The New Order, in B Costar and N Economou (eds.), The Kennett Revolution—Victorian Politics in the 1990s, UNSW Press, Sydney, pp. 110–21. Kiss, R (1999b) It’s in the mail, in Victorian Local Government Association, The Pros and Cons of Postal Voting—Papers from the VLGA Forum on Postal Voting, VLGA, Melbourne. Kiss, R (2000) The franchise implications of dual voting systems, in Dual Voting— The Introduction of the Dual Voting System in Three Victorian Municipalities, VLGA, Melbourne. Kiss, R (2002a) Local government, local autonomy and local democracy, paper presented to the Cutting Edge of Change: Shaping Local Government for the 21st Century conference, 14–17 February 2002, University of New England, Armidale, NSW. Kiss, R (2002b) Recovering community? Australian local government electoral reforms. in J Caulfield and H Larsen (eds.), Local Government at the Millennium, Leske and Budrich, Opladen, Berlin. Kitahara, T (1998) Japanese decentralisation reform in the 1990s: great reform or status quo? in Reforming Government: new concepts and practices in Local Public Administration, Comparative Studies of Public Administration, EROPA Local Government Center, Tokyo.

260 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Kleven, T (2000) Renewal of local government in Scandinavia: effects for local politicians, Local Government Studies, 26, pp. 93–116. Kloot, L and Martin, J (2001) Local government accountability: explaining differences, Accounting, Accountability and Performance, 7, pp. 51–72. Kluvers, R (1999) To PPB or not to PPB—Budgeting in Victorian local government, Australian Journal of Public Administration, 58, pp. 68–77. Koike, O (1998) Local government and national development: evolution of local autonomy in postwar Japan, in A Nakamura (ed.), Local Governance and National Development, EROPA Local Government Center, Tokyo. Krugman, P (1998) What Happened to Asia? http://web.mit.edu/krugman/www.DISINTERhtml. Kukathas, C (1996) Liberalism, communitarianism and political community, in E Paul, F Miller and J Paul (eds.), The Communitarian Challenge to Liberalism, Cambridge University Press, Cambridge. Lerner, M (1996) The Politics of Meaning: restoring hope and possibility in an age of cynicism, Addison-Wesley, Reading, Massachusetts. Llewellyn-Smith, M (1998) Local government reform in South Australia, Public Management, 80, pp. 20–24. Local Government Act 1989 (Vic). Local Government Act 1993 (NSW). Local Government Act 1993 (Qld). Local Government Act 1993 (Tas). Local Government Act 1995 (WA). Local Government Act 1999 (SA). Local Government and Shires Association of New South Wales (January 2001) Advancing Local Government: Partnership for a New Century (Draft), a discussion paper prepared by the UTS Centre for Local Government. Local Government Association of Queensland (1998) Review of local government chief executive officer: mobility and attrition, LGAQ, Brisbane. Local Government Association of Queensland (2002a) Initial Submission to the House of Representatives Economics, Finance and Public Administration Committee Inquiry into Cost Shifting onto Local Government by State Governments, and the Financial Position of Local Government, LGAQ, Brisbane. Local Government Association of Queensland (2002b) Report on Best Practice Simplified Internal and External Reporting for Local Governments in Queensland, www.lgaq.asn.au, accessed March 2002. Local Government Association of South Australia (1995) Local Government Structural Reform: An Information Package, LGASA, Adelaide. Local Government Board (1997) Review of Councils, Discussion Paper, Hobart, 22 July. Local Government Public Inquiry (2001) Inquiry into the Structure of Local Government in Eight Council Areas in the Inner City and Eastern Suburbs of Sydney, NSW Government Commission of Inquiry, Sydney. Loughlin, M (1986) Local Government in the Modern State, Sweet and Maxwell, London. Lowndes, V (1996) Locality and community: choices for local government. in S Leach, H Davis and Assocs, Enabling or Disabling Local Government, Open University Press, Buckingham and Philadelphia, pp. 71–85. Lowndes, V and Skelcher, C (1998) The dynamics of multi-organisational partnerships: an analysis of changing modes of governance, Public Administration, 76, pp. 313–33. Mack J, Ryan C, Dunstan K (2001) General Purpose Financial Reporting in the Public Sector: A Case for Differential Reporting for Australian Local Governments, paper presented at the APIRA conference, Adelaide, July 2001. Mackintosh, M (1992) Partnership: issues of policy and negotiation, Local Economy, 7, p. 3.

