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Local Government Efficiency in Western Australia

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  • Fogarty, James Joseph
  • Mugera, Amin W.

Abstract

The State government of Western Australia is currently working through a significant program of local government reform that has as a core objective a reduction in the number of local councils. The perception that there are economies of scale in service delivery is a key reason behind the State government’s desire to see a reduction in the number of councils in Western Australia. The following article uses the technique of Data Envelopment Analysis to measure the technical and scale efficiency of councils in Western Australia. The average pure technical efficiency score for Western Australian councils was found to be 83 per cent, and the average scale efficiency score was found to be 94 per cent. This suggests that pure scale effects are not a major source of inefficiency. Detailed returns to scale analysis for the 73 councils where complete data was available revealed that 17 councils were operating at the optimal scale, 26 were operating below the optimal scale, and 30 were operating above the optimal scale.

Suggested Citation

  • Fogarty, James Joseph & Mugera, Amin W., 2011. "Local Government Efficiency in Western Australia," Working Papers 117072, University of Western Australia, School of Agricultural and Resource Economics.
  • Handle: RePEc:ags:uwauwp:117072
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    File URL: http://purl.umn.edu/117072
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    References listed on IDEAS

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    1. Balaguer-Coll, Maria Teresa & Prior, Diego & Tortosa-Ausina, Emili, 2007. "On the determinants of local government performance: A two-stage nonparametric approach," European Economic Review, Elsevier, vol. 51(2), pages 425-451, February.
    2. Andrew Worthington, 2001. "An Empirical Survey of Frontier Efficiency Measurement Techniques in Education," Education Economics, Taylor & Francis Journals, vol. 9(3), pages 245-268.
    3. Kim Woodbury & Brian Dollery, 2004. "Efficiency Measurement in Australian Local Government: The Case of New South Wales Municipal Water Services," Review of Policy Research, Policy Studies Organization, vol. 21(5), pages 615-636, September.
    4. Andrew Worthington & Brian Dollery, 2002. "Incorporating contextual information in public sector efficiency analyses: a comparative study of NSW local government," Applied Economics, Taylor & Francis Journals, vol. 34(4), pages 453-464.
    5. Andrew Worthington, 1999. "Performance Indicators and Efficiency Measurement in Public Libraries," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(1), pages 31-42.
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    Keywords

    Data Envelope Analysis; Local Government; Efficiency; Productivity Analysis;

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