An Empirical Analysis of Administrative Scale Economies in Victorian Local Government

A voluminous literature has empirically examined scale economies in local government functions, particularly in local urban transportation, water and wastewater provision. Conversely, little work has focused on the empirical investigation of economies of scale in municipal administration, including in Australian local government. In order to address this gap in the empirical literature, in this paper we examine administrative scale economies and task density in the Victorian (VIC) local government system for the period 2014/15 to 2018/19 using a data panel. Our findings reveal no administrative scale economies in VIC local government. By contrast, task density is a key determinant of administrative intensity. We conclude by canvassing some public policy implications of our findings.