REFERENCES

• 261

Maclellan, R (1996) The State Government’s vision for the future, in P Johnstone and R Kiss (eds.), Governing Local Communities—the future begins, Centre for Public Policy, University of Melbourne, Melbourne, pp. 9–16. Magee, SP, Brock, WA and Young, L (1989) Black Hole Tariffs and Endogenous Policy Theory, Cambridge University Press, Cambridge. Mann, SZ (1986) The politics of productivity: state and local focus, in M Holzer and A Halachmi (eds.), Strategic Issues in Public Sector Productivity: The Best of Public Productivity Review 1975–1985, Jossey-Bass, San Francisco. Mark, JA (1986) Measuring productivity in government: federal, state and local, in M Holzer and A Halachmi (eds.), Strategic Issues in Public Sector Productivity: The Best of Public Productivity Review 1975–1985, Jossey-Bass, San Francisco. Marsh, D and Rhodes, RAW (1992) Policy Networks in British Governments, Oxford University Press, Oxford. Marshall, N and Sproats, K (2002) Managing democracy? Assessing some of the outcomes of Australian local government reform, in J Caulfield and HO Larsen, Local Government at the Millennium, Leske and Budrich, Opladen, pp. 45–62. Marshall, N and Witherby, A (2002) The roles and functions of regional organisations of councils, paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, New South Wales, 14–17 February. Martin J (1997) Workplace reform: human resource management and enterprise bargaining, in B Dollery and N Marshall (eds.), Australian Local Government: Reform and Renewal, Macmillan, Melbourne. Martin, J (1991) Devolution and decentralisation, in J Boston (ed.), Reshaping the State: New Zealand’s Bureaucratic Revolution, Oxford University Press, Auckland. Martin, J (1999) Leadership in local government reform: strategic direction v administrative compliance, Australian Journal of Public Administration, 58, pp. 24–37. Martin, S (2002) Best value: New Public Management or new direction?, in K McLaughlin, S Osborne and E Ferlie (eds.), New Public Management: Current Trends and Future Prospects, Routledge, London. Mautz, RK (1988) Monuments, mistakes and opportunities, Accounting Horizons, 2, pp. 123–28. McGregor W (1999) The pivotal role of accounting concepts in the development of public sector accounting standards, Australian Accounting Review, 9, pp. 3–8. Meppem, T, Bellamy, J and Gorddard, R (2002) The Role of Local Government in Emerging Regional Governance Arrangements, Draft Report, National Office of Local Government, Department of Transport and Regional Services, Canberra. Milgrom, P and Roberts, J (1992) Economics, Organisation and Management, Prentice Hall, New Jersey. Miller, GJ (1992) Productivity and the budget process, in M Holzer (ed.), Public Productivity Handbook, Marcel Dekker, New York. Miller, TC (1984) Public Sector Performance: A Conceptual Turning Point, Johns Hopkins University Press, Baltimore. Ministerial Advisory Group on Local Government Reform (1995) Reform of LocalGovernment in South Australia: Councils of the Future, Department of Housing, Urban Development and Local Government Relations, Adelaide. Moe, TM (1984) The new economics of organisation, American Journal of Political Science, 28, pp. 739–77. Montin, S and Amna, E (2002) The Local Government Act and local government reform in Sweden, in E Amna and S Montin (eds.), Towards a New Concept of Local Self-Government? Fagbokforlaget.

262 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Moore, D (1996a) Delivering real value for money, paper presented at the University of Melbourne’s Centre for Public Policy conference Governing Local Communities: The Future Begins, May 1996. Moore, D (1996b) The financial benefits of local government reform, in P Johnstone and R Kiss (eds.), Governing Local Communities, University of Melbourne, Melbourne, pp. 63–72. Mueller, DC (1989) Public Choice II, Cambridge University Press, Cambridge. Mulgan, R (1998) Politicisation of senior appointments in the Australian Public Service, Australian Journal of Public Administration, 57(3). Municipal Association of Victoria (1996) From Citizen to Councillor, 2nd edition, MAV, Melbourne. Municipal Association of Victoria (2001a) State government cost shifting in special purpose programs delivered by local government, MAV, Melbourne. Municipal Association of Victoria (2001b) Trends in local government finances, MAV, Melbourne. Nakamura, A (2002) A paradigm shift in Japan’s intergovernmental relations: reform of government and decentralisation of central power, in J Caulfield and HO Larsen (eds.), Local Government at the Millennium, Leske and Budrich, Berlin. National Competition Council (1998) National Competition Policy and Related Reforms: Supplementary Assessment of First Tranche Progress, NCC, Melbourne. National Office of Local Government (1995) Local Government Development Guidelines, AGPS, Canberra. National Office of Local Government (2001a) 2000–01 Report on the Operation of the Local Government (Financial Assistance) Act 1995, NOLG, Canberra. National Office of Local Government (2001b) Local Government National Report, Department of Transport and Regional Services, Canberra. National Review of Local Government Labour Markets (1988) Research Paper No. 2: Local government in a Changing Environment, NRLGLM, Melbourne. Nelson, M (2000) The challenge of implementing code of conduct in local government authorities, in P Bishop and N Preston (eds.), Local Government: Public Enterprise and Ethics, Federation Press, Sydney. New South Wales Department of Local Government (1997a) Annual Report 1996–97, NSWDLG, Sydney. New South Wales Department of Local Government (1997b) Under Careful Consideration: Key Issues for Local Government Guidelines to Reduce Conflicts of Interest in Councils, NSWDLG, Sydney. New South Wales Department of Local Government (1998) Annual Report 1997–98, NSWDLG, Sydney. New South Wales Department of Local Government (1999) Review of the Local Government Act 1993: Report on the Act Review, NSWDLG, Sydney. New South Wales Department of Local Government (2001a) Annual Report 2000–2001, NSWDLG, Sydney. New South Wales Department of Local Government (2001b) Comparative Information on New South Wales Local Government Councils 1999–2001, NSWDLG, Sydney. New South Wales Department of Urban Affairs and Planning (2001) Plan First: Review of Plan Making in NSW, White Paper, Department of Urban Affairs and Planning, Sydney. Niskanen, WA (1971) Bureaucracy and Representative Government, AldineAtherton, Chicago. Norris, DF (1997) Local government reform in the United States and why it differs so greatly from Britain, Local Government Studies 23, pp. 113–30. Northwood, K (1995) From Parochialism to Partnership: Voluntary Regional Organisations of Councils and the Regional development Organisations, National Committee on Regional Cooperation, Canberra.

