An Empirical Evaluation of the Relative Efficiency of 'Roads to Recovery' Expenditure in New South Wales Local Government, 2005/06

The Roads to Recovery local roads infrastructure funding program represents the most important Commonwealth local government finance initiative in the history of Australian fiscal federalism, not only because of its sheer size, but also because it funds individual local councils directly, thereby bypassing state and territory governments. Despite its significance, almost no scholarly attention has been directed at critically examining the operation of the program. In order to address this unfortunate neglect, this paper attempts to evaluate the relative efficiency of individual council expenditure under the Roads to Recovery program for New South Wales local government in the financial year 2005/06. Our results show that only a comparatively small proportion of councils expended funds relatively efficiently.