In this paper, the similarities in and differences between the UK and Australian systems of allocating central government grants to local government are used to evaluate the equalisation methodologies employed in each country. In the analytical framework used, fiscal disability is measured vis-à-vis the most advantaged authority. The extent of the horizontal equalisation which occurs is shown to depend on whether this most advantaged authority receives a positive, zero, or negative per capita grant. It is concluded that in the United Kingdom, under the post 1981 unitary block-grant system, a deficiency principle or sequential approach to equalisation has been continued. In Australia, if the recommendations of the 1985 national inquiry are implemented by the local government grants commissions, the equalisation methodology employed by them will imitate the UK approach. It will thus ensure that maximum support is provided to the most disadvantaged authorities, given the constraints imposed on total funds available for equalisation.
Get full access to this article
View all access options for this article.
References
1.
ACC, 1986Rate Support Grant (England) 1986/87 Association of County Councils, 66a Eaton Square, London SW1 (annually)
2.
ACC, 1986Understanding Block Grant 1986–87 Association of County Councils, 66a Eaton Square, London SW1 (annually)
3.
AronsonJ, 1977, “Some comments on fiscal equity and grants to local authorities”Economic Journal87774–779
4.
BennettR J, 1982Central Grants to Local Governments (Cambridge University Press, Cambridge)
5.
BradburyK, 1984, “State aid to offset fiscal disparities across communities”National Tax Journal37(2), 151–171
6.
BradburyKLaddHPerraultMReschovskyAYingerJ, 1984, “State aid to offset fiscal disparities across communities”National Tax Journal37(2), 151–171
7.
BramleyG, 1986a, “Horizontal disparities and resource equalization: a critique of Paying for Local Government”, paper presented to the Esmee Fairbairn Local Government Study Group, London, March; School for Advanced Urban Studies, Bristol
8.
BramleyG, 1986b, “Defining equal standards in local public services”Urban Studies23 forthcoming
9.
BramleyGEvansA, 1986, “Block grant: some unresolved issues”Policy and Politics9(2), 173–204
10.
BramleyGEvansALeatherPLambertC, 1983, “Grant related expenditure: a review of the system”, WP-29, School for Advanced Urban Studies, Bristol
11.
BuczkoW, 1982, “Measures of inequity, distribution standards, and municipal expenditures”Social Science Quarterly63(4) 661–673
12.
CIPFA, 1986Finance and General Statistics 1985/86 Chartered Institute of Public Finance and Accountancy, London
13.
CrippsFGodleyW, 1976Local Government Finance and its Reform: A Critique of the Layfield Committee's Report Department of Applied Economics, University of Cambridge, Cambridge
14.
DoE, 1985The Technical Handbook of Grant Related Expenditure 1985/86 (the ‘Green Book’), Local Government Finance Policy Directorate; 2 Marsham Street, London SW1
15.
DoE, 1985Grant Related Expenditures: How the Expenditure Needs of Local Authorities are Assessed for Block Grant February 1985, (the ‘Blue Book’), Local Government Finance Policy Directorate; 2 Marsham Street, London SW1
GibsonJTraversT, 1985, “Block grant: the story of a failure”Public Money5(2), 17–22
18.
GodleyWRhodesJ, 1972The Rate Support Grant System Department of Applied Economics, University of Cambridge, Cambridge
19.
GrewalB SBrennanH GMathewsR L (Eds), 1980The Economics of Federalism (Australian National University Press, Canberra)
20.
HMSO, 1986Paying for Local Government Cmnd 9714 (HMSO, London)
21.
HicksJ RHicksU, 1944The Problem of Valuation for Rating (Cambridge University Press, Cambridge)
22.
KingD, 1980The Theory of Equalising Grants WP-8, Institute for Fiscal Studies, London
23.
KingD, 1984Fiscal Tiers (Allen and Unwin, Hemel Hempstead, Herts)
24.
Layfield Report, 1976Local Government Finance Report of the Committee of Enquiry (chairman Frank Layfield), Cmnd 6453 (HMSO, London)
25.
LeGrandJ, 1975, “Fiscal equity and local government grants to local authorities”Economic Journal85531–547
26.
LeGrandJRechovskyA, 1971, “Concerning the appropriate formulae for achieving horizontal equity through federal revenue sharing”National Tax Journal24(4), 475–486
27.
LGFAA, 1986Local Government (Financial Assistance) Act 1986, (AGPS, GPO Box 84, Canberra), number 79 of 1986
28.
LGPITSA, 1976Local Government (Personal Income Tax Sharing) Act 1976 (AGPS, GPO Box 84, Canberra) number 123 of 1976
29.
MathewsR L, 1977, “Mechanisms for fiscal equalisation”, in Report of the Study Group on the Role of Public Finances in European Integration, volume II Commission of the European Community, Brussels; reprinted in The Economics of Federalism Eds GrewalB SBrennanH GMathewsR L (1980) (Australian National University Press, Canberra) pp 255–284
30.
MathewsR L, 1980Revenue Sharing in Federal Systems Research Monograph 31, Centre for Research into Federal Financial Relations, Australia National University, Canberra
31.
MathewsR L, 1983, “Fiscal federalism in retreat”Economic Papers2118–35
32.
MusgraveR, 1961, “Approaches to a fiscal theory of political federalism”, in Public Finances: Needs, Sources and UtilizationNational Bureau of Economic Research, Princeton University Press, Princeton, NJ; reprinted in The Economics of Federalism Eds GrewalB SBrennanH GMathewsR L (1980) (Australian National University Press, Canberra) pp 209–233
33.
MusgraveRMusgraveP, 1976Public Finance in Theory and Practice, 2nd edition (McGraw-Hill, Tokyo)
34.
NILGF, 1985, National Inquiry into Local Government Finance (chairman P Self) Report (Australian Government Publishing Service, Canberra)
35.
RSG Report, 1985, “Rate support grant”Rate Support Grant Report (England) 1986/87, Department of the Environment (annually)
36.
SmithJ, 1979, “Equalising local authority resources: what are the options?”CES Reviewnumber 5, 69–73
37.
SmithJ, 1981, “Principles of a grant distribution system”, in OECD Urban Management Studies, volume 4, Measuring Local Government Expenditure Needs: The Copenhagen Workshop (OECD, Paris) pp 251–280
38.
Society of County Treasurers, 1985Block Grant Indicators 1985/86 PO Box 12, Reading RG2 9XB
39.
ThurowL, 1970, “Aid to state and local governments”National Tax Journal23(1), 23–35
40.
TraversT, 1982, “Block grant: origins, objects and use”Fiscal Studies3(1), 11–23
41.
WeidenbaumMJossR, 1970, “Alternative approaches to revenue sharing: a description and framework for evaluation”National Tax Journal231–22
