municipalities and services 2015 - restructuring finnish local and regional administration

Municipalities and Services 2015- Restructuring Finnish local and regional

administration

AFLRA Brussels Office, October 2005

6.10.2005 2

Present municipal division in Finland

• 432 municipalities (19 regions)

• the most decentralized country in the EU

• wide municipal competences

• relatively independent financial status

• Local self-government safeguarded in the Finnish Constitution

• number of municipalities has been declining in recent years

• present municipal division is based on mid 19th century parishes and towns

• needs to face the challenges of 21st century

6.10.2005 3

The different levels of administration in Finland

NATIONALLEVEL

LL/AA/valtio

REGIONALLEVEL

PA

RLA

MEN

TA

RY E

LEC

TIO

N

LOCALLEVEL

ProvincialState

Offices

5

RegionalEnvironment

Centres

13

RoadDistricts

9

Trade&Employ-

mentCentres

15

RegionalCouncils(Regional planning, regional

development)

19

S T A T E

Municipalities and joint municipal authorities(education and culture, social welfare and health, technical infrastrucucture, water and waste, environment, local economy and employment, recreation,…)

Citizens, enterprises, local communities

MUNICIPAL ELECTION

CH

AR

GE

S,

TA

XES

ST

AT

E G

RA

NT

S

Police and justice, taxation, local employment offices

Åland

80 %

20%

6.10.2005 4

MUNICIPALECONOMY

STATEECONOMY

POPULATION AND AGE STRUCTURES

MUNICIPALEMPLOYEES

DEMOCRACY

INDUSTRY AND COMMERCE AND EMPLOYMENT

PRODUCTIVITY

TECHNOLOGICAL DEVELOPMENT

CITIZENMunicipalrestructuring

Organisationof municipal

services

Municipaltasks

Municipalfinancing

Municipalcooperation

The changing operational environment of Finnish Municipalities

GLOBALISATION

EUROPEAN UNION

Source: Ministery of the Interior

6.10.2005 5

Challenges for the municipalities

• Ageing population

• change in demand for public services

• availability of labour: need of skilled labour in the municipalites

• Regional differences

• Sustainability of municipal finances

• differences in demographic changes

• differences in service costs and -levels

• how to safequard services in all regions

• Future of public finances, problems in financing services

• Globalisation, international competition, EU

6.10.2005 6

Strenghts in facing the Challenges

• International evaluations: Finland on top in competitiveness, partly because of the quality of public institutions

• Decentralized administratation: brings transparency and efficiency

• Skilled personnel

• High quality of services

• Citizens are relatively satisfied and willing to pay for the services

6.10.2005 7

Elderly dependency ratioPeople at least 65 years to the 15-64 year-olds

Finland

France

Greece

Belgium

EU-15Denmark

Spain

Netherlands

AustriaUK

Luxembourg

Portugal

Ireland

Italy

SwedenGermany

all 2010 all 2020

Source: EuropeanCommission

6.10.2005 8

Changes in population’s age structure 2005-2030

Age group 2005 2015 2025 2030 Change 2005-2030, %

0 – 5 years 100 102 100 97 - 3 %

6 – 18 years 100 92 93 93 - 7 %

19 – 64 years 100 97 92 90 - 10 %

65 and over 100 132 161 170 + 70 %

All 100 102 104 104 + 4 %

Age group Change 2005 – 2030,1000 people

0 – 5 years 341 349 342 331 - 10

6 – 18 years 823 758 766 762 - 61

19 – 64 years 3247 3157 2993 2929 - 318

65 and over 836 1105 1343 1424 + 588

All 5248 5368 5444 5446 + 199

Source: Statistics Finland

6.10.2005 9

Projected population change (%) 2003-2030

Source: Statistics Finland

6.10.2005 10

Effect of population factors on the demand of basic services (Index 2005=100), Changes % in year

Expenditure,

million €

Expenditure 2003 2005 2010 2020 2006- 2010 2011- 2020

EDUCATION SERVICES 5368 100 97 95 -0,5 -0,3

preschool education 65 100 99 102 -0,1 0,3

comprehensive school 3134 100 93 92 -1,4 -0,2

upper secondary school 528 100 104 92 0,8 -1,2

vocational education 1136 100 102 92 0,3 -0,9

polytechnic 505 100 102 92 0,3 -0,9

HEALTH SERVICES 5914 100 104 117 1 1

specialised hospital care 3853 100 104 109 0,6 0,6

health centres 2061 100 105 130 1,7 1,7

SOCIAL SERVICES 4051 100 111 135 2,1 1,9

daycare for children 1928 100 99 101 -0,2 0,2

institutional elderly care 723 100 116 149 2,9 2,6

home care 541 100 113 139 2,5 2,1

service accommodation 859 100 109 128 1,7 1,6

Source: Ministry of Social Affairs and Health

6.10.2005 11

Municipal employees retiring 2006-2020percentage of current employees regionally

Source: Halmeenmäki Tuomo: Kunta-alan eläkepoistuma 2006-2020. Kuntien eläkevakuutus, 2005.

