Is Local Government Efficiency Measurement in Australia Adequate? An Analysis of the Evidence

Attempts to enhance the efficiency and effectiveness of local government have lagged behind the higher tiers of governance in Australia, and it is only in the comparatively recent past that systematic efforts have been made to measure the performance of Australian local government. This paper seeks to review municipal efficiency measurement in Australia and to advance the argument that the present reliance on partial measures of performance is inadequate and should be heavily augmented by data envelopment analysis (DEA). We summarize progress made in efficiency measurement on a state-by-state basis and then examine performance measurement in water and waste water as a more detailed case study. On the basis of this evidence, we argue that DEA provides the best means of providing public policymakers with the necessary information on municipal performance.