Administrative intensity and financial sustainability: An empirical analysis of the Victorian local government system

A substantial empirical literature has examined the relationships between organizational characteristics and performance across the public sector, including the determinants of financial sustainability in local government. However, with the exception of one 2020 source, no attempt has been made to investigate the impact of administrative intensity on municipal financial sustainability. To address this gap in the empirical literature, this article examines the influence of administrative intensity on financial sustainability in the Victorian state local government system in Australia, as proxied by financial sustainability ratios, over the period 2014/15– 2018/19. In addition, we consider whether variations in the relationship between administrative intensity and financial sustainability exist between rural and urban Victorian local authorities. We find that administrative intensity significantly affects the financial sustainability indices of local councils. In addition, there are differences across rural and urban councils in the association between financial sustainability and administrative intensity. The study concludes with a brief discussion of its broader policy implications.