Improving Efficiency in Australian Local Government: Structural Reform as a Catalyst for Effective Reform

Municipal amalgamation has been the main policy instrument of local government structural reform programmes in Australia for well over a century. However, council consolidation programs have not achieved the intended cost savings or improved service provision promised by advocates of this means of structural reorganisation. This paper considers whether the failure of municipal amalgamation processes to produce significant economic benefits necessarily implies that structural reform programs that invoke consolidation have no place in Australian local government policy. It is argued that 'top-down' state government structural reform policy initiatives carrying the threat of amalgamation constitute an efficient mechanism for evoking optimal 'bottom-up' structural change models.