Chances for caching up - the potential role of local level BUDAPEST CONFERENCE ON EU POLICIES February 2 to 3, 2006 Róbert Kovács

Local competitiveness and the public sector More effective public sector: New public managementMore effective public sector: New public management Potential tasks for increasing effectiveness:Potential tasks for increasing effectiveness: –Developing and operating human infrastructure and utilities –Regulating economic environment –Decreasing public burden –Organizing partnership of different public, private and civic actors Regulation: –determining the norms of the functioning of the mixed economy; Stabilization: –managing economic cycles, –maintaining internal and external equilibrium, and –assure competitiveness; Allocation: –assuring funds to the production of collective goods and –managing fails of the market; Redistribution: –compensating inequalities of wages and –managing imperfection or fails of market economy.

Some characteristics of the Hungarian administrative system CONSEQUENCIES ON SERVICE DELIVERY The financial conditions of the sub-national levelsThe financial conditions of the sub-national levels The continuously growing branches of central government institution to regional and local level; andThe continuously growing branches of central government institution to regional and local level; and Bad conditions for local service delivery: too small local governmentBad conditions for local service delivery: too small local government SUBNATIONAL ADMINISTRATION Extreme decentralization Central government’s de-concentrated institution Weakness of the intermediate administrative level Financial weakness of local level Extremely high weight of local business tax

Challenges to meet by public sector in general Financial challengeFinancial challenge –The increasing public responsibilities create financial needs which are impossible to satisfy Economic challengeEconomic challenge –Commonly accepted goals and values –Effectiveness in financial and professional term Social challengeSocial challenge –To decrease extreme social inequalities: people, regions Geographic challengeGeographic challenge –Equal chance to access to public service wherever you live –Service delivery in poor, isolated areas –Service delivery in agglomerations

Tasks to promote local competitiveness: the national level Regulation: reform of the local government systemRegulation: reform of the local government system –the institution of local democracy –local service delivery Allocation: fair local financingAllocation: fair local financing –should be at long term base –should be more equitable incentives to increase local sources (local taxes)incentives to increase local sources (local taxes) compensation of poor or disadvantaged local governments (service delivery at the agreed national minimum service level)compensation of poor or disadvantaged local governments (service delivery at the agreed national minimum service level)

Tasks to promote local competitiveness: the local level Cooperation and partnership at local levelCooperation and partnership at local level –Cooperation between local governments –Cooperation of local actors Flexibility in local service delivery designFlexibility in local service delivery design –Division of tasks between administrative level –Options to service delivery Strategy for operating and developmentStrategy for operating and development

Flexibility in local service delivery design Regulation function: normative conditions of service deliveryRegulation function: normative conditions of service delivery Financing function: covering costs of local service deliveryFinancing function: covering costs of local service delivery Delivering function:Delivering function: –strategy function: planning of service delivery –organization function: managing service delivery system –operation function: realizing the service itself –controlling-monitoring function: examining effectiveness and functionality of the service (quality and expected results), review of plans

Summary New sub-national administrationNew sub-national administration –Intermediate governments –The place of local level Service deliveryService delivery –Flexibility of delivery –Financing EffectivenessEffectiveness