Does Municipal Efficiency Affect Citizen Satisfaction? An Empirical Analysis of Efficiency and Effectiveness in Victorian Local Government

The performance of local governments continues to be a key concern for public policymakers around the world. While a substantial body of research has examined the supply side of municipal performance, particularly focusing on efficiency at both the service-specific and system-wide levels, comparatively little attention has been given to municipal effectiveness, or the demand-side perspective. This study aims to address this gap by empirically investigating the relationship between municipal efficiency, measured through operational efficiency estimates, and municipal effectiveness, measured through local resident satisfaction scores. The analysis focuses on the Victorian local government system, one of Australia’s seven states, over the period 2014/15 to 2017/18, with the goal of identifying whether a systematic link exists between efficiency and effectiveness in municipal performance.