Monday, February 18, 2013

Reform: Making Town Halls Smaller

The national government's finance minister, Cristóbal Montoro, has unveiled proposals for the reform of local authorities. The new bill already has general support from within the Partido Popular and from the main opposition PSOE party. It should eventually be passed without overly much debate.

The reform is badly needed as it tackles excessive costs incurred by town halls and addresses competencies that town halls have assumed but for which there is no legal requirement for them to have assumed. These are the so-called "impropias" competencies, some of which have led to duplication of responsibilities and of course to strains on town hall funding.

The bill is primarily a finance bill. Anyone who had hoped for a radical restructuring of local government will be disappointed. The government is not proposing that town halls be scrapped, though it is saying that authorities will be done away with if they do not function efficiently. A key part of the bill involves centralisation of specific services under the control of regional governments or provincial authorities, of which the Council of Mallorca is one. The Council, again to the disappointment of some, does not appear to be headed for the local government scrap-heap.

The services which are due for centralisation are any tasks related to education, health and social services. A further provision in the bill will see the number of paid councillors reduced drastically by over 80% to 12,000 in the whole of Spain and limits placed on the level of compensation that mayors and other councillors may receive. And yet another provision envisages that towns with fewer than 20,000 inhabitants (the overwhelming majority of municipalities in Mallorca therefore) will lose responsibility for other services. The government anticipates making a saving of 7.12 billion euros as a result of the reforms.

Reaction at municipal level in Mallorca has been mixed. Inca is one town hall where satisfaction has been expressed, as the reforms will mean a significant lowering of the financial burden and the annual deficit at which the town currently operates. Less supportive is reaction which suggests that the municipalities are the best authorities for deciding what local people need.

There is no "best solution" for how local authorities are organised, only one that is least bad. There will always be tensions between highly local sentiment and demand and centrally-driven, rationalised administration. A move towards greater centralisation does not herald a return to the days of control in the hands of Madrid and pretty much Madrid alone; it is a pragmatic, sensible and overdue measure, one that some would argue doesn't go far enough. But as it stops short of eliminating local authorities, except in worst cases of inefficiency, the new law represents a compromise; the government should be given credit for balancing local sensibilities with the urgent need for rationalisation.

The reform will also mean that there will be job losses and curbs placed on the employment of temporary staff and on the contracting of advisors. The government is, therefore, furthering its efforts to cut down the bloated public sector. But it faces a problem. Apart from any job losses, there is another urgent need that it has to address, and it is a cultural one.

The government has been talking up its plans to foster entrepreneurialism, even if it hasn't put any real flesh on the bones, but such entrepreneurialism is hard to foster when the nature of employment has been as skewed towards the public sector as it has been and when the climate of this employment has been risk-free (little threat to jobs) and essentially control-based as opposed to innovative.

At the presentation organised by the regional government's Centre Balears Europa in November, a spokesperson from the institute for business innovation made a very telling observation - that public-sector employment has been seen as the preferable option because it is risk-free; much of it demands little by way of initiative or proactivity. And this control-based public sector culture has endured since the days of Franco. It is one that is ingrained and will take enormous efforts to change and so, the government would hope, bring about a more dynamic society imbued with the principles of service, innovation and entrepreneurialism.

But a start has to be made, and attacking the hugeness of public administration, with its multiple and duplicative layers that have created ever more employment with little or no value added is one way. Things are going to take time, though. And time is something of which the government does not have huge reservoirs.

Any comments to please.

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