Examining Efficiency Differentials by Council Type in South Australian Local Government: An Environmentally Adjusted Meta-Frontier Data Envelopment Approach

Abstract

The empirical analysis of local government performance has spawned a voluminous international research effort. While some of this literature has focused on the impact of non-discretionary factors on municipal performance, to date the efficiency differentials between discrete types of local authority contingent on non-discretionary factors has yet to be investigated. In an endeavour to address this gap in the literature, as well as some of the shortcomings of extant studies on the impact of non-discretionary environmental factors on municipal performance, in this paper we investigate the meta-frontier technological efficiency gap between four categories of local councils in South Australian (SA) local government by placing them all in a common framework using a data envelopment analysis approach. The effects of the non-discretionary factors on the individual efficiency of each council group are filtered out to obtain robust meta-frontier technological gap ratios and thereby evaluate the managerial (in)efficiency of SA municipal sub-categories.