Strasbourg, 22 January 2013                                                             CDLR-Bu(2013)6

Item B.1 of the agenda

BUREAU OF THE

EUROPEAN COMMITTEE ON LOCAL AND REGIONAL DEMOCRACY

(CDLR)

EXCHANGE OF VIEWS ON TOPICAL ISSUES

Secretariat Memorandum

prepared by the

Directorate of Democratic Governance

Democratic Institutions and Governance Department


This document is public. It will not be distributed at the meeting. Please bring this copy.

Ce document est public. Il ne sera pas distribué en réunion. Prière de vous munir de cet exemplaire.


Introduction

The Terms of Reference require the CDLR to “exchange information, views and good practice among its members, observers and participants on intergovernmental issues concerning local and regional democracy and crossborder cooperation”.

At its last meeting, three CDLR delegations put forward topics for an exchange of views: Italy gave a summary of the preliminary results of their questionnaire as part of the exchange of views on infrastructural projects, The Netherlands introduced a debate on measures adopted to reduce public expenditure and announced a questionnaire on the topic and Estonia invited members to respond on the questionnaire on local finance.

Two CDLR delegations put forward new topics for an exchange of views: Germany suggested an exchange of views on the vulnerability of adding government information to the internet as part of public consultation in spatial projects and Cyprus suggested in writing holding a debate on the Exchange of views regarding the impact of the financial crisis on local finance.

Infrastructural projects

The CDLR welcomed the debate on the preliminary results and asked the Secretariat to prepare a summary of the responses on the questionnaire. A draft of this summary can be found in appendix I.

Measures adopted to reduce public expenditure

The CDLR supported the idea of having an exchange of views on the topic and the suggestion to disseminate a questionnaire. The CDLR agreed that given the importance of the topic, the replies to the questionnaire will be sent to the Secretariat and forwarded directly to all CDLR members. The draft questionnaire can be found in appendix II.

Local finance

The Estonian questionnaire was sent to the CDLR members who were requested to respond directly to the Estonian delegation.  

Public consultation

Germany suggested an exchange of views on the vulnerability of adding government information to the internet as part of public consultation in spatial projects at the next CDLR. Germany is experiencing possible difficulties with sharing (technical/strategic) information on the internet as part of the public consultation and the possibility of the abuse of this information for other purposes. The German delegation will make an introduction on the topic which in Germany is connected with the German E-Government-Act, currently under scrutiny of the German parliament.  The German delegation will provide a short overview on the discussion within the legislation process and is interested in the experiences of other delegations on this issue. The German delegation is  considering an additional questionnaire.


Financial crisis on local finance

The delegation of Cyprus suggested in writing (appendix III) a debate on the financial crisis. The secretariat is of the opinion that the issue raised by the delegation of Cyprus has a lot of similarities with a topic already raised by the Dutch delegation. The Secretariat would therefore like to propose to the delegation of Cyrus to await the results of the questionnaire to be disseminated by the Dutch delegation.

Reform of Local Government in Ireland

Ireland will present its Action Programme for Effective Local Government to the CDLR at its 51st meeting in April 2013.  The Action Programme seeks to introduce new degrees of accountability, transparency and external scrutiny as essential pillars of local democracy while increasing the partipation of women in politics.  For logistical reasons, Ireland has requested that the presentation be scheduled for Thursday 11 April 2013.

Action required

The Bureau is invited to comment, to give instructions and guidance to the Secretariat with a view to having a successful exchange of views at the next CDLR meeting.


APPENDIX I

Summary of replies to the questionnaire
on difficulties in decision-making and participation
relating to major public works

In accordance with its terms of reference[1], the CDLR held exchanges of views on topical issues at its two meetings in 2012. Based on national data supplied in response to a questionnaire, the Committee discussed, among other things, decision-making procedures and practices regarding consultation of the public and of local/regional authorities when planning major infrastructure projects having an impact on a given area.

