Population size and economic and political performance of local government jurisdictions

Stephen Charles Soul

This research hypothesises that a relationship exists between the population size of local government jurisdictions and their economic and political performance. A review of the literature is conducted and data sets from primary and secondary sources on the performance of local government jurisdictions in the State of New South Wales are collected and analysed to test two hypothetical propositions within a theoretical framework. The findings from this research are used to draw a number of conclusions that have implications for public policy. To measure and rank the economic performance of local government jurisdictions in New South Wales relative to population size, analyses are conducted to model expenditure on local government rates using both individual and household income. Analyses are also conducted to measure and rank the technical economic efficiency of these jurisdictions at institutional level using performance indicators drawn from secondary data. To measure and rank the political performance of New South Wales local government jurisdictions relative to population size, an analysis of democratic representation is conducted using secondary data. Analyses are also conducted to measure constituent perceptions of the efficacy of political participation using a sample survey of constituents from four jurisdictions. This research finds a weak but significant positive relationship between increasing population size and increasing technical economic performance among New South Wales jurisdictions. It has been argued th.at while small jurisdictions are less economically efficient, the cost of this inefficiency can be offset as small jurisdictions provide constituents with better representation and more effective political participation than large jurisdictions. However, this study failed to establish any significant statistical relationship between the population size of jurisdictions and perceptions of efficacious political participation. Empirical evidence is found of a relationship between increasing population size and decreasing democratic representation among these jurisdictions, and of increasing political exploitation relative to decreasing population size by high 'class' political elite, determined by crude measures of income, occupation and education. This research finds that the lack of adequate population size among New South Wales local government jurisdictions tends to cause or exacerbate: a. inefficient 'technical' economic performance; b. diminished democratic participation; c. diminished and unequal political representation; d. unequal distribution of the local public good both within and among jurisdictions; e. production of local public goods at excessive quantity, quality and price levels; f. excessive externalities; g. excessive free-riding; h. deterioration in the standard of local infrastructure due to the existence of political incentives to redirect capital funding to current expenditure; and i. the imposition of gross transaction, salary, assessment and compliance costs on rate and taxpayers due to the absence of competition and constraint from market forces. There appears to be no logical or constitutional rationale for the existing structure of local government jurisdictions. This research set out to establish theoretical support for determining the size and boundaries of local government jurisdictions on the basis of economic and political optimality, naturally formed geographic containment and long-standing patterns of commerce. Two potential remedies are indicated. Firstly, that the number of local government jurisdictions be reduced to enhance economic and political performance. Secondly, that the proportion of local public goods provided directly by State Government be substantially increased, possibly through networks of larger urban and regional jurisdictions and more numerous smaller, place-specific jurisdictions in rural and remote areas. Provision of local public goods by the State should rely more heavily on localised private sector production, user-fees and focus on those goods that are readily priced, tradable and likely to benefit from competitive market forces.

Population size and economic and political performance of local government jurisdictions

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Population size and economic and political performance of local government jurisdictions

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