Strengthening Public Administrations across All Levels of Government

Governance Perspectives from the OECD

CEPA meeting, 16-20 April 2012, New York

ROLF ALTERDirector, Public Governance and Territorial Development

Citizens and government: a relationship under pressure…

Enormous expectations:• Crisis recovery, competitiveness, job creation, fiscal stability

Diverse pressures:• Scarce financial resources• More vocal and demanding civil society• A decision-making “deficit”• Reduced trust and confidence in public authorities

New priorities for government?• Demonstrate that the public sector can lead and deliver• Strengthen dialogue between government and citizens

Despite pressures, public service values remain the guiding principle

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Integrity

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y

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10%

20%

30%

40%

50%

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2000 2009

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Source: OECD Government at a Glance 2009

But maintaining service quality will be a challenge…

Greece: 20% of retiring employees replaced, fewer than short-term contract employees

Spain: 10% replacement of vacant positions between 2011-2013

United Kingdom: 330 000 public sector jobs by 2014

:Dramatic impact on capacity at local level

Canada: In 2010, a three-year freeze of departments’ salaries was announced

Czech Republic: 10% wage cut in the public sector (excluding teachers)

United States: Two-year wage freeze, expected savings of up to USD 28 billion over 5 years

.

Staffing targets: Wage reductions:

Innovative approaches will be needed if level of service is to be maintained…

The priorities for government seem clear enough…

Strengthen strategic decision-making capacity at the centre

Follow through on fiscal commitments Open up to users and civil society to drive

innovation Reach out to and work better with the local level Partner with private sector providers

But scope for experimentation is limited, no time for trial and error, emphasis on measurable results, motivation

may be low…

But reaching goals depends on healthy local governments

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Sub-national governments account for 22% of public revenues, 31% of public expenditures on average in the OECD…and 66% of public investment

0%

10%

20%

30%

40%

50%

60%

70%

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90%

100%

CAN BEL USA CHE DEU AUT MEX ITA JAP ESP FRA ISR AUS NDL FIN KOR SVK IRL DEN NOR POL SVN HUN CZE SWE GBR TUR NZL ISL PTR LUX EST GRE

State/Region Local Central

SNG as share of public investment in 2010

7

Coordination and capacity gaps currently undermine outcomes…

Challenges Description

Policy Contradiction/tension across sectoral policies. -- Key problem in both developed and developing countries

Fiscal Difference between sub-national revenues and the required expenditures to meet responsibilities. Unfunded mandates.-- Currently hot topic in OECD – less so in countries with lower fiscal pressure

Capacity Insufficient human, knowledge or infrastructural resources available to carry out tasks, mainly at the sub-national level-- Likely to be a bigger concern in lower income countries – huge need to invest

Information Information asymmetries between levels of government, ministries and agencies when designing, implementing and delivering public policy-- Major obstacle in countries with tradition of centralisation

Administrative Administrative scale for public policy not in line with functional relevance, as in the case of municipal fragmentation.-- Functional governance uncommon; but good examples exist

Accountability Reflects difficulties in ensuring the transparency of practices across different constituencies and levels of government.-- Integrity and transparency at all levels must be a priority

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But there are levers to strengthen capacities (the case of public investment)

National conditions to establish an

enabling environment for public investment

• 11. Vertical coordination

• 12. Horizontal coordination (across jurisdictions)

• 13. Contractual design and enforcement

Critical sub-national governance capacities

1. Strategic planning, oversight and budgeting

2. Integrity and transparency (public procurement)

3. Quality of multi-level regulatory framework,

4. Performance monitoring & evaluation

5. Investment prioritization & selection

6. Strategic resource management

7. Engaged citizens and firms

8. Integrity and transparency

9. Public employment capacity

10. Monitoring and evaluation

Critical coordination mechanisms

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Learning from good practices:examples from non-OECD countries

Brazil

Financial incentives to sub-national governments: the case of the ‘Bolsa Familia’ programme: Financial incentives for municipalities to participate in the programme and to update the national single registry database on poor families.

Use of performance indicators to benchmark municipalities and identify training needs for this Bolsa Familia programme.

South Africa

Improved strategic planning at local level: since 2000, every municipal council must adopt a single, inclusive plan for the development of its municipal area [Integrated development plan enshrined in the Municipal Systems Act]

Increased level of citizen engagement in municipal policy making

Conclusion: a challenging trade-off

Being more cost effective at sub-national levels…– Fiscal reforms (e.g. tax reforms)– Reallocation of competences across levels of government– Reconsidering territorial organisation

…while enhancing the quality of local public service delivery and strengthening trust with

citizens…– Reforms linked to integrity, transparency and enforceable

commitment– Improving local public employment – Better performance monitoring

…and preserving long-term growth– Fiscal space for investment spending at sub-national level – Especially for green investments and human capital

development Requires even more effective multi-level governance in a more difficult context

The role of OECD: How can we help the search for better policies?

• Key issue: Build recognition (politicians, media, citizens) that good governance at all levels is crucial

• Strengthen the evidence base• Share international experience on good practice• Develop standards and benchmarks to assess

progress

One example: OECD Observatory of Public Sector Innovation

• To map and categorise innovative practices• To assess results and identify what works and what does not• To promote and diffuse innovation in the public sector 11