This topic was proposed by the delegation of Italy, prompted by the difficulties experienced by that country in striking a consensus between the two levels of government concerning the location of major infrastructures and the implementation of measures entailing additional costs for local authorities. The lengthy debate on the building of the Turin–Lyon railway line or the Messina bridge (between Calabria and Sicily) and the establishment of safe sites for nuclear waste storage (Scanzano Jonico) or even ordinary landfill sites for municipal waste (Naples) illustrated these difficulties.

 

At its meeting in November 2012, the CDLR decided to pursue discussion on this topic in 2013. The present document is a summary of 14 national replies[2] (appendix I), structured in four sections along the lines of the questionnaire. Its aim is to draw together the different replies to each question to shed light on the approaches taken by the countries concerned and also to provide further material for the Committee's forthcoming exchanges on questions requiring detailed examination.

 

*   *   *

 

In terms of time, public works to build or maintain civil engineering infrastructures form part of a long-term vision, for the benefit of both present and future generations. In material terms, public works fulfil one or more of the following objectives: 

-  improvement of the living environment through the renovation or development of a given area,

-     the economic development of an area through the building of new links,

-     greater fluidity of traffic and reduction of pollution through the building of new links,

-     sustainable development through the building of environmental hazard management plants (sewage, waste processing etc) and renewable energy generating stations. 


Public works projects may be driven by the administration at local, regional, national or even European level or by public or private enterprises. Many projects are initiated by local/regional authorities themselves. As the guarantor of the national interest, the State defines the infrastructure needed by the country for the coming years, in principle involving local and regional authorities in the design of projects that will have an impact on their respective territories.

Before any decision is taken, the projects are brought to the attention of elected representatives and the local community and public utility and environmental impact studies are carried out.  This is the phase in which any individual or body concerned should be able to voice their opinion. In order to succeed, a project must be underpinned by a social and economic consensus - in other words the parties involved must strike the right balance between the utility of the project for as many people as possible and the nuisances and costs it will entail.  

*   *   *

Question 1

The replies show that most of the States responding to the questionnaire have encountered difficulties when designing and/or taking decisions on public works projects. These difficulties can result either from challenges at a political level concerning the necessity, content, implementation, timetable, budget etc, or from the reactions of social or economic partners at national level (ecology organisations, associations of entrepreneurs, archaeology departments etc) or local level (citizens, enterprises, local authorities, civil society) concerning how the project is to be implemented and what economic, social and environmental impact it will have. These challenges and reactions generally translate into public debate, political debate in Parliament or referendums or ultimately court proceedings.  The consequences reported include delays, budget overspends, modifications and sometimes even the abandoning of the project. 

Three member States have encountered difficulties linked to the environmental impact of various construction projects. Austria cites the example of the project to build the 27.3 km-long Semmering rail tunnel, which is to run below the Northern Alps range, between Gloggnitz in Lower Austria and Mürzzuschlag in Styria. For 30 years, the tunnel project was hotly contested by ecologists and community groups fearing potential water shortages, damage to the environment and costs spiralling out of control. A new environmentally friendly alternative to tunnel project was devised, with construction beginning in 2012 and set to continue up to 2024. The Czech Republic gave several examples - the project to build a second international airport to the north of Prague, a new radioactive waste storage facility and a dam at Nove Herminovy (Northern Moravia)


- all voted against by the local community in referendums. However, after an environmental impact assessment finding in favour of the projects, the State intends to push on with the public works, compensating communities in the event of expropriation or adverse effects. Luxembourg had to abandon a scheme to establish an industrial waste disposal site following a backlash from the local community. This country is currently facing difficulties over the building of a football stadium and shop outlets on ground at risk of flooding, forcing the government to reconsider the scheme. 

Three countries shared their experience of difficulties in implementing major public works arising from funding issues. The spreading of funding between the State and the municipalities concerned, using needs-costs-benefits analysis, for the installation of a new underground train line between Helsinki and Espoo is one of the challenges currently facing Finland, whose reply states that it is also difficult to reconcile public information and consultation with the political objectives of works projects. In Serbia, despite keen interest in public works on the part of enterprises and the unemployed, funding for these types of projects is patently inadequate, and there is a similar situation in Turkey.

