The paper "Microeconomic Policy Evaluation: Grants" is a wonderful example of a literature review on macro and microeconomics. Over the years, Australian local governments have played a vital aspect in the livelihood of the citizens. Brackets (2013, p. 4) argued that the local governments were created to offer amenities and services to the local citizens such as clean water, allocation of lands and properties, management of parking, parks and sewerage systems, and construction of roads, hospitals, and schools. However, local funds from taxes are sometimes not enough to provide better service compelling the local government to look for funds elsewhere (Boadway & Shah, 2007, p. 6).
Nevertheless, allowing Commonwealth and States, and territories to provide grants to local government has been a huge boost to service provisions to different areas. In most cases, the grants provided have not been effective leading to a contentious debate of which type of grant providers should use to fund local government programs. Therefore, using relevant theoretical considerations and diagrams, the essay will argue that the Commonwealth government and different Australian state and territory Local Grants Commissions should use both matching and non-matching grants to fund local government programs. According to Grossman (1994, p. 296), a grant is described as the intergovernmental transfers of the purchasing power.
Research has shown that there are several types of intergovernmental grants which exist today. Some of the grants include conditional grants, unconditional grants, matching grants, matching close-ended grants, and non-matching or specific purpose grants (Pal, Dahlberg & Mork, 2004, p. 317). However, in this essay the paper will majorly focus on matching grants and non-matching grants to establish the best grant type Australian state and territory Local Grants Commissions should use matching grants to fund local government programs.
A matching grant is one that is formulated to balance sub-national contributions. Baker, Payne, and Smart (1999, p. 270) claimed that in the grant program, the beneficiary has also to contribute in percentage or absolute terms. Policymakers argue that matching grant is reliant on actual or normative or spending for the purpose for which such funds are allocated or on the revenue collection associated with these services.
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