REFERENCES

• 263

O’Dowd, MC (1978) The problem of “government failure” in mixed economies, South African Journal of Economics, 46, pp. 360–70. O’Sullivan, A (1995) Property Taxes and Tax Revolts: the legacy of Proposition 13, Cambridge University Press. Oates, WE (1972) Fiscal Federalism, Harcourt Brace, New York. Oliver, J (2001) Democracy in Suburbia, Princeton University Press, Princeton. Olson O, Guthrie J, and Humphrey C (1998) Global Warning: Debating International Developments in New Public Financial Management, Cappelen Akademisk Forlag, Oslo. Olson, M (1965) The Logic of Collective Action, Harvard University Press, Cambridge. Organisation for Economic Cooperation and Development (1999a) Taxing powers of state and local government, in Tax Policy Studies No. 1. Paris. Organisation for Economic Cooperation and Development (1999b) Revenue Statistics 1965–1998 Special Feature, Paris. Osborne, D and Gaebler, T (1992) Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, Addison-Wesley Publishing Company Inc., Reading. Ouchi, W (1991) Markets, bureaucracies and clans, in G Thompson, J Frances, R Levacic and J Mitchell (eds.), Markets, Hierarchies and Networks: The Co-ordination of Social Life, Sage, London. Oxley, R (2002) Local government culture: a mind set for change, paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, New South Wales, 14–17 February. Pallot, J (1990) The nature of public sector assets: a reply to Mautz, Accounting Horizons, June, pp. 79–85. Pallot, J (1992) Elements of a theoretical framework for public sector accounting, Accounting Auditing and Accountability Journal, 5, pp. 38–59. Parker, LD and Guthrie, J (1993) The Australian public sector in the 1990s: new accountability regimes in motion, Journal of International Accounting Auditing and Taxation, 21, pp. 59–81. Pease, G and McMillan K (1993) The Independent Non-Executive Director, Longman, Melbourne. Percy, I and Hepworth, NP (1994) Corporate Governance in the Public Sector, CIPFA, London. Perkins, C (1992) Aboriginal Australia and public administration, Australian Journal of Public Administration, 51, pp. 223–33. Peters, BG (1998) Local Government Reform in the United Kingdom, in Reforming Government: New Concepts and Practices in Local Public Administration, EROPA Local Government Center, Tokyo. Pollitt, C and Bouckaert, G (2000) Public Management Reform: A comparative analysis. OUP, Oxford. Proctor, C (2002) Local Government Reform in South Australia, Paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, New South Wales, 14–17 February. Pusey, M (1991) Economic Rationalism in Canberra, Cambridge University Press, New York. Putnam, R (1993) Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, Princeton. Putnam, R (2000) Bowling Alone, Simon and Schuster, New York. Queensland Government (1996) Policy Statement on the Application of National Competition Policy to Local Government. Queensland Public Accounts Committee (2001) Report No 59 Annual reporting in the Queensland public sector, www.parliament.qld.gov.au/Committees/, accessed 29 March 2002.

264 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Quiggin, J (1996) Great Expectations: Microeconomic Reform and Australia, Allen and Unwin, Sydney. Randwick City Council (2000) Submission, in K Sproats, Inquiry into the Structure of Local Government in Eight Council Areas in the Inner City and Eastern Suburbs of Sydney, NSWDLG, Sydney. Raysmith, H (2001) Building Better Communities, Working Paper, Victorian Local Governance Association. Reid, M (1999) The central–local government relationship: the need for a framework?, Political Science, 50, pp. 164–81. Rhodes, RAW (1988) Beyond Westminster and Whitehall, Unwin Hyman, London. Rhodes, RAW (1997a) From marketisation to diplomacy: it’s the mix that matters, Australian Journal of Public Administration, 56, pp. 40–53. Rhodes, RAW (1997b) Understanding Governance, Open University, Buckingham. Rhodes, RAW and Marsh, D (1992) New directions in the study of policy networks, European Journal of Political Research, 21, pp. 181–205. Riverina Eastern Regional Organisation of Councils (2001) Annual Report 2000–2001, REROC, Wagga Wagga. Rodden, J and Rose-Ackerman, S (1997) Does federalism preserve markets?, University of Virginia Law Review, 83, pp. 1521–72. Romer, T and Rosenthal, H (1978) Political resource allocation, controlled agendas and the status quo, Public Choice, 33, pp. 27–43. Rose-Ackerman, S (1999) Corruption and Government, Cambridge University Press, Cambridge. Rouse, P Putterill, M and Ryan, D (1995) Measuring the Performance of New Zealand Local Authority Maintenance Activities in Roading Using Data Envelopment Analysis, paper presented to the New England Conference on Efficiency and Productivity, 23–24 November, University of New England. Rowles, T, Hutton, B, Bellamy S (1998) AAS27: A survey of local government views, Australian CPA May, pp. 46–48. Ryan, B (1997) Managerialism/contractualism and council structures. in R Chapman, M Haward, and B Ryan (eds.), Local Government Restructuring in Australasia, Series in Public Management and Policy, Hobart, Centre for Public Management and Policy. Ryan, C, Robinson M, Grigg T (2000) Financial performance indicators for local governments, Accounting, Accountability and Performance, 6, pp. 89–107. Sancton, A (2002) Local government in North America: localism and community governance, in J Caulfield and HO Larsen (eds.), Local Government at the Millennium, Leske and Budrich, Berlin. Savery, N (1997) Rationalising Australian local government reform: the Victorian experience, Australian Planner, 34, pp. 163–64. Scharpf, F (1992) Political institutions, decision styles and policy choices, in R Crada and A Windhorff-Heritier (eds.), Political Choice, Institutions, Rules and the Limits of Rationality, Campus, Frankfurt. Schedler, K and Proeller, I (2002) The New Public Management: a perspective from mainland Europe, in K McLaughlin, SP Osboren and E Ferlie (eds.), New Public Management: Current Trends and Future Prospects, Routledge, London. Schmidt, P (1985) Frontier production functions, Econometric Reviews, 4, pp. 289–328. Scott, M (2002) Partnering for change: the tasmanian partnership agreements experience, paper presented to The Cutting Edge of Change Conference: Shaping Local Government for the 21st Century conference, University of New England, New South Wales, 14–17 February. Self, P (1997) The future of Australian Local Government, in B Dollery and N Marshall (eds.), Australian Local Government: Reform and Renewal, Macmillan, Melbourne, pp. 297–310.

