Performance measurement and accountability in Victorian local government

There is a a great deal of literature on performance measurement and accountability in government. Governments around the world have invested large amounts to develop performance measurement systems, the results of which are mediocre at best. There is also a growing recognition that financial performance measures alone measure only limited aspects of an organisation’s performance. To improve performance measurement systems and accountability to different stakeholders, non‐financial indicators have been developed for the for‐profit sector. Prior research in the local government sector in the state of Victoria, Australia, showed low levels of accountability and very little performance measurement taking place. However, significant changes have been imposed on the sector, enhancing local and central accountability, making it more business‐like, and focussing on the need to measure performance. This research studied the extent to which performance measurement systems are currently being used in practice in Victorian local government, the factors which lead to the use of performance measurement and the extent of non‐financial indicators. The results revealed a substantial increase in the level of use of performance measurement in the sector, related to increased emphasis on accountability and organisational changes imposed on the sector by the state government. The performance of both people and programs is now being measured. Although there is an emphasis on financial and budgetary measures for financial accountability, the use of non‐financial measures in determining outcome accountability is increasing. Customer service and quality are two of the areas in which non‐financial performance measures are being developed.