An Empirical Examination of the Determinants of Expenditure Dispersion in South Australian Local Government

The empirical analysis of the cost structure of local government has traditionally employed population as a proxy for municipal output, despite longstanding reservations as to its suitability, especially in terms of local service provision (Boyne, 1995). Based on alternative proxies for local government output, and employing data drawn from the South Australian local government system over 2015/16, the present paper examines per household expenditure dispersion by comparing estimates based on population size with estimates based on the number of households and businesses. We then consider how exogenous variables affect the per household expenditure structure of local councils in South Australia. Policy recommendations are drawn for improvement in South Australian municipalities.