REFERENCES

• 265

Smith, S (1996) European integration and local government finance, in G Pola (ed.), Developments in Local Government Finance, Edward Elgar. Soul, SC (2000) Population Size and Economic and Political Performance of Local Government Jurisdictions, PhD Thesis, University of Southern Cross, Lismore. Soul, S and Dollery, BE (1999) A note on the size of Australian local government, Regional Policy and Practice, 8, pp. 35–40. South Australian Local Government Boundary Reform Board (1998) Board News, 3, March. Sproats, K (1996) Australian Local Government Reform in the 1990s, Centre for Local Government, University of Technology, Sydney. Sproats, K (1998) Local management or local governance? Towards a theory of community governance, paper presented to the Reaching Common Ground Conference, Sydney, 20 March. Sproats, K (2001) Inquiry into the Structure of Local Government in Eight Council Areas in the Inner City and Eastern Suburbs of Sydney, NSWDLG, Sydney. Stacey, M (1974) The Myth of Community Studies, in C Bell and H Newby (eds.), The Sociology of Community, Frank Cass, London and Portland, pp. 13–26. State Government of Victoria (1996) Application of Competition Policy to Local Government: Draft Victorian Statement. Steering Committee for the Review of Commonwealth/State Service Provision (1997) Report on Commonwealth/State Service Provision, AGPS, Canberra. Steering Committee for the Review of Commonwealth/State Service Provision (1998) Data Envelopment Analysis: A Technique for Measuring the Efficiency of Government Service Delivery, AGPS, Canberra. Stewart, J and Kimber, M (1996) The transformation of bureaucracy? Structural change in the Commonwealth public service 1983–93, Australian Journal of Public Administration, 55, pp. 37–48. Stilwell, F and Troy, P (2000) Multilevel governance and urban development in Australia, Urban Studies, 37, pp. 909–30. Stoker, G (ed.) (1999) The New Management of Britain’s Local Governance, Macmillan. Streek, W and Schmitter, P (1985) Private Interest Government, Sage, London. Sturgess, G (1996) Virtual government: what will remain inside the public sector?, Australian Journal of Public Administration, 55, pp. 59–73. Suttles, G (1972) The Social Construction of Communities, Chicago University Press, Chicago. Tasmanian Local Government Advisory Board (1990) Issues Discussion Paper, Hobart, December. Tasmanian Local Government Advisory Board (1992) Inquiry into the Modernisation of Local Government Report, Hobart, June. Thompson, G, Frances, J, Levacic, R and Mitchell, J (eds.) (1991) Markets, Hierarchies and Networks: The Co-ordination of Social Life, Sage, London. Tonnies, F (1963) Community and Society (Gemeinschaft und Gesellschaft), Harper and Row, New York. Tourism Task Force (2000) Submission in Inquiry into the Structure of Local Government in Eight Council Areas in the Inner City and Eastern Suburbs of Sydney, K Sproats, Inquiry into the Structure of Local Government in Eight Council Areas in the Inner City and Eastern Suburbs of Sydney, NSWDLG, Sydney. Trembath, A (2002) Competitive Neutrality: Scope for Enhancement, National Competition Council Staff Discussion Paper, Ausinfo, Canberra. Tucker, D (1997a) From administration to management, in B Dollery and N Marshall (eds.), Australian Local Government: Reform and Renewal, Macmillan, Melbourne. Tucker, D (1997b) Queensland Local Government: Rationalisation to the 1990s and Beyond, in R Chapman, M Haward and B Ryan (eds.), Local Government

266 •

RESHAPING

AUSTRALIAN

LOCAL

GOVERNMENT

Restructuring in Australasia, CPMP University of Tasmania, Hobart, pp. 74–92. Tulkens, H (1993) On FDH efficiency analysis: some methodological issues and applications to retail banking, courts, and urban transport, The Journal of Productivity Analysis, 4, pp. 183–210. Tweedie, D and Whittington, G (1997) The end of the current cost revolution, in TE Cooke and CW Nobes (eds.), The Development of Accounting in an International Context, Routledge, London. Urgent Issues Group (1999a) Accounting for Major Cyclical Maintenance, Abstract 26, Australian Accounting Research Foundation, Melbourne. Urgent Issues Group (1999b) Condition-Based Depreciation, Discussion Paper 8/9/99, Issue 99/7, Australian Accounting Research Foundation, Melbourne. Urgent Issues Group (2000) Depreciation of Long-Lived Physical Assets, including Infrastructure Assets: Condition-Based Depreciation and other Related Methods, Abstract 30, Australian Accounting Research Foundation, Melbourne. Van Daniker, R and Kwiatkowski, V (1986) Infrastructure Assets: An Assessment of User Needs and Recommendations for Financial Reporting, Governmental Accounting Standards Board, Connecticut. Van Gramberg, B, and Teicher, J (2000) Managerialism in local government— Victoria, Australia, The International Journal of Public Sector Management, 13, pp. 476–91. Vanden Eeckaut, PJ, Tulkens, H and Jamar, MA (1993) Cost efficiency in Belgian municipalities, in HO Fried, CA Lovell and SS Schmidt (eds.), The Measurement of Productive Efficiency: Techniques and Applications, Oxford University Press, New York. Victorian Department of Infrastructure (2001) Local Government in Victoria 2001, DLG, Melbourne. Vince, A (1997) Amalgamations, in B Dollery and N Marshall (eds.), Australian Local Government: Reform and Renewal, Macmillan, Melbourne, pp. 151–71. Vitaliano, DF (1997) X-Inefficiency in the public sector: the case of libraries, Public Finance Review, 25, pp. 629–43. Vitaliano, DF (1998) Assessing public library efficiency using data envelopment analysis, Annals of Public and Co-operative Economics, 69, pp. 107–122. Viton, PA (1992) Consolidations of scale and scope in urban transport, Regional Science and Urban Economics, 22, pp. 25–49. Wagner, A (1883) Three extracts on public finance, in RA Musgrave and Peacock (eds.) (1958) Classics in the Theory of Public Finance, Macmillan, London. Walker, RG (1989). Should there be common standards for the public and private sectors, Australian Society of Accountants Government Accounting Research Lecture, ASA, Melbourne. Walker, RG (2001) Reporting on service efforts and accomplishments on a whole of government basis, Australian Accounting Review, 1, pp. 4–16. Walker, RG (2002) Are annual reports of government agencies really general purpose if they do not include performance indicators? Australian Accounting Review, 12, pp. 43–54. Walker, RG, Clarke, FL and Dean, GW (1999a) Reporting on the state of infrastructure by local government, Accounting Auditing and Accountability Journal, 12, pp. 441–58. Walker, RG, Clarke, FL and Dean, GW (2000) Options for infrastructure reporting, Abacus, 36, pp. 123–59. Webb, J, Schirato, T and Danaher, G (2002) Understanding Bourdieu, Allen and Unwin, Sydney. Weisbrod, BA (1978) Problems of enhancing the public interest: toward a model of governmental failures, in BA Weisbrod, JF Handler and NK Komesar (eds.), Public Interest Law, University of California Press, London, pp. 30–41.

