ABSTRACT
In order to understand the current status of local government and its relationship with central government, it is necessary to understand the recent history of local government finance, which is one characterised by increasing controls being imposed by central government. The Royal Commission on Local Government, 1966-69, discussed finance but made no proposals for a change in financial arrangements. The genesis of increased control on local government spending by central government generally can be seen in the 1970s under the Labour government. The oil crisis of 1973 increased government alarm over public spending in general. In 1976-77, the government fixed grants at a level of projected price levels for the financial year without any adjustment for inflation.
