The Price of Democracy? Political Representation Structure and Per Capita Expenditure in Victorian Local Government

Abstract

Local government systems across the world face acute and ongoing fiscal challenges. In Australia the regulatory response has focused squarely on council consolidation. This has unfortunately meant that comparatively little attention has been paid to alternative, less disruptive methods for enhancing municipal sustainability. One such possibility lies in modifying the structure of local political representation. We conduct a number of estimations on a four-year panel of Victorian municipal data to test whether the 'law of 1/n' has empirical support at the local government level. Our results clearly show that the number of geographically defined fragments, or wards, within a given municipality is a statistically significant determinant of local government expenditure. A number of public policy recommendations follow from the empirical evidence which might be broadly applicable to other municipal systems. KeywordsLocal government; political representative structure; Law of 1/n JEL: H10, H11

Applying an Institutional Collective Action Framework to Investigate Intermunicipal Cooperation in Europe

“…Elsewhere, many of Latin America's largest metropolises face significant governance challenges due to excessive fragmentation (e.g., Mexico City, São Paulo, Buenos Aires, and Santiago), with monocentric metropolitan regions constituting the exception, either by intentional design (Lima's metropolitan government) or by historical dominance of the central city (Bogotá) (Nickson 2011;Frey 2014). Several Australian states have engaged in significant mergers in search for economies of scale with deleterious consequences for the exercise of democracy (Drew et al 2016;Drew and Dollery 2017) and similar trends have been reported in Japan (Mabuchi 2001;Yamada 2016) and Canada (Cobban 2017;Sancton 2000).…”

An empirical analysis of municipal efficiency and local resident satisfaction by council type in Victorian local government

“…The Local Government Act 1989 represents the principal governing legislation over Victorian local authorities (Drew & Dollery, 2017). It is augmented by numerous other acts of the Victorian Parliament, notably the City of Melbourne Act 2001, the Municipal Association Act 1907, the Victoria Grants Commission Act 1976, the Libraries Act 1988, and the Municipalities Assistance Act 1973.…”

A sizeable effect? Municipal council size and the cost of local government in Canada

“…In this hypothesis, a higher number of electoral districts reduces the cost burden of public works projects for each district, thereby facilitating the approval of larger projects and contributing to greater total expenditures. While numerous studies find a positive relation between council size and total expenditures (Baqir ; Bradbury and Stephenson ; Egger and Koethenbuerger ; Hirota and Yunoue ), others are more nuanced (MacDonald ; Berry and Gersen ; Drew and Dollery ), while the inverse relation is identified in one study (Pettersson‐Lidbom ). Although the law of 1/n has been transposed to various contexts, it has not been applied to Canadian municipalities.…”

“…Using fixed effects with panel data, she finds that the positive relationship between city council size and expenditures disappears. Using panel data for municipalities in the state of Victoria, Australia, Drew and Dollery () provide support for the law of 1/n, with a caveat; it is the number of wards rather than the number of elected officials that is linked to higher municipal expenditures. Pettersson‐Lidbom (), on the other hand, identifies an inverse correlation between council size and per capita expenses in Finnish municipalities, a refutation of the law of 1/n that is attributed to a political consensus in favour of austerity.…”