REFERENCES

• 267

Weller, P (2001) Australia’s Mandarins: The Frank and the Fearless?, Allen and Unwin, Sydney. Weller, P and Davis G (eds.) (1996) New Ideas, Better Government, Allen and Unwin, Sydney. Wensing, E (1997) The process of local government reform: Legislative change in the states, in B Dollery and N Marshall (eds.), Australian Local Government— Reform and Renewal, Macmillan, Melbourne, pp. 89–102. Westwood, M and Mackenzie, A (1999) Accounting by Recipients for NonReciprocal Transfers, Excluding Contributions by Owners: their Definition, Recognition and Measurement, G4+1 Special Report, FASB, Connecticut. Wettenhall, R (1988) Local governments as innovators, Australian Journal of Public Administration, 48, pp. 351–74. Whittaker, M (1999) Emerging triple bottom line models for industry weights environmental, economic and social considerations, Oil and Gas Journal, December 20, pp. 23–26. Wilks, S and Wright, M (1987) Comparative Government–Industry Relations, Clarendon, Oxford. Williamson, OE (1985) The Economic Institutions of Capitalism, Free Press, New York. Wills, J (2001) Just, Vibrant and Sustainable Communities, Local Government Community Services of Australia, Townsville. Wilson, D and Game, C (1998) Local Government in the United Kingdom, 2nd edition, Macmillan, London. Wintrobe, R (1997) Modern bureaucratic theory, in DC Mueller (ed.), Perspectives on Public Choice, Cambridge University Press, Cambridge, pp. 429–54. Witherby, AW, Marshall, N and Dollery, BE (1997) One industry, many perspectives: local government attitudes to local government reform, in R Chapman, M Harward and B Ryan (eds.), Local Government Restructuring in Australasia, CPMP University of Tasmania, Hobart, pp. 111–32. Wolf, C (1993) Markets or Governments: Choosing Between Imperfect Alternatives, MIT Press, Cambridge MA. Woolcock, M and Narayan, D (2000) Social capital: implications for development theory, research, and policy, The World Bank Research Observer, 15, pp. 225–49. World Bank Development Report (1997) The State in a Changing World, Oxford University Press, Oxford. Worthington, AC (1999) Performance indicators and efficiency measurement in public libraries, Australian Economic Review, 32, pp. 31–42. Worthington, AC (2000) Cost efficiency in local government: a comparative analysis of mathematical programming and econometric approaches, Financial Accountability and Management, 16, pp. 201–24. Worthington, AC and Dollery, BE (1999) Fiscal illusion and the Australian local government grants process: how sticky is the flypaper effect? Public Choice, 99, pp. 1–13. Worthington, AC and Dollery, BE (2000a) An empirical survey of frontier efficiency measurement techniques in local government, Local Government Studies, 26, pp. 23–52. Worthington, AC and Dollery, BE (2000b) Productive efficiency and the australian local government grants process: an empirical analysis of New South Wales local government, The Australasian Journal of Regional Studies, 6, pp. 95–122. Worthington, AC and Dollery, BE (2001) Diversity in Australian local government: the case against the imposition of uniform national standards, International Review of Public Administration, 6, pp. 49–58. Worthington, AC and Dollery, BE (2002) Incorporating contextual information in public sector efficiency analyses: a comparative study of NSW local government, Applied Economics, 34, pp. 453–64.

