The impact of Equalization on Service Delivery

Catherine Hull and Bob Searle

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: The operation of the horizontal fiscal equalisation (HFE) system between the Australian States has had an impact on service delivery. It redistributes funds among State governments to give each of them the same capacity to provide services. However, service standards are not the same across Australia because the HFE system delivers capacity and not performance equalisation. There is evidence that for some State government functions, standards of service are converging towards the average. This is due in part to by-product information from the HFE system. Service standards in Australia result from the interaction of the HFE system with other Australian and State government policy instruments, such as specific purpose grant programs and revenue raising policies. Community preferences also appear to be particularly important. The Commonwealth Grants Commission has a data series covering the period 1977-78 to 2002-03 showing the relative levels of State services over the period. This database is used to identify the drivers of changes in levels of service provision.

Keywords: Fiscal Equalization; Service Delivery; horizontal fiscal equalisation (HFE) (search for similar items in EconPapers)
Pages: 31 pages
Date: 2004-11-01
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper0412

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