Do Economies of Scale Exist in Australian Local Government? A Review of the Research Evidence1

Abstract

The 1990s witnessed a major era of structural reform in Australian local government. Amalgamation programmes in all six states resulted in a substantial decrease in the number of local authorities in Australia. The chief rationale underlying local government mergers lay apparently in the belief that larger municipalities would exhibit greater economic efficiencies. Despite its widespread acceptance amongst policy elites, this argument did not derive from a solid empirical base. This article seeks to evaluate available research evidence on the controversial question of economies of scale in Australian local government.