INDEX

AAS 27 Financial Reporting by Local Governments 6, 65, 66, 67, 70, 74, 75, 236–37 AAS 38 Revaluation of Non-Current Assets 68 Aboriginal and Torres Strait Islander communities 119 accessibility of local government 40 accounting accrual 64, 65, 74 cash 71 renewals 71–72 accounting standards 6, 65, 67, 68, 72 accrual accounting 64, 65, 74 achievements of local government 232–38 Advisory Council for Inter-Governmental Relations 153, 248 agency theory 219–20 agenda control 220 Aldrich, JH 216 Allan, P 88, 89, 90, 92, 96–97 amalgamation of local government 79–97, 109, 119–21, 238, 246 Ammons, DN 187 annual reports 60, 64–65 assets depreciation 69, 71–74 expenditure 39–40 maintenance 72–73 valuation 67–71 asymmetric information 163–64, 214, 219–21 Aulich, C 79, 85, 132, 136, 137 Australian Accounting Standards Board 65, 68, 71, 76 Australian Council of Auditors-General 67

Australian Institute of Urban Studies 93 Australian Local Government Association 147, 149, 249 Austria 18–19 autonomy fiscal see fiscal autonomy local government 16–17, 86 Bailey, S 212, 213, 214, 215, 217, 223, 225, 228 Baker, G 7–8, 117–38, 232 Balmain Peninsula 90–91 Balmer, C 248 Banker, RD 193 Barr, JL 226 Barry, BM 221, 226 Barton, A 66, 69 Belgium 18, 26–27, 28 Bell, C 105 benchmarking 245–46 Bjurek, H 189, 190, 192 Borzel, TJ 159, 161, 170 Boulding, KE 162 Boyne, GA 212, 213, 215, 217, 223, 228 Bradrach, J 162 Brennan, G 216 Breton, A 221 Brisbane City Council 136–37 Brock, WA 221–22 Buchanan, JM 216, 221 budgeting 126, 128 bureaucracy legal-rational model 124 Mintzberg’s concept 124 Cadbury Committee 140–41, 153, 156 Canada 18, 25, 30

INDEX

Carlon, T 69 Carnegie, G 70 cash accounting 71 Caulfield, J 5, 13–34, 232 Cetinic-Dorol, CJ 151 Chang, S 189, 194 Chapman, R 80, 87, 95 Charnes, A 193 chief executive officers creation of position 127–28 relationship with councillors 151–52 relationship with non-executive directors 152–53 role 139, 143–44, 147–51 turnover rate 152 citizens consultative committee 155 clientalism 14, 21 collections, publicly held 70 Commonwealth Financial Assistance Grant 44, 53, 56, 58 Commonwealth Grants Commission 41, 49, 61–62 communitarianism 101, 107 community, concept of 103–11 community attitudes towards local government 52–53, 232 community education in local government 59–60, 62 community expectations of local government 15, 37, 40, 49–51, 59–60 community participation in local government 59, 103 community representation 85 community studies 105 Community Support Fund 111 competition, forms of 213 compulsory competitive tendering 131, 235 condition-based depreciation 72 constitutional recognition of local government 1, 82, 85, 103 contracts, executive 128 Cook, WD 189, 190 Cooper, WW 193 corporate governance 139–41, 152–55, 234 local government 142–44 public sector 141–42 corporate management reforms 125–29 corporate structure 127, 235 corporations, as voters 114 corruption 119, 224 cost shifting 42, 44 in expenditure 48–49 in grant income 44–48 Council of Australian Governments 103 councillors ratio to population 81, 109 relationship with professional managers 151–52, 219

• 269

role 139, 143–47, 155 salaries 153 training 153–54 turnover rate 146 councils, number per state 83 Crime and Misconduct Commission 119 cyclical maintenance 72–73 data, benchmarking 245–46 data envelopment analysis 181, 182–86, 189, 190–91, 192–93 Davis, OA 226 De Borger, B 189, 191, 192, 194, 196, 197 deferred maintenance 72–73 Deller, SC 188, 189–90, 194 democracy, local 79, 101–16, 233–34 democratic representation 85–87 Denmark 18 depreciation 69, 71–74 deprival value 68 deterministic frontier approach 180–81, 182–83, 188–89 devolution of government responsibilities to local level 42, 173 distributional coalitions 223 diversity of local government 3–4, 80–82 Dollery, B 9–10, 79, 82, 84, 85, 95, 189, 194, 197, 212–28, 231–50, 247 Domberger, S 188 Downs, A 226 Eccles, R 162 economics, local government 234–38 economies of scale 79, 80, 87, 89, 90, 92, 120, 131, 247 education, post-graduate, in local government 249–50 efficiency and democratic representation 85–87 determinants 195–98 economic 222 effect of community characteristics on 196 effect of political composition of council on 195–96 political 222 selective 221 targets 61 efficiency measurement 176–211 difficulties in implementing 186–88 studies, local public services 188–95, 200–211 techniques 180–86 theory 179–81 efficiency reforms 62, 119, 138, 245–48 integrating with public policy 136–37 National Competition Policy 133–36 Victoria 129–32

270 •

RESHAPING

AUSTRALIAN

LOCAL

elected members see councillors elections media reporting 218 political significance 217 electoral system, local government 111–15 employment in local government 125, 127, 235 employment practices 129 Ernst and Young Management Consultants 52 European Union 173 ‘exit’ (means of influencing service provision) 213–14 expectations, public see community expectations of local government expenditure by local government 1, 49, 50, 51 external reporting 64–77 failure, local government see government failure fair value 68 Faith, RL 216 fees and charges, state government 48 Financial Assistance Grant, Commonwealth 44, 53, 56, 58 financial pressures on local government 38, 61–62 financial reforms 64 financial reporting 63–77, 236 Financial Reporting by Local Governments (AAS 27) 6, 65, 66, 67, 70, 74, 75, 236–37 financial statements 65 Finland 18, 26 fiscal autonomy 17–18, 28, 30, 31 measurement 28, 33 fiscal illusion 224–26 flypaper effect 224–25 Forsund, FR 189, 192 France 18, 26 franchise, local government 111–15 free-disposal hull approach 181, 182–84, 189, 191–92 functions of local government 82, 103, 233 funding, external, of local government 60–61 G4+1 (group) 76 Gaebler, T 136 Gambetta, D 167 Geelong, amalgamation of local government 94 general purpose financial reports 65–66 Germany 18, 22, 28, 30, 31 Gerritsen, R 128 Golany, B 193 goods and services tax 57

