THE SPECIFIC EFFECT OF SPECIFIC ROAD GRANTS IN SOUTH AUSTRALIA.

Grants between governments fall into one of two basic categories, general purpose grants or grants specified (ear-marked) for a particular purpose. Each category, in turn, may or may not have conditions attached requiring the recipient to match, in whole or part, the monies received, This paper is concerned with specific but nonmatching grants in the context of local council spending on local roads in South Australia. The objective is to consider whether grants of this type have had the effect of modifying the amount spent on local roads. More precisely, this paper considers whether the specificity of the grants has been an effective condition or whether general-purpose grants of an equivalent size would have resulted in a similar level of roads expenditure. The paper is divided into four sections. The first section considers the theoretical aspects of the type of grant involved. It is shown that the impact of grants in this nonmatching case, is an empirical issue. The second part of the paper specifies a model for measuring this impact. The third and fourth sections, present the results of applying the model, first to 90 South Australian district councils and then to 34 municipal councils. [ABSTRACT FROM AUTHOR]