Four other countries – Greece, Ireland, Sweden, and the United Kingdom – said that they have frequently run into difficulties, without providing details, when taking decisions on major public works. In Sweden, satisfactory solutions have sometimes been arrived at through the State and local authorities working together. In Ireland, the development of the road network is based on statistics and well established procedures. Even so, some projects have had to be dropped or revised or have been the subject of legal proceedings.  In the United Kingdom, the adoption of a new package of measures has made it possible to improve the regional planning system and speed up decision-making procedures for major infrastructure projects. The old system was complex and bureaucratic, entailing lengthy delays which hindered economic development: it took seven years, for example, to reach a decision on terminal 5 at Heathrow airport and six years for a decision on the upgrading of the high-voltage line in North Yorkshire.

Of the 13 replies received, only two speak of healthy dialogue on matters of principle between national and local levels and the carrying out of public works without major difficulties. Given the specific nature of Monaco - with its small territory and a single local authority - the authorities manage to coordinate their efforts well.  In Switzerland, despite lengthy and complex approval procedures for public works, there are very few examples of projects that have been stopped or abandoned.  This is down to high standards of construction that respect both the environment and health, as well as a process of democratic participation in decision-making, for every new project phase or modification. When an infrastructure project is validated by a referendum, it is not


subsequently challenged unless it undergoes modifications. The most significant example of a project rejected by mass public demonstrations and subsequently abandoned is a scheme to build the Kaiseraugst nuclear power plant. Some projects running over several decades may be put to a further referendum for every new phase or adaptation (eg building of the national road network or the new transalpine rail link – the Lötschberg and Gotthard tunnels).

Question 2

The notion of major public works is approached differently in the legislation of the respondent countries.  Under Luxembourgish law, it means the construction of major communication routes (motorways and link roads) and carrying out of large-scale real estate projects (building business estates, redeveloping areas).  Similarly, in the United Kingdom, major infrastructures are major transport links, water facilities (dams, reservoirs, sewage plants) and hazardous waste disposal sites. In the Czech Republic, the law lists the activities that may be the subject of public works tenders, with the classification of works differing according to the type of activity and cost. In Finland, the scale of public works is defined by thresholds indicating the estimated amounts of public tenders. Ireland and Switzerland emphasise the utility and impact, in the beneficial sense, of establishing infrastructures (linking up areas, providing road mobility for the entire population and resources such as electricity or water). Serbia's legislation does not define the notion of major public works.

The environmental impact study is an administrative procedure systematically carried out in the respondent countries; it has even become compulsory upstream of large-scale developments and civil engineering works above a given financial threshold. This assessment procedure envisages and evaluates the direct, indirect, immediate and long-term environmental effects of the project. Within the framework of that study, the parties involved in the project engage in discussion and negotiation on the ecological and socio-economic considerations, and the pros and cons of the scheme.  Following the study, the project may undergo modifications, have conservation and/or compensation measures attached to it or even be replaced by an alternative solution (Luxembourg mentions industrial waste processing as an alternative to a landfill site). Assessment is sometimes criticised or shows limitations because it requires time, financial resources, information and additional expertise, which delays implementation of projects and creates unforeseen problems (Austria reported such difficulties). When different administrative levels are involved in a major public works project, they all take part in the impact assessment through their competent authority.  This is mentioned in the replies from Austria, Switzerland, the Czech Republic and Greece.


Where the decision-making process is concerned, some countries reported that all interested parties, from all the governmental levels involved, participate in decision-making on a major civil engineering construction. In some countries, the decision is a matter solely for central Government (Serbia, Turkey and the United Kingdom).  In Norway, government proposals are ratified by Parliament.  In other countries, local/regional authorities may act in the capacity either of the decision-making administrative authorities if they themselves are the originators of the project or as authorities affected by a project initiated at central government level (Austria, Czech Republic, Greece, Sweden, Switzerland). The reply from Switzerland is particularly interesting in this respect, with its clear explanation of how the subsidiarity principle is applied in that country and how any major infrastructure project gains the necessary democratic legitimacy (see the information provided for questions 1 and 2).  It emerges that in the event of disagreement between the central and local levels, the necessary arbitration lies within the remit of central government.  In Luxembourg, "any creation, transformation, change of use or demolition of a construction, as well as earthworks, are subject to authorisation by the bourgmestre".  In Monaco, decisions are taken following consultation between the government and the municipality. In Ireland, it is an independent national authority – An Bord Pleanala - which examines, authorises and modifies major infrastructure projects, taking into consideration the national interest, sustainable development and respect for the environment.    

