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Emperor With No Clothes: Local Government Amalgamation

Emperor With No Clothes: Local Government Amalgamation. Brian Dollery Centre for Local Government University of New England. Centre for Local Government University of New England. Emperor With No Clothes. All Australian local government systems undergone amalgamation, except WA.

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Emperor With No Clothes: Local Government Amalgamation

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  1. Emperor With No Clothes: Local Government Amalgamation Brian Dollery Centre for Local Government University of New England

  2. Centre for Local GovernmentUniversity of New England Emperor With No Clothes • All Australian local government systems undergone amalgamation, except WA. • In WA, mergers advocated for Perth. • In NSW, drastic Sydney mergers proposed. • However, de-amalgamation in QLD and de-centralisation options in NT.

  3. Emperor With No Clothes • Among OECD countries, Australian local authorities fourth largest local authorities (at 40,118 residents per council). • UK has largest councils (143,000), followed by Denmark (55,500) and New Zealand (49,000). • France has smallest councils (1,500 persons) with Switzerland (2,500) slightly larger.

  4. Emperor With No Clothes • Structure-conduct-performance (SCP) paradigm in IO economics. • Council size-council conduct–council performance. • Larger councils > better management & greater scale > lower costs/improved outcomes. • But SCP now discredited in economics.

  5. Centre for Local GovernmentUniversity of New England Emperor With No Clothes • Amalgamation advocates claim ‘bigger is better’, ‘bigger is cheaper’, and/or ‘bigger means better services’. • Recent shift away from ‘cost saving’ claims towards ‘enhanced capacity’ claims. • But what of the empirical evidence?

  6. Emperor With No Clothes Official Inquiries • Numerous state and national inquiries. • Almost all find amalgamation has not met expectations. • Find costs of amalgamation invariably badly under-estimated.

  7. Emperor With No Clothes Official Inquiries (cont.) • 2006 PWC National Report found no differences in financial viability between different states. • (Then) amalgamated states (SA, TAS, VIC & NSW) and non-merged states (QLD, NT & WA) had no systematic differences in viability.

  8. Emperor With No Clothes Existing Academic Literature • Big literature, especially in US, but also Australia, mostly case studies. • Almost all find amalgamation does not meet expectations. • Councils in Cooperation (2012) summarises the evidence in detail.

  9. Emperor With No Clothes New Academic Work • Andrews and Boyne (2012) UK study pioneered new approach comparing merging with non-merged councils. • We applied this to NSW in Admin & Society (2012): no relationship between council size & costs. • 2004 NSW amalgamation thus misplaced.

  10. Emperor With No Clothes New Academic Work (cont.) • We applied approach to DAE (2011) TAS analysis in AJPA (2013): no relationship for council size & costs. • Evaluated QLD pre- & post-amalgamation for scale economies. • Found compulsory mergers increased proportion of QLD councils with diseconomies of scale to 84%.

  11. Emperor With No Clothes New Academic Work (cont.) • Empirical modelling of Perth mergers shows no scale economies, cost savings or other pecuniary gains. • Only two of ten main functions have economies of scale. • Sydney merger proposals also show no evidence for scale economies.

  12. Centre for Local GovernmentUniversity of New England Emperor With No Clothes Summary: • There is limited empirical evidence in support of an association between council size and total council expenditure. • Total expenditure is the most important category to consider as it measures how much ratepayers must pay for all their local government services.

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