Lapland

Kainuu

Southern Karelia

Southern SavoNorthern Savo

Satakunta

Kymenlaakso

Ostrobothnia

Uusimaa

Eastern Uusimaa

Åland islands

South-West Finland

Central OstrobothniaKanta-Häme

Northern Ostrobothnia

Northern Karelia

Päijät-Häme

Southern OstrobothniaCentral Finland

Tampere region

6.10.2005 12

Loan stock and cash of the municipalities and joint municipal organisations

(current prices, milliard €)

Source: Years 1985-2004 Statistics Finland. Prognosis for 2005-2009: KUTHANEK 1.3.2005. Association of Finnish Local and Regional Authorities.

0

1

2

3

4

5

6

7

8

9

10

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

LainakantaKassavaratLoan stock

Cash

6.10.2005 13

Restructuring Finnish local and regional administration

• The project was set by the Government for the term of May 2005 to May 2006

• The objective of the project is a sound structural and financial basis for the services that municipalities are currently responsible for, in order to secure the organisation and provision of such services in the future, with due regard to the required standard of quality, effectiveness, availability, efficiency, and technological advancement.

• The new structure should be sustainable also in 2020’sSource Ministery of the Interior

6.10.2005 14

Project Organisation

• Working Group on Restructuring Municipalities and Services (Restructuring Group) responsible for the practical implementation

• representation from the various ministries and six political parties

• Chaired by the Minister for Regional and Municipal Affairs, Mr. Hannes Manninen

• Project Manager and Secreteriat, working directly under the Chairman

Source Ministery of the Interior

6.10.2005 15

Task 1

• Based on the key findings made in the first stage of the Project, the Restructuring Group evaluates the areas of responsibility for the provision of services, with due regard to the specific features of individual services, in terms of availability and standard of quality in the long term (at least up to the year 2015), while exploring new ways of producing the services with special emphasis on efficiency and productivity.

6.10.2005 16

Task 2

• In September 2005, the Restructuring Group submitted to the Ministerial Working Group for Preparing the Basic Service Programme, a position paper on the main measures to be taken in the regions. The Ministerial Group adopted the position paper on Sept 28th.

• In the regional stage of the Project, the measures outlined for the regions in the position paper will be evaluated in order that the feasibility of various options be debated, with due regard to the specific features of each region.


6.10.2005 17

Task 3: The Regional Stage

• The regional stage is carried by the municipalities and the Regional Councils in cooperation with the Association of Finnish Local and Regional Authorities.

• Due consideration will be given to the special features of each region, cooperation across municipal, regional and provincial borders, the key organisations essential to the provision and production of services, expertise, and regional and political representativeness.


6.10.2005 18

Task 4

• The Restructuring Group will prepare, by 31 December 2005, a proposal for the duties to be reassigned from the municipalities to the Central Government and the impact of such re-assignment on the financial relations between the municipalities and the Government.


6.10.2005 19

Task 5

• Additionally, the Restructuring Group will collect and process the proposals related to the responsibility and means for the provision of services for submission to the Cabinet by May 2006.


6.10.2005 20

Task 6

• In May / June 2006, the Cabinet will pass decisions on the future financing, organisation and production structures (the options include a framework act, Cabinet decision-in-principle, inclusion of the Basic Services Programme in national legislation or other such action) and take a position on any need to amend the Municipal Grouping Act.

• Basic bills on legal reforms will be put before the Parliament during 2006.


6.10.2005 21

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12Year 2005 Year 2006

Cabinet decision

onspending

limits III/

2005

Decision

toinstigate

theproject

V/2005

Ministerial Working Group on Basic Services ProgrammeV/2005 - VI/2006

Working period of the Working Group on RestructuringMunicipalities and Services

V/2005 - V/2006

Preparationby theStateSecre-taries

WorkingGroup

III-IV/2005

Project to restructure municipalities and services

Cabinetdecision

onmeasures

toimplementthe reformV-VI/2006

Preparation of the proposals by

the Working Groupon Restructuring

Municipalitiesand services

III-V/2006

Working period of the four Preparatory Working Groups V/2005 – III/2006

Cabinetposition

onpreparationof regionalproposalsIX/2005

Regional implementationstage

IX/2005-II-III/2006

Evaluation ofstructures and

preparation of measuresfor the regional stage

V-IX/2005


6.10.2005 22

Models under discussion

1. “Model of Strong Basic Municipalities”

