Has amalgamation delivered better financial performance for local government in the Northern Territory, Australia?

In recent decades, Australian policymakers have used amalgamation as a method of achieving economies of scale to improve efficiency and performance in local government. The Northern Territory (NT) government amalgamated 53 rural remote councils into 8 shire councils in 2008. However, there has been no investigation into the effects of the local government reform in terms of implications for financial performance in the NT. This research contributes to filling this knowledge gap. The aim of this thesis is to investigate the effect of the 2008 amalgamation on the financial performance of local councils in the Northern Territory. This study used all 16 NT local councils as subjects. Data was obtained from relevant council websites and is publicly available. This investigation was focused on the Key Performance Indicators (KPI) analysis of council financial reports for the 5 years since reform (i.e. 2008-2013). The rationale behind this method was that the local councils with improved efficiency would have better financial performance as embodied in improved KPI results. The results of this study suggest that amalgamated councils have performed no differently than other councils. These findings suggest that size is not a significant contributor to financial performance in the NT local government system. Therefore, simply changing the scale of local government bodies in the NT does not improve their financial efficiency. To do so, policy makers will need to look for alternatives. This thesis offers the knowledge base for policy-makers considering structural reform of local government, especially local government systems similar to that of the NT, thus contributing to efficient and viable local government systems in Australia. To have broad application, further studies with more representative samples and data produced over a longer period should be undertaken.