The subject of this thesis is an assessment of the disparities in Local Government Finance patterns in Queensland over the last ten to twenty years.
There is a dearth of comprehensive studies on the public financing of local government in Australia and this thesis is an attempt to remedy the situation in respect of one state.
The method of empirical analysis used in this thesis involves a process of successively-exploring deeper into the data in search of the underlying patterns involved in local government fiscal variables. The local government revenue, expenditure and debt structure are examined and analysed separately and in-depth so that elements responsible for changes and variations of each fiscal variable may be identified.
The most significant contribution of this thesis is that it combines both a time series and cross sectional analysis of differences in local government fiscal levels as well as attempting to explain and quantify the size of the variations in these fiscal variables.
The thesis reveals the existence of real fiscal disparities among local authorities overall as well as among those of the same municipal type. It is acknowledged that the thesis represents only the beginnings of a much more onerous task of precisely determining the reasons for those large disparities in local government fiscal variables.
The thesis is divided into seven chapters, five of which are devoted to an analysis of the revenue, expenditure and debt structure of local government. Chapter one briefly examines the growing importance of local government in Australia and recent Federal Government policy initiatives in urban and regional development. It also discusses the new data requirements needed to support these policy developments, the most important being the foreshadowed “Urban and Regional Budget" to be presented in the September Budget. This urban and regional budget system is to be used as a co-ordinating and decision making tool. In addition the creation of the Australian Municipal Information System by the Bureau of Statistics is another step toward improving the quality of the local government data base. The point is made that after being neglected for so long the area of local public finance has now achieved a higher ranking in the research programs of academic institutions and government departments.
Chapter two starts with the analysis of the general rate which is the major revenue source of local government and examines its growth and variation over time in relation to the tax revenue of other levels of government in Australia and in relation to growth of personal income. The growth of rate revenue and the tax base is related to changes in personal income for the whole State and for regions within the State to enable calculation, of their elasticity coefficients. These elasticity co-efficients enable an assessment to be made of the adequacy of the major source of local revenue.
With regard to the rateable value base, we examined the variation among local authorities in the ratio of exempt property to total UCV, and the amount of rates foregone on these exempt properties as a proportion of their rate revenue. To more accurately assess the magnitude of the underlying local authority revenue disparities attention was focused on the relative dispersion (co-efficient of variation) of per capita personal income, per capita rateable value base, per capita general rate revenue, general rate in the dollar and per capita expenditure (revenue and loan) for local authorities by regions in Queensland. This enabled an assessment as to whether these divergences were increasing or decreasing over time. The question of equity and burden of the rating system was examined using recent Australian findings which unambiguously showed that the incidence of local authority rates were regressive over nearly all income classes. To assess whether ratepayer resistance was increasing with higher levels of rates imposed we examined the ratio of rate receipts to the rate levy and rate arreas to the rate levy over time by municipal status.
In the third chapter the overall receipts picture of local authorities was rounded out with an examination of receipts from revenue, loan and subsidy sources over time by municipal status, population size and region. In addition we more closely examined the relative proportions of their "own source" revenue (rates. charges and miscellaneous) for the last twenty years by region, municipal status and population size, in order to ascertain any significant differences in the use of each source.
In chapter four we examined in depth the impact of Australian Government and State Government grants and subsidies on local government finance in Queensland, and the reasons for the significant year to year variations observed. The analysis assessed the importance of aggregate interg0vernmental payments as a l0cal government revenue supplement, in total then by municipal status and function. Using the technique of rank correlation analysis we examined the extent to which existing schemes tend to favour local authorities with higher expenditure or lower rateable capacity. It was clear that the largest grants and subsidies per capita went to those local authorities with the largest per capita expenditure and tax base per capita.
Chapter five focuses its attention solely on the expenditure side of the local fisc, starting with a comprehensive analysis of all fund aggregate expenditure by major function, municipal status and population size over time and at a point in time. The second part of this chapter concentrates on an assessment of the difference in emphasis among local authorities in expenditure on 'general service' functions by using derived statistics from the 'Australian Manicipal Information System', Interim Local Government Data File. Using these derived statistics we examined
(i) the significance, by municipal status, population size group and D.U.R.D. regions of each general expenditure function as a percentage of the total.
(ii) the per capita expenditure figures by function to ascertain the range of dispersion amongst local authorities.
To round out the analysis of the public financing of local government in Queensland Chapter six examines the loan liability and debt service structure, in the first instance concentrating on trends and inter-relationships over time in the aggregate data and then supplementing this by focusing attention on disparities amongst local authorities by region, population size and municipal status.
The final chapter concludes with the major findings of the thesis and attempts to reveal the key areas where further research into specific aspects of local public finance is needed.
In summary then the focus of this thesis is on trying to highlight the local government fiscal pattern in Queensland. The primary goal is to extend our knowledge of the local government fiscal structure. Definitive answers cannot be expected at this point in the evolution of Local Government studies in Australia. However the analysis yields some insights and hopefully prepares the way for the subsequent methodological studies which will use more refined statistical techniques.