Optimal Structural Reform in Australian Local Government: An Empirical Analysis of Economies of Scale by Council Function in New South Wales

Abstract

Amalgamation has always been the preferred means of improving the operational efficiency of Australian local government through structural reform. However, its implicit assumption that 'bigger is better' has scant empirical support, especially regarding the question of economies of scale. This article considers the results of a survey of general managers in New South Wales that sought to solicit opinion on which services should be provided locally and which services should be provided on a regional basis. The results of the survey suggest that respondents felt that only some services would benefit from regional provision thereby not undermining only weakening the argument for amalgamation as a panacea, but also implicitly rejecting the view that economies of scale are ubiquitous across all services.