State of Play Subnational public finances in the EU and ... · Ireland Italy Latvia Lithuania...
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Dorothee Allain-Dupré Head of Unit Decentralisation, public investment and subnational finance ESG/CFE, OECD [email protected] State of Play Subnational public finances in the EU and "Making fiscal decentralisation work" Subnational finance and investment ten years after the crisis: Fiscal decentralisation and innovative public finance instruments as the way ahead?
Transcript of State of Play Subnational public finances in the EU and ... · Ireland Italy Latvia Lithuania...
Dorothee Allain-Dupré
Head of Unit
Decentralisation, public investment and subnational finance
ESG/CFE, OECD
State of Play
Subnational public finances in
the EU and "Making fiscal
decentralisation work"
Subnational finance and investment ten years
after the crisis: Fiscal decentralisation and innovative public finance instruments
as the way ahead?
SNAPSHOT OF SUBNATIONAL
GOVERNMENTS IN THE
EUROPEAN UNION
Subnational governments are key social and economic actors in the EU28 (2017)
% General Government – 2017
33%
51%
44%
52%
24%
15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Expenditure StaffExpenditure
PublicProcurement
Investment Tax Revenue Debt
EU average Minimum Maximum OECD 2016 average
Malta MaltaMalta Malta
MaltaMalta
Denmark
BelgiumSpain
Belgium
Germany
Estonia
Large variety in the degree of subnational government expenditure SNGs expenditure represent 33.5% of public spending and 15.3% of GDP in 2017
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Austria
Belgium
GermanySpain
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Greece
HungaryIreland
Italy
LatviaLithuania
Luxembourg
Malta
NetherlandsPoland
Portugal
Romania
Slovakia
Slovenia
Sweden
United Kingdom
EU average
OECD average
0%
10%
20%
30%
40%
50%
60%
70%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Sub
nat
ion
al G
ove
rnm
en
t Ex
pe
nd
itu
re a
s a
% o
f P
ub
lic E
xpe
nd
itu
re
Subnational Government Expenditure as a % of GDP
SNG investment mainly targeted at economic affairs/transport (32%), general public services (17%) and education (15%)
* Other: defence; public order and safety; health; recreation, culture and religion; social protection.
32% 15% 17% 11% 7% 19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
CyprusCroatia
BulgariaSweden
LuxembourgDenmark
LatviaFinland
HungaryItaly
BelgiumGermanySlovenia
FranceEU28
NetherlandsSlovakia
AustriaCzech Republic
IrelandUnited Kingdom
OECD 30Spain
PortugalEstoniaPoland
LithuaniaRomania
GreeceMalta
Economic Affairs / Transport Education General public services
Housing and community amenities Environmental protection Other*
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Tax revenue and grants/subsidies represent respectively 42% and 43% of SNGs revenue in the EU, and 45% and 37% of SNGs revenue in the OECD
42% 43% 12%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
MaltaEstonia
LithuaniaSlovakia
AustriaRomania
NetherlandsBulgaria
United KingdomIrelandCyprusGreece
BelgiumLuxembourg
PolandHungary
DenmarkCroatia
SpainSloveniaPortugal
EU28Italy
OECD 35Czech Republic
FinlandFrance
SwedenGermany
Latvia
Taxes Grants & Subsidies Tariffs&fees Property Income Social Contributions
Average and
median
municipal size
(# of
inhabitants)
Municipalities
by population
size class
0
40,000
80,000
120,000
160,000
Cze
ch R
ep
ub
lic
Slo
va
k R
ep
ub
lic
Fra
nce
Cy
pru
s
Hu
ng
ary
Au
stri
a
Sp
ain
Lu
xe
mb
ou
rg
Ma
lta
Ro
ma
nia
Ge
rma
ny
Cro
ati
a
Ita
ly
Slo
ven
ia
Po
lan
d
La
tvia
Est
on
ia
Fin
lan
d
Be
lgiu
m
Bu
lga
ria
Gre
ece
Po
rtu
ga
l
Sw
eden
Net
her
lan
ds
Lit
hu
an
ia
Den
ma
rk
Irel
an
d
United…
Median municipal size Average municipal size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cze
ch R
epu
bli
c
Fra
nce
Slo
va
k R
epu
bli
c
Cy
pru
s
Hu
ng
ary
Sp
ain
Au
stri
a
Ge
rma
ny
Ita
ly
Lu
xem
bo
urg
Cro
ati
a
Ro
ma
nia
Ma
lta
Fin
lan
d
Slo
ven
ia
Gre
ece
Est
on
ia
La
tvia
Bu
lga
ria
Po
rtu
ga
l
Den
ma
rk
Bel
giu
m
Net
her
lan
ds
Po
lan
d
Sw
eden
Lit
hu
an
ia
Un
ite
d K
ing
do
m
Irel
an
d
Less than 2 000 inhabitants 2 000 to 4 999 inhabitants 5 000 to 19 999 inhabitants 20 000 or more inhabitants
Large variation in the demographic size of EU municipalities
IMPACT OF THE CRISIS,
LONG-TERM AND RECENT
TRENDS IN MULTI-LEVEL
GOVERNANCE
• Scale-up in subnational governance:
o Inter-municipal cooperation
o Metropolitan governance
o Regionalisation
o Clarification in assignment of responsibilities
o Spain
• Mixed impact on decentralisation
o Reduced grants
o Increased tax autonomy
o Greater control on subnational fiscal stability (fiscal councils, fiscal rules, stability pacts)
o Re-centralisation in some countries in recent years
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Impact of the crisis on subnational governments: territorial reforms, decentralisation and recentralisation
Increase in metropolitan governance in OECD and EU countries
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Number of metropolitan bodies created/reformed by decade
0
5
10
15
20
25
30
35
40
45
50
1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2010
15 new metro
structures
created
between 2011
and 2013
Source: OECD Elaboration based on OECD Metropolitan Governance Survey.