Question 3

Concerning the participation of local communities in the sense indicated in the question, the right to information, as one means of participation by users or residents, appears to be well established in all the respondent countries. Citizens are informed of major public works projects under formal procedures and through various means: posters (usually at the town hall), publication on the web (on the internet site of the ministry or the local authority responsible) or by announcements in the media.  The fact that any individuals so wishing may obtain details on the implementation of the project (of the budget, for example) or express their views may be considered as an extension of that right. 

The established pattern in nearly all the countries is for those managing a project to consult the public.  Public involvement helps, among other things, to foster relations of trust with the authorities.  Members of the public have various opportunities (at the stage of design, impact study or during or after decisions) and various means (proposals, comments, voting in referendums, petitions, complaints) to express their opinions. This is the case in Austria, the Czech Republic, Ireland, Luxembourg, Norway, Slovakia, Switzerland, Turkey and the United Kingdom.


Switzerland stated that citizens are involved in each phase of a project, both at the design stage, so that their needs are taken into consideration, and at the time of the decision on the project or its adaptation when in progress.  In Switzerland, each referendum is preceded by public debate and broad public information through the media.  In Monaco, the Order of architects and the Committee for Monegasque traditions are represented on the Advisory Committee for building. Greece lies somewhere between the rule and the exception in that its legislation makes no express provision for public participation when a project is devised or in the decision-making.  There is a proliferation of court proceedings in the country relating to projects infringing the right of ownership. At the same time, project developers organise exchanges with citizens and, for their part, the citizens mobilise their efforts and organise discussion with local authorities.  Finland reported difficulties in organising public information efficiently and expressed its desire to make improvements in that area. Serbia pointed out that associations of citizens may also reply to calls for tender and become public works contractors.

Question 4

The interest of this question lies in ascertaining how States react and interact in the event of a dispute over a facility or the building of a major infrastructure on a European scale. This issue is particularly topical at a time when decisions are to be taken on the future of the new railway line passing under the Alps (Lyon-Turin) intended to aid regional, national and European exchanges.

Some States did not reply to the question from this viewpoint, focusing instead on interaction between the State and local/regional authorities. As already pointed out, with regard to question 2, in internal disputes, in principle, it is the State which takes the final decision. However, the central authorities are not unsympathetic to the arguments of local/regional authorities or citizens and seek a solution that best caters for the interests at stake. If this is not possible, there is the option of lodging an appeal before a court, which will then rule in favour of one of the parties.   

As regards European Union member states, in theory, supranational (European) legislation should be incorporated in national legislation. As Austria, points out, in accordance with the principle of the primacy of European Union law, supranational interests should normally win out over local interests. Finland and Sweden share the good practice of identifying interests and objectives held in common with the neighbouring country when devising projects stemming from a national initiative but reaching beyond national borders.


For the countries that are not members of the European Union, the information obtained allows us to conclude that in Norway the ultimate decision lies with Parliament, while in Switzerland supranational interests are taken into account in the decision-making process and the country concludes bilateral agreements with neighbouring countries on the development of any infrastructure of national interest that might extend beyond national territory. For example, Switzerland has contributed funding to the restoration of the Bourg-en-Bresse-Geneva railway line in France, which significantly cuts journey times between Paris and western Switzerland.  Similarly, Switzerland has participated in the funding of the TGV Rhine-Rhône high-speed rail link. Looking ahead, the country will also contribute funding to the improvement of the Bregenz–Munich line in Germany and to other projects in progress concerning the Alps on Italian territory.

