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The impact of Equalization on Service Delivery

Author

Listed:
  • Catherine Hull
  • Bob Searle

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.

Suggested Citation

  • Catherine Hull & Bob Searle, 2004. "The impact of Equalization on Service Delivery," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0412, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper0412
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0412.pdf
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