incumbent service providers however can either lose their jobs or be forced to apply for redesigned jobs with fewer conditions .
It was thought unions would battle against outsourcing however a number of unions took a defeatist approach by not standing in the way of structural reforms with the excuse of believing it was a pragmatic and an evolutionary approach to the development of local government ( Teicher , Van Gramberg & Holland 2006 ). Policy makers often see the implementation of outsourcing and full cost pricing in a positive light . Measurement of the effect of outsourcing on the quality of the service is problematic ( Lee , Malatesta , & Fernandez 2019 ). A contrast can be drawn between the qualities of outcome in a field like refuse collection , planning services , which may be relatively unproblematic however it is much more challenging to monitor achievement in social services such as health services where service quality is important ( Taponen & Kauppi 2020 ). Outsourcing can curb the power of monopolies by creating efficiencies , which are more likely to succeed in the larger local government areas such as cities were contestability for local government services is high ( Placek et al . 2020 ).
Full cost pricing can help local governments to recover costs for services and demonstrate greater transparency of the true cost of providing services ( Harris , Hodge & Phillips 2019 ). Full cost pricing however can be unfair to ratepayers and consumers who have marginal purchasing power particularly those who rely on social
security and other welfare payments ( Beecher 2020 ). The debate over full cost pricing is complex , and there are strong arguments on both sides ( Thépot & Netzer 2008 ). Local government needs to consider the advantages and disadvantages inclusive of economic and social considerations ( Mehan 2017 ). In some cases , alternative pricing strategies , such as value-based pricing or dynamic pricing , could be more appropriate for certain products and markets ( Faith 2018 ). Figure 4 adapted from Leflaive & Hjort ( 2020 ) depicts a full cost pricing regime applied to water services which demonstrates a number of complex factors including concerns around affordability .
Full cost pricing can help local governments to recover costs for services and demonstrate greater transparency of the true cost of providing services . Full cost pricing however can be unfair to ratepayers and consumers who have marginal purchasing power particularly those who rely on social security and other welfare payments .
GENERAL INFERENCES FROM THE FULL COST PRICING AND OUTSOURCING LITERATURE RELEVANT TO QUEENSLAND Outsourcing can have adverse impacts on staff morale in Queensland local governments with many outsourcing activities leading to a decline in job rewards and satisfaction ( Awoloh & Owusu-Manu 2021 ). Outsourcing can result in negative social impacts such as reductions of job numbers and employment conditions ( Petersen et al . 2022 ). This conflicts with the notion of local government service delivery provided by a highly trained , skilled and motivated workforce with high standards of public accountability , ethics and probity ( Davis & Rhodes 2020 ).
Full cost pricing can increase the financial sustainability of a local government by making sure services are self-sufficient and less reliant on state and federal government subsidies as well as improving transparency and accountability by providing a transparent platform for price setting ( Exchange 2022 ). Evidence of the effects of full cost pricing in Queensland local governments is limited . Some studies suggest full cost pricing has led to increased financial sustainability for local governments ( Bradbury 2009 ). For example , a study found that full cost pricing had enabled local governments to recover the full cost of providing services , which had improved financial sustainability ( O ’ Keefe et al . 2017 ). However , 55 % of Queensland local governments are spending more than they earn and one-third of the sector is considered unsustainable ( Queensland Audit Report 2021 ).
Figure 4 – Example of Full Cost Pricing Regime
Source : Leflaive & Hjort 2020
ECONOMIC DEVELOPMENT JOURNAL VOL 16 NO 3 2023 09