An empirical analysis of municipal efficiency and local resident satisfaction by council type in Victorian local government

Abstract

Although a voluminous empirical literature has examined local government efficiency, much less attention has focused on municipal effectiveness and almost no effort has been directed at the relationship between efficiency and effectiveness. In this paper, we seek to add to the latter nascent literature by investigating the relationship between operational efficiency and local resident satisfaction for three different municipal categories (metropolitan, regional, and rural councils) in the Victorian local government system over the period 2014-2015 to 2017-2018 using data envelopment analysis and an advanced regression model. We find that although a strong relationship exists between efficiency and satisfaction for metropolitan and regional councils, the same is not true of rural councils.