Does Small Mean Less?: Governing Mallorca

What does small government mean? What indeed does big government mean? I ask the questions because the current Balearic administration was supposed to have been run along small government lines. President Bauzá said so. I ask them also because the UPyD (Unión Progreso y Democracia) has proposed that all town halls with fewer than 20,000 residents should be scrapped.

In its broadest sense, big government refers to bloated administrations often characterised by corruption and almost always by inefficiency. It is a form of government which lacks accountability, spends way too much, does things which smaller bodies could do with greater efficiency and produces limited real benefits to the public. It is also characterised by the dominance of the higher level of government over lower levels to the detriment of decentralised and local administration. Small government is supposed, therefore, to counteract this inefficiency, corruption, lack of accountability, excessive spending, but it doesn't necessarily entail fewer levels of government because it is geared towards decentralisation.

The Bauzá version of small government has so far involved the elimination of a number of government companies and that is pretty much all it has involved. Despite this elimination, cuts to services and to jobs, the regional government budget will increase next year to a level higher than in the first year of the Bauzá administration. So, it is hard to see how Bauzá has followed through with his promise.

He has, however, wanted to or at least intimated that he would like to trim down responsibilities and to reduce the cost of the regional parliament. He suggested that the Council of Mallorca should become no more than an advisory body, a proposal which got short shrift from the president of the Council, Maria Salom. He wishes to cut the number of deputies in the parliament by sixteen from the current fifty-nine. But eliminating these deputies would only be a cost-cutting exercise and not one of making government smaller or any more efficient.

There was a good deal of sympathy for Bauzá's proposal regarding the Council. It has long been seen as a source of duplication and over-spend and as unnecessary. There may also be some sympathy for what the UPyD is proposing. Of Mallorca's fifty-three municipalities, only six would retain town halls, and so there would be an enormous cost-saving. But scrapping all these town halls would mean some organisation taking on their responsibilities, in all likelihood the Council of Mallorca, which is already poised in any event to take some from the smaller towns. The Council would thus become very much bigger than it already is, while getting rid of the town halls would be contradictory to a principle of small government. Likewise, Bauzá's proposal also contradicted this principle in that the Council's existence conforms to a small-government notion of downward delegation.

The town halls will be losing a whole load of paid councillors from next year under national reform of local government, but as with the idea to cut the number of parliamentary deputies, this doesn't mean smaller government. The UPyD would clearly seem to think that getting rid of town halls altogether would do, but
the chances of the overwhelming majority of Mallorca's town halls being eliminated must be put at slightly less than zero. Sympathy there may be in terms of eradicating costs, but sympathy there would not be because of all the psychological and social baggage attached to small-town identity, of which the town hall is the epitome. This said, it is undeniable that the island's smaller towns can be and generally are inefficient in cost terms purely because costs of services for smaller populations are proportionally that much higher than in larger municipalities.

It might be said that because of the system of downward delegation small government already exists in Mallorca, but to suggest that it has acted as a buffer against corruption, lack of accountability and inefficiency would be a long way wide of the mark. As we are all too well aware, corruption has occurred at all levels of government - regional, Council and town halls. It can't act as a buffer if there is a culture of corruption, and it is questionable whether any form of government could ultimately tackle this.

The discussion about small government really revolves around the issue of cost. What Bauzá and, one suspects, the centrist, free-market liberal UPyD would like is far more privatisation. Of the two biggies of regional spend - health and education - it has been suggested that the government's policies have been designed to drive the public into the arms of the private sector, be this private health or private schools. As a philosophy of government, this is one for which there will be limited sympathy, but were there to be that much more contracting-out, would this mean less corruption? One suspects it might mean the opposite. 

Harming Tourism: Government policies

Hugh Morgan, director-general of Cosmos Holidays, bemoans the fact that British reservations for holidays in Spain this summer are down by 5%. Spanish tourism, as a whole, will enter its own recession in 2012, experiencing a fall of 0.3%. In Greece, airport taxes have been scrapped for nine months. In Egypt, these taxes have been reduced, there has been "aggressive promotion" and in the first quarter of 2012 the level of arrivals increased by over 30% compared with the same quarter of 2011.

These different stories are inter-related. In the case of Spanish tourism, the reason for it experiencing negative growth in 2012 is due to a fall in demand from the domestic market, one that will not be compensated for by overseas markets. This local demand is being affected, among other things, by the rise in airport taxes in Spain. British reservations are not being helped for the same reason. Yet in Greece and Egypt ... .

There is more to the British story than just the taxes, there is also the fact that joint promotions between the Spanish tourism agency, Turespaña, and tour operators have all but ceased. Not because the tour operators have wanted them to, but because the Spanish Government has slashed the tourism promotional budget to the extent that it has. And for the Spanish Government, read also the Balearic Government. Yet in Greece and Egypt ... "aggressive promotion."

There are of course other factors affecting a fall in British tourism, but if the boss of Cosmos argues that a lack of joint promotion and a rise in taxes are major ones, then I am not about to disagree with him. It's when you put these different stories together, though, that a picture emerges that paints a scene of governmental ineptitude and one-dimensionality of economic strategy, both nationally and regionally in the Balearics.

Neither Madrid nor Palma are showing the slightest sign of doing anything to inspire growth. Both are interested solely in austerity and in measures that will do nothing to help growth. Tourism, for all that it is a double-edged sword in being a key driver of the economy and being an industry sector on which there is an over-reliance, cannot be treated, should not be treated with the apparent disregard with which it currently is. Attitudes in Madrid and Palma are perverse.

It may prove to be that, with people being killed again in Egypt, the best intentions of Egyptian tourism leaders are dashed. The beneficial effects of the Arab spring on Spanish and Mallorcan tourism had been expected to continue this year, and they may indeed now do so. But it is poor strategic thinking if a reliance is placed on external factors, such as events in Africa, to the detriment of proactivity, e.g. in promotion, or of use of the fiscal system in aiming for growth in the key Spanish tourism sector.

The perversity of attitudes towards tourism is indicative of a serious malaise within governmental circles. Current policies are being aimed mostly at symptoms of Spanish economic troubles and indeed at making these symptoms worse, e.g. by increasing IVA, rather than attacking causes. I have great sympathy for the arguments regarding a rationalisation of public administration, e.g. repatriation of certain responsibilities to central government, elimination of tiers of government or mergers of existing local authorities. I have said previously that a solution is staring the national government in its face, i.e. the system of regional government and decentralisation as it is currently practised, but as I said more recently, in connection with the tiny administration of the village of Búger, it isn't anything like as simple as one might think for this system to be changed.

Political expedience doesn't rule out a change, but would any Spanish government, including the current one, be bold enough to take remedial measures that would, almost at a stroke, have a highly positive effect on the deficits nationally and regionally? The answer is almost certainly no. So instead, the government takes the easy options to do nothing, where promotion to drive tourism and therefore growth is concerned, or to hammer everyone arbitrarily through indirect taxation and to further hammer tourism by raising airport taxes. They are economics of the madhouse, determined by a total absence of political courage in effecting a major change to a root cause of Spain's troubles.

Over in Greece, they know all about economics of the madhouse, but remarkably they also seem to know something about tourism. The Spanish Government clearly doesn't. But then what do you expect if you appoint a property expert as a tourism secretary of state?


Any comments to andrew@thealcudiaguide.com please.