GOVERNMENT

governance corporate see corporate governance local, capacity of councils to supply 171–75 governance mechanisms hierarchical 164–66 market system 162–64 network 166–71 government failure 212–28 susceptibility of local government 215, 228 taxonomies 213–28 typology 212–13 Gramlich, EM 225 Granovetter, M 168 grants, central government 18–19 Commonwealth Financial Assistance Grant 44, 53, 56, 58 cost shifting 44–48 effects on local government expenditure 224–25 indexation 44, 47 revenue recognition 75 to Victorian local government 45–47 Grindle, M 215 GST (goods and services tax) 57 Guidelines to Reduce Conflict of Interest in Councils 154 Gustafsson, B 190, 192 Guyra Shire Council 48–49 Hallebone, EL 94 Halstead, JM 189, 190 Hampel Committee 141, 153, 154, 156 Hardin, R 221, 226 Haward, M 87, 95 Hawley, W 217 Hayes, K 189, 194 health care 48 heritage assets 69 Hindmoor, A 164, 165, 166, 167 Hirschman, AO 175, 213, 216 Hjalmarsson, L 189, 190–91, 192 Hood, C 14, 16 horizontal co-ordination 161 Howell, R 86 Hughes, OE 149 Iceland 18–19 Independent Commission Against Corruption 119 industrial relations 121–22 Industry Commission 187 information asymmetries see asymmetric information infrastructure, council-controlled 38–39 Inner Sydney Inquiry 87, 92, 93, 97 innovation in local government 122–23 Integrated Local Area Planning Scheme 147 interest-based networks 167–69

INDEX

interest groups 221–23 Ireland 18–19, 28 iron triangles 221–24, 234 issue networks 167–68 Italy 26 Jamar, MA 191, 192, 193, 194, 195 Japan 25–26 Johnson, A 5, 37–62, 237, 245–46 Jordan, G 166 Karpin Report on management 124 Kazakov, A 189, 190 Kenis, P 159 Kerr, R 217, 218 Kerstens, K 189, 191, 192, 194, 196, 197 Kiss, R 7, 81, 84, 86, 87, 101–16, 233 Kjulin, U 190, 192 Kluvers, R 128 KPMG 93 Krugman, P 169 land tax 52, 54–55 ‘land under roads’ valuation 70–71 Larsen, HO 15 leadership, local 124–25, 127 least squares econometric techniques 180, 181–82, 188 legislation 102, 103, 118 cost benefit analysis 42 implementation by local councils 40, 42–43 Integrated Planning Act 1999 240 Local Government Act 1993 127 Local Government (Financial Assistance) Act 1986 123 Local Government (Financial Assistance) Act 1995 56 legitimacy of local government 15, 104, 107–11 Leichhardt Council 90–91 liability 73, 75, 76 Llewellyn-Smith, M 95 local democracy model 79, 85, 136 local government acts 102, 103, 118 Local Government Development Program 147 Local Government Managers Association 147 Loughlin, M 217 Lowndes, V 161, 162–63, 164–65, 168, 169, 172 Maclellan, R 94 Magee, SP 221–22 Mahoney, ME 94–95 maintenance see assets, maintenance Management Plans, council 60 management practices 147–48 management reform 232–33

• 271

Commonwealth role 121–23 general manager’s role 125 states’ role 118–19 Manly Council 91 Marsh, D 169 Marshall, N 8, 9–10, 102, 139–56, 231–50 Martin, J 132, 138 May, P 6–7, 79–97, 238, 247 microeconomic reform 234–35 Miller, GJ 187 Mintzberg’s concept of bureaucracy 124 models of local government 79 Moe, TM 219 Moesen, W 189, 192, 196, 197 Moore, D 93, 130, 132 Morey, RC 193 Mueller, DC 216 Mulgan, R 151 multi-organisational partnerships 160–61 catalytic role of local government 172–73 co-ordination problems 161–71 complexity 163 information asymmetries 163–64 power asymmetries 163 ‘thin’ transactions 164 transaction costs 163–64, 165 Municipal Association of Victoria 143 Narayan, D 171 National Competition Policy 133–36, 234 National Local Government Training Board 122 National Office of Local Government 84, 232 National Review of Local Government Labour Markets 122, 147 Nelson, CH 190 Netherlands, The 18–19, 23, 28, 30 Networking the Nation program 123 networks 159–75, 234 new institutional economics 162 new public management 13–14, 19, 124–38, 232, 235 cross-country comparisons 15–16, 20–27, 27, 29, 32 New South Wales amalgamation of local government 92–93 size of local government 88 state-local government planning 241 voting provisions 113, 114 New South Wales Local Government Grants Commission 57 New Zealand 18–19, 21–22, 30, 84, 86 Newby, H 105 Northwood, K 242

272 •

RESHAPING

AUSTRALIAN

LOCAL

Norway 18, 26, 31 NPM see new public management Oakerson, R 88–89 Oates, WE 225 O’Dowd, MC 212 OECD (Organisation for Economic Cooperation and Development) 17–18, 28 Olson, M 221, 223, 226 organisational structure of local government 124 Osborne, D 136 out-sourcing 90, 235, 236 Pallot, J 70 partnership agreements, state/local 238–42 pensioner concessions 49 performance information 66, 77, 176, 246 performance measures, difficulties in implementing 186–88 Plan First 241 policing 48–49 policy advisers 220 policy communities 167–69 policy networks 159–75, 234 policy role, local government 4 political composition of council, effect on efficiency 195–96 political entrepreneurship 226–28 political parties 217 political representation 85–86 population size 81 per councillor 81, 109 relationship to political performance 85–86 Proctor, C 242 productivity 177–78, 179 Proeller, I 23 profile of local government 248–50 program management 126 program planning 128 public choice theory 212, 213, 216 public sector reporting 64–67 Putterill, M 189, 191, 192 Queensland amalgamation of local government 120 community attitude towards local government 232 reform of local government 134–36 state and local planning coordination 240–41 voting provisions 114 Randwick City Council 92–93 rate pegging 52 rate revenue 51–52

