The Institute of Public Works Engineering Australia (IPWEA) has recently published the Australian Infrastructure Financial Management Guidelines. The Guidelines provide new assistance to link the technical (engineering) and financial aspects of managing infrastructure and services, and to assist infrastructure owners such as local government to develop sustainable long-term asset and financial management plans. Financial management for long-life infrastructure assets (such as roads, water, sewerage, and stormwater networks, and community buildings) is about ensuring sustainability in the provision of services required by the community. These new Guidelines offer advice for every organisation and individual with responsibility for the management of infrastructure assets. 

The multi-faceted problem of local government finance has attracted increasing attention in the new millennium. The reasons for the renewed interest in this thorny question are comparatively straightforward. In the first place, for the past two decades all public sector institutions have been profoundly affected by the twin revolutions simultaneously sweeping the world – the globalization of the international economy and the information revolution wrought by the computer age – and local government is no exception. Not only have these inexorable forces had dramatic implications for the structure of government as a whole, and relationships between the different tiers of government, but also for service provision and public finance, including local public finance. Secondly, substantially heightened demands on local government, together with limited access to adequate funding, have seen the genesis of a deepening crisis in the financial sustainability of local government entities.

A striking feature of local government reform in many Commonwealth countries has been a heavy reliance on structural reform, often in the form of forced local council amalgamation. This paper argues that the long-run success of structural change in local government hinges on several key factors, not least that voluntary rather than compulsory council mergers have a far greater chance of success. A second key ingredient resides in a high degree of local autonomy in both the composition and operation of decentralized governmental functions. A third vital factor lies in ensuring that revenue and tax assignment is sufficient to provide local government with financial autonomy. Finally, adequate powers of taxation need to be accorded to local government and this requires careful consideration of the types of taxes most suited to local government.

In this paper we seek to answer some basic questions about the condition of local government in the Pacific. Firstly, we examine what is meant by ‘local government’ in the various islands and for that matter how Pacific Island states have perceived and accepted local government institutions in practice; second, we ask basic questions about existing legal and constitutional recognition and powers; and third, we provide initial findings on current per capita expenditure and local government financial viability in a number of Pacific cities and towns. We also make some observations on current moves towards local government reform.