Local government amalgamation policy: A highway maintenance evaluation

Evaluating the effects of a change in public policy setting is a critical element in the chain of accountability. Factors such as effectiveness and efficiency in government operations are often difficult to measure. In this study of efficiency outcomes, we follow events before and after significant structural change arising from local authority amalgamation. The study focuses on highway maintenance and uses Data Envelopment Analysis (DEA) to evaluate whether greater efficiency was achieved. Results (confined to highway management activities) show no evidence that amalgamation was justified in terms of diseconomies arising from smallness (i.e. increasing returns to scale). While new governance practices introduced contemporaneously lifted the level of performance of local authorities in terms of higher technical efficiency, there is no evidence that the amalgamation policy contributed to this improvement. The policy impact evaluation methodology developed in this paper has potential for application to other local government service activities.