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While a voluminous empirical literature has investigated cost efficiency in local government, until recently no effort has been invested in decomposing municipal performance into its persistent efficiency and transient efficiency components. In this paper, we estimate persistent and transient cost efficiency that might be attributed to managerial and environmental factors in the Victorian state local government system in Australia using stochastic frontier analysis over the period from 2014/2015 to 2018/2019. In addition, we seek to contribute to the empirical literature on local government performance by estimating differences in cost efficiency between urban and rural councils and the relationship between the transient cost efficiency and the overall cost performance of Victorian local councils. We find that the overall cost efficiency (OCE) of local councils is highly correlated with transient (short term) cost efficiency and that urban councils are more cost-efficient than their rural counterparts. Various public policy implications are then considered.

Shortfalls in infrastructure expenditure represent a ubiquitous problem in all Australian local government systems as well as in many other countries. In this paper, we use an evolutionary model to describe how local government investment decisions are made. We demonstrate that fear of reputational damage among elected councilors could cause herding behavior resulting in convergent and overly cautious investment behavior by councils. Under these conditions, divergent viewpoints amongst council members are discouraged and local government may become moribund in its decision-making. We show how this may result in “gaps” in infrastructure investment.

This paper constructs a DSGE model to study the relationship between the Chinese local government’s land policy, social welfare and economic fluctuations. I find that increasing the supply of residential land by the local government will reduce housing price and increase social welfare, but it crowds out the amount of industrial land and decreases final output and social welfare as well. This trade-off brings out an optimal supply ratio of residential land, 40%, in deterministic steady-state equilibrium. Besides, the local government is able to use dynamic pro-cyclical residential land supply policy to dampen economic fluctuations in China’s macroeconomy.

This paper utilizes network data envelopment analysis and the second-order cone programming approach to evaluate the performance of 20 Taiwanese local governments (which consist of 6 municipal governments and 14 non-municipal governments). We first explore the fiscal policies in local governments using non-parametric methods. Second, this study develops an innovative two-stage process to measure the effects of fiscal policies to economic efficiency and fiscal effectiveness of 20 local governments for from 2010 to 2016. Several findings are summarized as follows. (1) Non-parametric results reveal that current and capital expenditures, as well as tax and non-tax revenue of municipal governments, were higher than non-municipal governments. (2) The municipal governments have a higher economic efficiency level and fiscal effectiveness yearly and on average based on the two-stage efficiency scores. Overall, empirical results provide insights to local governments on the efforts to integrate resources that will exert a synergistic effect on governance performance. To mitigate economic problems arising from increasing fiscal deficits, it is recommended to implement forward-looking policies and allocate government funds wisely during the early expansion stage. This can be achieved by analyzing tax systems and adopting fiscal policies that boost tax revenue and enhance overall fiscal effectiveness.

Most studies addressing the issue of financial reporting quality (FRQ) focus on corporations. This study investigates the determinants of FRQ in the public sector. We use the type of audit opinion as a proxy for reporting quality, with an unqualified opinion representing the best reporting quality while a disclaimer of opinion represents the worst quality. Using manually collected data from 3018 financial reports of local governments in Indonesia from 2008 to 2014, we find that a high proportion of capital expenditures in the total budget is associated with low FRQ. Further, we find that larger and wealthier local governments are associated with higher FRQ. Finally, we find that local governments under more experienced mayors have higher reporting quality. Our results are robust to different measures of FRQ. This study contributes to the reporting quality literature by providing empirical evidence on the determinants of FRQ in the public sector, which has been relatively underexplored. We conclude that certain characteristics of local governments and of mayors are associated with the types of audit opinion and that financial incentives accelerate the improvement of reporting quality.

Malawi entered a formalisation of a decentralised administration structure through the enactment of the Local Government Act of 1998. The environmental implications and obligations are stated in the Environmental Management Act 1996, which also mandates the Environmental Affairs Department as the co-ordinator for environmental management. Both acts devolve environmental management responsibilities to the District Assemblies. Donors (i.e., UNDP and DANIDA) sponsored and facilitated environmental management decentralisation through projects that strengthened legal and institutional framework, and built capacity. A few of lessons have been learnt from the process, and some are outlined in this paper e.g. the need for capacity building, harmonisation of the major statutes, and institutions where to anchor the mainstreamed decentralised environmental management functions. Other lessons include lack of delineation between devolution and deconcentration leading to local participation apathy, different policies among donor agencies resulted in implementation difficulties, and uncertainty in continuity of the initiative e.g. closure of DANIDA activities resulted in almost halt to the decentralisation of environmental management.

The empirical analysis of local government efficiency has spawned a substantial literature. However, to date, few studies have investigated municipal performance by council type under both a meta-frontier framework and a network structure approach. This chapter addresses this gap in the literature by examining the performance of 41 urban and 38 regional Victorian councils under a common framework and in a network structure of financial activity and service provision. Using a meta-frontier network data envelopment analysis for the period of 2014/15–2018/19, we find that regional councils have divisional and network efficiency scores slightly higher than those of urban councils. However, when all councils are placed in a common framework, urban councils are more efficient than their regional counterparts using their own production technology, with meta-technological gap ratios of 0.880 and 0.826, respectively. A sensitivity analysis of divisional weights in a network operational structure indicates that a higher weight placed on service provision could improve the technological gaps of councils and bring them closer to the full meta-frontier production technology of the whole sector. This underscores the importance of public service provision in the performance of Victorian local government. Various policy implications are thus indicated.

The increasing magnitude and frequency of natural disasters put growing pressure on disaster risk reduction (DRR). DRR strategies have traditionally relied upon risk identification as the first step in assessing disaster risks, but they are incapable of planning for all risks that a community will face. In most countries, current DRR strategies focus on prevention and mitigation of identifiable risks. They seek to build specified resilience — resilience to known risks. On the contrary, there are no strategies that aim to build general resilience to address unexpected risks. This is also the case for South Australia, where this study took place. This chapter explains the importance of broadening the focus of DRR strategies beyond specified resilience to also include general resilience. Starting from a sense-making framework on resilience to known and unexpected risks, focus group discussions were facilitated to assess systemic conditions that have an impact on community resilience to unexpected risks, that is, those that most people are not prepared to face. System of Systems (SoS) and complex systems thinking (CST) were used to explore potential to integrate systemic approaches to current DRR strategies. The study involved community members, the Australian Red Cross and State Government agencies responsible for disaster mitigation and prevention in South Australia. Systemic factors residing outside the scope of the investigated DRR SoS highlighted the need for “feedback policies” that take into account modern community routines and new characteristics of social relations dynamically. Key recommendations and insights have local, national and international relevance.