Price setting for local government service delivery : An exploration of key issues

Local governments in Australia are constantly seeking to raise additional revenue to fund higher service demands. One key revenue source is service fees and charges, including fines. Premised on the notion of user pays, service fees and charges represent a significant proportion of total revenue for many local governments, especially in New South Wales, Queensland and Tasmania. This exploratory essay addresses a number of key issues related to this revenue source in order to stimulate discussion and debate on matters which are presently under-examined in the literature. The article examines the philosophy underpinning price setting, the identification of the principles of price setting, the adoption of applicable price setting models, the need to adhere to National Competition Policy and also the applicability of differential pricing of service delivery within local government. Calls for more open approaches and enhanced disclosure relating to service provision and pricing are made.