*   *   *

Conclusion

During forthcoming exchanges of views, the delegations might wish to provide other examples and further details on the following questions:

In the event of opposition to a project of supranational interest, what other solutions are there for securing the project?  How can the expectations or concerns of citizens or local authorities best be catered for?  Which body has the over-ruling decision? How should a costly major project be managed in the current economic context? What must be prioritised – the cost of a project or its expected benefits (positive impact) for the quality of the living environment (less pollution, less noise, less road traffic, lower CO2 emissions etc)? What place in the decision-making process does the European Union have as a donor of funding for major projects?

 


APPENDIX II

At the 50th meeting of the CDLR, the Dutch delegation proposed an exchange of views on the effect of the financial crisis on local and regional government in the member states. The crisis, which we are facing for some years now, has its effect on local and regional government in many ways. It is therefore that the Dutch authorities were forced to take various measures, to manage and control the budgetary implications of this current crisis. The Dutch authorities prepared for example laws enabling central government to enlarge its control on local and regional expenditures in order to reduce and manage the overall deficit[3], especially in the light of the Eurozone criteria. The Dutch delegation noticed that several countries are forced to reduce the public expenditure and that the members of the Eurozone even committed themselves to agree on a strict time schedule in the coming years to mitigate the deficit and to work towards a balanced budget and a maximum level of overall debt of max 60%.

The Dutch delegation would like to learn from the experiences and measures taken in the other countries and therefore proposed to have an exchange of views on the different approaches and measures adopted by the member states in order to reduce the public expenditure on local level. In this light the Dutch delegation would like to ask you the following questions:

1. How is the budgetary policy organised in your country. Please specify the (budgetary) relation between the national, regional and local governments.

2. Are the expenditures of local and regional governments in any way managed or monitored by the national government?

3. Are the accounting systems of the national, regional and local level equal, or are the different levels of governments free to choose their own system?

3.b What type of accounting system is commonly used by the national, regional and local government? Cash based accounting systems or accrual based accounting systems?

4. Did the economic crisis led to specific policy initiatives to increase the control of the expenditures of local and regional governments?

4.a. If yes, did these policy initiatives led to a change of tasks and responsibilities?

4.b. If yes, were/ are the local and regional authorities involved in the policy making process?

4.c. If yes, what were/are successes and bottlenecks of these initiatives?

5. Did the economic crisis led to specific policy initiatives to reduce the expenditures of local and regional governments?

5.a. If yes, did these policy initiatives led to a change of tasks and responsibilities?

5.b. If yes, were/ are the local and regional authorities involved in the policy making process?

5.c. If yes, what were/are successes and bottlenecks of these initiatives?

6. Does the national government take/ offer specific measures to support regional and local governments who are severely affected by the economic crisis?

6.a. If yes, are there conditions attached to this support?

Answers can be submitted by email to the Dutch delegation: [email protected]  and copied to all CDLR members (by simply replying to all the recipients of this email). If you have any  questions, please do not hesitate to contact us. You are kindly requested to reply at latest by the 15th of February 2013.  Thank you very much for your cooperation!


APPENDIX III

CDLR Meeting (November 19 & 20) –

Cyprus’ Delegate Follow Up Report on Issues Discussed on the 19th of Nov.

Exchange of views on adopted measures

to reduce public expenditure [CDLR (2012)20]

1.       Financial crisis in Cyprus, and elsewhere, was mainly the result of a mismanaged banking / financial sector.  For example, huge for the size of the Cypriot economy capitals were invested by Cyprus banks in problematic foreign financial organizations.  The largest part of these capitals was actually lost.  This problem’s size was so big that the Government was not able to respond to it and eventually refinance at a satisfactory level those problematic institutions.  Eventually, pressures from the national financial sector, in combination with all the negative factors that the international financial crisis had and still has on open economies like that of Cyprus, made the structural and other problems and shortcomings of the wider public sector more visible. 

2.       Within the above general economic environment, Cyprus Local Authorities (LA) were definitely affected, as they are part of the wider public sector. 

3.       Cyprus LA (Municipalities and Communities) expenditures, amount about 2,2% of the GDP and 5,1% of the total public sector expenditure.