2. “District Model”

3. “Regional Model”

6.10.2005 23

”District Model”

• Objective: Social and Health Care Districts which are responsible for organising all the social and health care services

• Basis of inhabitants 100 000 – 200 000, divided into lower level “Basic Care Areas” (some 20 000 inhabitants)

• Politically controlled by a convention of municipalities

• Services financed by the municipalities and state grants

• State grants based on population• Planning would start 2007 and the implementation from

2009

6.10.2005 24

“Regional Model” (1/2)

• Objective: 20 – 25 regional municipalities with taxing power and directly elected councils. Present municipalities become/would be called “Local Municipalities”.

• Regional Municipalities responsible for the services that municipalities are currently responsible for

• Also responsibility for the tasks of the present Regional Councils and other Joint Municipal Boards (at present some 250 Joint Municipal Authorities with different tasks)

• Can delegate duties and submit needed financial resources to Local Municipalities, with elected councils as well

6.10.2005 25

”Regional Model” (2/2)

• Taxes and state grants to Regional Municipalities

• Transition period: In Autumn 2008 election of the regional councils; proceeding according to the timetable required by jurisprudence

• Open questions:

• Taxation rights of the Local Municipalities?

• Delegation of duties/tasks

6.10.2005 26

“Model of Strong Basic Municipalities” (1/2)

• Based on the existing structures and competencies

• Objective: vital municipalities with sustainable finances

• Operational criteria based on the commuting areas and the location of services

• Minimum 20 000 – 30 000 inhabitants per municipality

• Means municipal mergers, from 432 municipalities to around 100

• Financing, service provision and democratic control at the same level - municipalities

• In a transitional phase possibility to assign duties to service districts


6.10.2005 27

“Model of Strong Basic Municipalities” (2/2)

• Specialised health and social services provided by social and health districts

• The number of social and health districts and Joint Municipal organisations will be reduced

• If no success on a voluntary basis the Cabinet may take necessary measures

• Municipalities should make decisions before autumn 2007

• Implementation starting from the beginning of 2009

6.10.2005 28

Models and the Finnish Legislation

Model of Strong Basic Municipalities• municipal mergers can be implemented on the basis of existing legislation

• service districts reguire new legislation

District Model• Constitutional problem if major part of the municipal tasks will be

transferred to districts and the municipalities don’t have the steering powers

Regional Model• if the ”Local Municipalites” don’t have the same autonomy based on the

constitution, a change in the constitution will probably be needed

• if the ”Local Municipalities” have elected councils, legal competencies and the right to levy taxes, the ”Regional Municipality” can be considered as regional administration (regional council) and this change can be realised by an ordinary law.

6.10.2005 29

AFLRA: Reforms are needed

1. Changes in the administrative structures and service provision are necessary, but they alone are not enough

2. The State policies on municipalities need to be reformed, tasks and obligations should be in line with the resources

3. The ways of organising service production like the service procesesses themselves need to be developed.

4. The new opportunities of IT should be fully utilised.

6.10.2005 30

Levels of Structural Reform

Administrative Stuctures

(basic municipality, service districts, regional municipalities)

Service Production

(companies, enterprises,

intercommunal cooperation, purchasing)

Service processes

(expertise and know-how, tehchnologies, productivity)

Managing

the change

within

Municipalities

(strategy,

management,

expertise,

resources,

evaluations)

State Strategy

and

Guidelines

(legislation,

municipalities policies,

financing,

restucturing state

administration)

6.10.2005 31

Next steps

• The regional phase of the project starts with 19 provincial seminars Oct 11th – Nov 2nd, 2005.

• The municipalities analyse different models from their own point of view

• Regional coordinating groups and project officers; interim reporting to the Restructuring Group; questionnaires and task outlines

• Decisions by the Cabinet concerning the division of powers between the municipalities and the Govt by Dec 31st, 2005

• Reports from the regional phase by Mar 15th, 2006

• Conclusions by the Cabinet in May / June 2006

6.10.2005 32

The Regional Stage

• The work done during the regional stage should be based on municipalites own will and pay regard to the regional characteristics

• Best practices already developed in the regions and municipalities should be utilised in the whole country.

• Evaluation should be based on the long term strategies drawn up in the municipalities, measures of developement and joint projects of the municipalities which should be constantly pushed forward for strenghtening the vitality of the municipalities.

municipalities and services 2015 - restructuring finnish local and regional administration

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