GOVERNMENT

reform, local government 13–34, 102 local democracy model 85, 136 process reforms 13 public management model 136 structural efficiency model 85, 136 structural reforms 13, 83–84 Regional Organisations of Councils 242–45 Reid, M 173 renewals accounting 71–72 rent-seeking activity 221–23 renter illusion 225–26 reporting external see external reporting financial see financial reporting public sector see public sector reporting reports, general purpose see general purpose financial reports research on local government 1–3 resource sharing 247 responsibilities of local government 82, 103, 233 Revaluation of Non-Current Assets (AAS 38) 68 revenue recognition 74–77 revenue sources for local government 18, 44, 45, 80–81 Rhodes, E 193 Rhodes, R 166, 169 Richardson, J 166 Rodden, J 224 role of local government 82, 103, 233 Roll, Y 189, 190, 193 Romer, T 220 Rose-Ackerman, S 224 Rosenthal, H 220 Rouse, P 189, 191, 192, 194 Royal Commission on Australian Government Administration 125 Rudnicki, ER 188 Ryan, B 87 Ryan, C 6, 63–78, 236 Ryan, D 189, 191, 192 safety, community 48–49 Sartor, F 91 Savery, N 94 Schedler, K 23 Schmidt, P 183 Schneider, V 159 Seiford, LM 190 Self, P 86 services, provision of 79, 82, 97, 235 cost 41, 49–51 impediments to 214 means of influencing 213–14 services centre, shared 89 ‘services to the person’ 3, 4, 49–51 ‘services to the property’ 2, 4, 49–50 Singh, S 224

INDEX

size of local government 80–82, 87–89 Skelcher, C 161, 162–63, 164–65, 168, 169, 172 Smith, W 84, 85 social capital 170–71 social services, provision of 49–51 Soul, S 82, 85, 88, 89 South Australia amalgamation of local government 95–96, 109, 120 efficiency gains 120–21 partnerships program 239, 242 Spain 18, 26, 30, 31 spatially divisible public goods 223–24 Sproats, K 87, 91, 97, 102 standards, accounting 6, 65, 67, 68, 72 state government fees and charges 48 statutory positions 124 stochastic frontier approach 181, 182–83, 189–90 Stronger Families and Communities Strategy 111 structural efficiency model 79, 85, 136 Sweden 18–19, 24, 30 Switzerland 18, 23, 30, 31 Sydney Inner Sydney Inquiry 87, 92, 93, 97 local government structure 87 Sydney City Council 92 Tasmania amalgamation of local government 95, 107–8, 109, 120, 121 partnership agreements 239, 241 voting provisions 113, 114 tax goods and services 57 land 52, 54–55 Teicher, J 94 tendering, compulsory competitive 131, 235, 236 Thornton, J 89 Tollison, RD 216, 221 Tonnies, F 105, 106 Tourism Task Force 93 town and shire clerks 124, 127 Townsend, MA 94 training 122, 153–54 transfers, revenue 74–75, 76–77 transparency 86, 245 trust 166 Tulkens, H 189, 191, 192, 193, 194, 195 Tullock, G 221 United Kingdom fiscal autonomy 28, 31 local government reform 91, 130 new public management development 20, 30 revenue sources 18–19

• 273

United States 24–25, 28, 30, 91 universities, role in building local government profile 249–50 urban parish 89 Urgent Issues Group 72, 73 user charges 18 Vanden Eeckaut, PJ 191, 192, 193, 194, 195 Vann Gramberg, B 94 Vanneste, J 189, 192, 196, 197 Veiderpass, A 190–91 Victoria amalgamation of local government 84, 86, 93–95, 102, 108–9, 120, 131 community building 111 efficiency reforms 129–32 grant funding 45–47 state-local government relationship 240 voting provisions 113, 114, 115 virtual councils 80, 89–91, 96, 247 Vitaliano, DF 189, 196–97 Viton, PA 189 ‘voice’ (means of influencing service provision) 213–14 voter apathy 216–19, 234 voting alternatives to 216 as consumption activity 216 postal 114–15 property-based 112–14, 115 voting provisions, local government 111–15 WA Inc Royal Commission 119 Wagner, A 51 Walker, RG 66, 69, 73 Wallis, J 8–9, 159–75, 212, 218, 221, 227, 233 Walzer, N 190 Weisbrod, BA 212, 218 Western Australia, state-local government partnership 240 Wettenhall, R 232 Whyard, M 128 Wilks, S 166 Wintrobe, R 219, 220, 221 Witherby, AW 87, 89 Wolnizer, P 70 Woolcock, M 171 World Bank 174–75 Worthington, A 9, 176–211, 189, 194, 196, 197, 224, 225, 238, 245 Wright, M 166 Young, L 221–22 Zwart, I 95

Also published by UNSW Press

DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE Andrew Beer, Alaric Maude and Bill Pritchard The press and contemporary political debate send conflicting messages about the economic future of Australia’s regions. Developing Australia’s Regions: Theory and Practice is a book that recognises that regions matter – what takes place in our diverse regions fundamentally determines the nation’s quality of life. This practical book draws upon regional development theory, and national and international experience, to set out the principles and strategies that can be used to establish a stronger future for our regions.

UNSW PRESS

ISBN 0 86840 548 5