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Did the Big Stick Work? An Empirical Assessment of Scale Economies and the Queensland Forced Amalgamation Program

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  • Joseph Drew
  • Michael A. Kortt
  • Brian Dollery

Abstract

In 2007, the Queensland Government imposed forced amalgamation with the number of local authorities falling from 157 to just 73 councils. Amalgamation was based inter alia on the assumption that increased economies of scale would generate savings. This paper empirically examines pre- and post-amalgamation (2006/07 and 2009/10) for scale economies. For the 2006/07 data, evidence of economies of scale was found for councils with populations up to 98,000, and thereafter diseconomies of scale. Eight percent of councils in 2006/07 (ten councils) – representing 64% of the state’s population – exhibited diseconomies of scale. For the 2009/10 data, the average cost curve remained almost stationary at 99,000 residents per council, but almost 25% of all councils (thirteen councils) were now found to exhibit diseconomies of scale. The compulsory merger program thus increased the proportion of Queensland residents in councils operating with diseconomies of scale to 84%.

Suggested Citation

  • Joseph Drew & Michael A. Kortt & Brian Dollery, 2016. "Did the Big Stick Work? An Empirical Assessment of Scale Economies and the Queensland Forced Amalgamation Program," Local Government Studies, Taylor & Francis Journals, vol. 42(1), pages 1-14, January.
    • Handle: RePEc:taf:flgsxx:v:42:y:2016:i:1:p:1-14
    DOI: 10.1080/03003930.2013.874341
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    Cited by:

    1. Dollery, Brain & Piper, Donella, 2020. "Council cooperation in New South Wales: Why have some councils not joined joint organisations?," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 125-136.
    2. Gerard Turley & John McDonagh & Stephen McNena & Arkadiusz Grzedzinski, 2018. "Optimum Territorial Reforms in Local Government: An Empirical Analysis of Scale Economies in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(4), pages 463-488.
    3. Stefano Manestra & Giovanna Messina & Anna Peta, 2018. "Is there strength in unity? Some preliminary evidence on inter-municipal cooperation in Italy," Questioni di Economia e Finanza (Occasional Papers) 452, Bank of Italy, Economic Research and International Relations Area.
    4. Hiroki Baba & Yasushi Asami, 2020. "Estimating the minimal efficient scale and the effect of intermunicipal cooperation on service provision areas for waste treatment in Japan," Asia-Pacific Journal of Regional Science, Springer, vol. 4(1), pages 139-158, February.
    5. Tavares Antonio F., 2018. "Municipal amalgamations and their effects: a literature review," Miscellanea Geographica. Regional Studies on Development, Sciendo, vol. 22(1), pages 5-15, March.
    6. Pérez-López, Gemma & Prior, Diego & Zafra-Gómez, José L., 2018. "Temporal scale efficiency in DEA panel data estimations. An application to the solid waste disposal service in Spain," Omega, Elsevier, vol. 76(C), pages 18-27.
    7. Francesca Bartolacci & Rosanna Salvia & Giovanni Quaranta & Luca Salvati, 2022. "Seeking the Optimal Dimension of Local Administrative Units: A Reflection on Urban Concentration and Changes in Municipal Size," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    8. Dollery, Brian & Drew, Joseph, 2017. "Paying the piper: A critical examination of ACIL Allen’s (2016) An Economic Assessment of Recasting Council Boundaries in South Australia," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 74-82.
    9. Dollery, B.E., 2021. "A critical appraisal of the Western Australian local government review panel’s recommendations," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 434-438.

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