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Scale-up in subnational governance: increase in the
authority of regions in European countries until the
late 2000s
• Regional Authority Index: of the 81 countries, 52 experienced a net increase
in the degree of regional authority
0
5
10
15
20
25
30
35
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Average Regional Authority Index score
Europe
America
Asia
Source: Regional Authority Index in 81 countries (2016)
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Increasing asymmetric decentralisation
Increased asymmetric decentralisation in 81 countries (RAI index)
0
10
20
30
40
50
60
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Nu
mb
er o
f re
gio
ns
special autonomy asymmetry
Greater convergence between unitary and federal countries in terms
of more differentiated governance at the subnational level
GUIDELINES FOR MAKING MLG &
DECENTRALISATION WORK
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Making Decentralisation Work:10 Guidelines for policy-makers
1. Clarify the responsibilities assigned to different government levels
2. Ensure that all responsibilities are sufficiently funded
3. Strengthen subnational fiscal autonomy to enhance accountability
4. Support subnational capacity building
5. Build adequate coordination mechanisms across levels of government
6. Support cross-jurisdictional cooperation
7. Strengthen innovative and experimental governance, and promote citizens’ engagement
8. Allow and make the most of asymmetric decentralisation arrangements
9. Consistently improve transparency, enhance data collection and strengthen performance monitoring
10. Strengthen fiscal equalisation systems and national regional development policies to reduce territorial disparities
Making Decentralisation Work for Regional Development: 10 pre-conditions
• Clear assignment of responsibilities & functions
• Ensure balance in the way different responsibilities and functions are decentralised
• Subnational governments need own-source revenues beyond shared tax revenues – they need to a balanced basket of revenues.
• Higher own-tax share may contribute to make subnational governments more efficient and accountable
• Decentralisation of revenue raising responsibilities should be accompanied by a system of equalisation of revenue raising capacities to ensure that different SNGs have the potential for financing comparable level of public services at comparable tax rates.
Making (fiscal) decentralisation work
Source: OECD forthcoming Making Decentralisation Work: a Hanbook for Policy-Makers 15
Checklist Yes Partially No
SNG have autonomy to:
Set revenue bases for own revenues
Set tax rate for own revenues
Establish tax collection, administration and compliance and enforcement organizations and procedures
Have the ability to set supplementary rates on higher order bases
Set user charges/fees for own services
SNG own revenues finance most of SNG expenditures
Higher order transfers are mostly:
Formula based
Unconditional
Stable
Predictable
SNG have the freedom to access capital market finance:
Borrowing for long lived infrastructure projects
Issue bonds
Checklist Yes Partially No
Is the freedom of information legislation guided by the principle of maximum disclosure – all information is accessible subject only to a narrow set of exceptions?
Does the principle of maximum disclosure take precedence in the event of conflict with other legislation?
Are exceptions clearly and narrowly defined and based on the determination that harm to national interest through disclosure outweighs gains in citizens right to know?
Are public entities required to publish key information needed to assess their results-based chain in a timely and reasonable manner to assess integrity, efficiency and equity of their operations?
Are requests for information processed rapidly within defined time frame?
Is a recourse to an independent review available for delays and refusals?
Are the costs of requesting information reasonable and affordable by an average citizen?
Do meetings of government entities open to media and
