An Empirical Analysis of the Determinants of per Capita Municipal Expenditure in South Australian Local Government

Abstract

The inability of a range of public policies aimed at improving the financial sustainability and performance of local government has given rise to renewed interest in the determinants of local government expenditure. This paper seeks to add to the empirical literature on local government expenditure by not only investigating its determinants, especially the impact of ‘external’ non-discretionary factors on expenditure, but also whether expenditure varies systematically between different types of local authorities. Situating our analysis in the institutional context of South Australian (SA) local government and using 2015/2016 data for the 68 SA local councils, we investigate these two questions. We find that systematic differences exist between the four classes of council in our study and that non-discretionary environmental factors exert a significant effect on municipal expenditure.