4.       On average, 40 – 60% of the total income of Cyprus LA comes from annual Government grants.  Additionally, the State funds, partially or in full some times, many public works and other local development projects (i.e. roads and public buildings).  

5.       Moreover, the annual Budgets of Cyprus Municipalities and Communities are approved by the Council of Ministers and the Minister of Interior, respectively.  Thus, both LA are obliged to comply with the general budget preparation guidelines issued by the Ministry of Finance.  These guidelines are adopted by all governmental organizations.

6.       Within the above framework, the austerity policy adopted by the Government of the Republic of Cyprus because of the economic crisis also applies to LA.  Since 2011, the basic aforementioned fiscal disciplinary measures include the following:

(a)  15 – 20% decrease of the Government grant to LA.

(b)  No hiring of any new employees.

(c)  Salary cuts for average and high pay employees.

(d)  New public employees will get 10% less than the existing current salary.

(e)  25% decrease in available (paid) overtime work time.

(f)  Decrease of annual operating costs in 2012.

(g)  New development projects’ feasibility will be scrutinized by the Ministry of Finance.

7.       Additionally, the approval of the LA annual Budgets by the Government includes additional terms and conditions such as the following:

(a)  The budget must be balanced and, if possible, present a surplus.

(b)  More auditing by Central Government authorities.

(c)  Introduction of standard annual financial indicators.


.         At the political level and on a longer term range, a consensus plan is underway for the restructuring of Local Government in the Republic of Cyprus.  This effort is based on a study that was concluded in 2010, as part of a joint effort by the Ministry of Interior and the Unions of Cyprus Municipalities and Communities.  Discussions for the implementation of the reform strategy are well under way and a new legislation that will eventually substitute the existing Municipalities and Communities Laws is already discussed by the Parliament.  The whole implementation horizon is a ten year period, from 2012 till 2021.  Some key general features of the restructuring plan of Cyprus LA are the following:

(a)  Territorial reforms (i.e. merges of smaller Municipalities and Communities).

(b)  Decentralization and allocation of more powers to LA.

(c)  More cooperation with citizens and organized groups.

(d)  Strengthening of inter-municipal cooperation.

(e)  More cooperation with the private sector.

(f)  Improvement of system of governance (e-government, human resources etc.).

(g)  Strengthening transparency.

(h)  Improving legitimacy.

9.       The measures mentioned in paragraphs 6 and 7 above apply to Central Government Budget also [except 6(a) and 7(c)].  Moreover, at the Central Government level, additional measures apply such as:

(a)  Income criteria on almost any subsidy to citizens, groups etc.

(b)  Increase of certain taxes and government services fees.

(c)  Measures of improving the efficiency and productivity of the public sector.

10.     Almost all the above measures are implemented by law, yet are previously discussed even publicly and consensus usually is reached among most basic national actors (unions, political parties etc.).  The State Annual Budget is a Law of the Republic, discussed and approved by the National Parliament.

11.     The monitoring of the enforcement of the above mentioned measures is done at different levels, like:

(a)  Ministry of Finance (overall responsibility).

(b)  Government Auditing and Accounting Bureaus.

(c)  Other Ministries.

(d)  Parliament.


Suggestion:

It will be even more useful to have a Part II of this discussion.  Particularly, equally important could be a discussion about the economic development strategies and measures of Governments, at central as well as local level.

In case the above suggestion is approved, the discussion could take place at the next meeting of the CDLR, on the basis of preliminary reports prepared by the Delegations.  In such case, guideline questions would be useful for the Delegates to structure their reports timely and accordingly.  

Moreover, host speaker on the topic could enrich even more the whole effort.

The results of the above work could also be communicated later on to other interested parties, such as the Parliament, the Council of Ministers and the Congress.



[1] The CDLR must "exchange information, views and good practices among its members, observers and participants on intergovernmental issues concerning local and regional democracy and cross-border cooperation".

[2] Austria, Czech Republic, Finland, Greece, Ireland, Luxembourg, Monaco, Norway, Serbia, Slovakia, Sweden, Switzerland, Turkey, United Kingdom.  

[3] Overall deficit in this regard includes national, regional and local level.