The Price of Democracy? Political Representation Structure and Per Capita Expenditure in Victorian Local Government

Abstract

Local government systems across the world face acute and ongoing fiscal challenges. In Australia, the regulatory response has focused squarely on council consolidation. This has, unfortunately, meant that comparatively little attention has been paid to alternate, less disruptive methods for enhancing municipal sustainability. One such possibility lies in modifying the structure of local political representation. We conduct a number of estimations on a four-year panel of Victorian municipal data to test whether the “law of 1/n” has empirical support at the local government level. Our results clearly show that the number of geographically defined fragments, or wards, within a given municipality is a statistically significant determinant of local government expenditure. A number of public policy recommendations follow from the empirical evidence that might be broadly applicable to other municipal systems.