Deconstructing local government performance and infrastructure measurement

Abstract

PurposeThis paper revisits the debate regarding myriad measurement bases and begins a new discussion within a public sector environment. It does this by considering the under‐researched technical aspect of measurement within Neely et al.'s measures design template framework.Design/methodology/approachUsing the full population from Australia's largest state, New South Wales (NSW), the annual reports of all local councils were analysed over a seven‐year period. In addition, interviews were conducted with a sample of councils representing all geographical areas of the state.FindingsUnder the auspices of the modified Neely et al.'s measures design template, additivity problems associated with valuing infrastructure, property, plant and equipment (IPPE) were found to result in the production of unreliable performance indicators – in this case, the capital expenditure ratio (CER).Research limitations/implicationsThe limitations include the research using an untested model; local councils in only one Australian state and one performance indicator analysed. Future research will examine the behavioural aspects of local councils as a result of being judged on an inappropriate indicator.Originality/valueThis paper considers two research issues – the imposition of private sector ideas to public sector entities and problems associated with combining myriad measurement bases to produce performance indicators used for decision making in local government. By introducing the CER as an exemplar within Neely et al.' measures design template, problems associated with combining myriad measurement bases to produce performance indicators used for decision‐making provide an unique insight into local government reporting.