What's in a Name? Assessing the Performance of Local Government Classification Systems

Local government classification systems are employed in many countries for regulation, grant transfers and other public policy purposes. Given the pivotal role these classification systems play in public policy, their accuracy is a matter of some importance. Classification systems take several forms typically consisting of groupings of municipalities based on factors such as degree of urbanisation, population size and the like. However, to date none of these classification systems have been tested for homogeneity with respect to environmental constraints or validated against external data. This paper employs the classification system for New South Wales (NSW) local authorities as a representative case study to demonstrate that a wider range of external constraints should be considered for the robust classification of local councils.