I examine the purchaser – provider split in the contexts of two local government areas (Hobart and Sorell) in Tasmania, Australia. I assess whether that split has delivered on the promised effects. I also examine the influence that context has on response outcomes to the purchaser – provider arrangement. Specifically, I pay attention to the impact of purchaser – provider reform on service spending, aggregate municipal spending, and total employment. The evidence shows that the use of the purchaser – provider split is viable only for large programme expenditures. The purchaser – provider split is not related to total municipal spending even though it may be negatively related to the programmes that are subject to it. Savings from purchaser – provider reform result in increased spending and therefore employment elsewhere in the local authority. Greater efficiency gains in some jurisdictions are attributable more to particular local favourable contextual conditions than to the purchaser – provider split per se.
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