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Title: How High Should They Jump? An Empirical Method for Setting Municipal Financial Ratio Performance Benchmarks
Contributor(s): Drew, Joseph  (author)orcid ; Dollery, Brian E  (author)
Publication Date: 2016
Open Access: Yes
DOI: 10.1111/1467-8500.12152Open Access Link
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Abstract: Heightened concerns regarding the financial sustainability of local councils have resulted in an increasing reliance by municipal regulators on financial ratio performance benchmarking. However, these benchmarks are often assigned without explicit justification and despite a paucity of empirical evidence. Furthermore, regulators typically allocate a single performance benchmark across an entire local government system despite the fact that individual councils may face entirely different operating environments. Failure to take account of the environmental challenges facing councils can result in inappropriate or unattainable performance benchmarks that may give rise to unintended consequences, such as the well-documented threshold effects. To address this problem, we develop an empirical method for allocating performance benchmarks with respect to the current level of performance and environmental constraints facing individual local authorities. We demonstrate this technique in a case study using data drawn from New South Wales local authority operating ratios.
Publication Type: Journal Article
Source of Publication: Australian Journal of Public Administration, 75(1), p. 53-64
Publisher: Wiley-Blackwell Publishing Asia
Place of Publication: Australia
ISSN: 0313-6647
Field of Research (FOR): 160509 Public Administration
Socio-Economic Outcome Codes: 940204 Public Services Policy Advice and Analysis
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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Appears in Collections:Journal Article
UNE Business School

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