Evaluation of regionalisation in central Europe especially in Poland - CG (7) 7 Part II

Rapporteur: Leon KIERES (Poland)

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EXPLANATORY MEMORANDUM

I. DECENTRALIZATION AS A POLITICAL PROCESS

1. The presented overview of the progress of regionalisation in Central Europe is based mainly on the Polish experience. The Polish reforms resulted in the greatest progress in this field among Central European countries. Therefore analysis of these results offer the best information base to identify the issues critical for establishment of regions as new administrative units. The analysis also provides an opportunity to determine which barriers were of the greatest significance for processes that led to establishment of regions.

2. Regionalisation is an important element of the whole process of transition from communist centralized state toward a democracy based on the principle of subsidiarity. Therefore regionalisation can not be analyzed separately without any reference to all other processes of transformation of the state, the economy and the society itself. That is why a comparison with Western Europe is so difficult and in many cases misleading.

3. Several theoreticians have written that in 1989 newly emerging democratic governments had a great amount of freedom in choosing models of the state’s organization. It is a mistake. New democracies inherited from the abolished regimes organized and functioning administrations. The challenge for new democracies was to change inherited organization’s patterns against the will and interests of the bureaucracy. The whole process of decentralization and building of local and regional self-government was a continuos political struggle against individual groups of interest. The progress in this field is a result of successes, defeats and compromises. Therefore analyzing those processes it is not sufficient to present and compare arguments for and against decentralization. The crucial issue is not to elaborate a good model of the state organization but to implement it, finding sufficiently strong political powers interested in decentralization and to step over resistance of those groups who feel themselves challenged by proposed changes.

4. A necessity of decentralization and territorial self-government was evident for democratic opposition in the late eighties already. The overall control exercised by a political party and state administration was a basic barrier to any social and economic progress. That is why local government reforms were undertaken immediately after political change. In Poland the sequence of undertaken actions was different than in other countries of the region. The legal changes became implemented before the first free elections were hold. So, new people were introduced already into new legal framework established according to the lines of the Local Government Charter. Looking backward we acknowledge the crucial importance of that decision for the further development of local democracy.

5. The role of the state under the communist system was to implement political goals, established by the party’s authorities. So, the state’s organization was supposed to have an executive character and have power to manage the economy and all public affairs, and in many instances to interfere into the private lives of its citizens. In a democratic system, however, the role of the state is quite different. The state is not supposed to manage, but to create stabile and secure conditions in which its citizens, social groups and business entrepreneurs can become active. So the role of the state in a democratic system is completely different from the one under a communist regime. Therefore, it becomes apparent that both the state legal structures and its organization must change. It is impossible to implement the principles of a democratic system using the state organized in a totalitarian way. That is why the reforms that are being currently undertaken are to change and adapt the state structures to its new role.

6. The local government reforms undertaken in beginning of nineties were oriented to fight down the five fundamental monopolies of the communist state:

- Political monopoly of the communist parties.

- Monopoly of the state power, which meant that only the state could hold power in all spheres of the public life.

- Monopoly of ownership rights to any public property.

- Financial monopoly as whole public finances was controlled within one uniform state budget.

- Administration as the uniform state administration was only one executor of central orders and all local officers were state appointed.

The successes of breaking down those monopolies differ from one country to another and between individual spheres, too.

7. The local reforms started a process of decentralization in all countries of the region. It progressed during the following years in close relation to the political orientation of the ruling parties. In general after an enthusiastic period of changes in the beginning of the last decade, a period of stagnation arrived with the transfer of power to left oriented coalitions in the mid-nineties. In the last years of this decade a progress is visible.

Analyzing the process of reforms it can be noted that for a success four factors must be present at the same time:

political will of the leaders,
knowledge of experts,
support of the society,
and thousands of people ready to fulfil new openings by their works and initiatives.

In Poland in 1989/90 the whole society asked for change and local activists were enthusiastic to work for reconstruction of the country. Political leaders were ready to implement radical reforms. Thanks to many years of studies by opposition researchers a comprehensive program of establishment of local government existed. Therefore Poland was prepared to make the local reform a success.

In the following years those factors diminished their importance or even disappeared completely. Ruling parties reoriented their attention to other issues or even expressed their will to stop any change. The society under pressure of current economic difficulties lost the enthusiasm and support to further reforms declined. Accumulated knowledge was used for the first reforms and new experiences were too limited to let the elaboration of the next steps.

This negative situation started to change in the mid-nineties. The positive results of local government activities were very attractive to local communities and resulted in rising demands for further decentralization. Important groups of local skilled officers and politicians were prepared and became ready to enlarge their responsibilities. Independent groups of experts and researchers organized themselves to work on further reforms. With the new elections of 1997 and establishing new government a political will returned to make a next step in the process of decentralization. In 1998 all four factors emerged once more, and the second step of territorial reform became possible.

8. The local and regional reforms in Central European countries were directly linked to establishing new institutions. So, their competencies and means given to their disposal were to be fixed in their absence when, on the other hand, central bureaucracy, which was going to loose its power, existed and was looking carefully to limit its losses. That is why at the start of each reform the scope of resources transferred to newly created bodies was fixed too narrowly. So, during the following years after their establishment local and regional governments have to influence changes of legislation and administrative practice to adapt them to real needs. On the other hands we can observe strong counter-offensive of central bureaucracy to recover at least a part of power which was lost. So, the struggles around a reform do not end with the vote in the Parliament but is has a permanent character and it is particularly strong during the parliamentary works and first years of its implementation.

9. To understand the process of decentralization it is necessary to identify main political powers supporting it or breaking it down. It is much easier to identify the lasts. The main opponent was always the central bureaucracy. Any transfer of power and resources to lower levels result in limitation of it’s political influence and access to different kinds of means. This limitation was challenging directly local and regional branches of ministerial administrations very expanded in Poland. Several politicians were involved also in many actions against reforms as they were linked to sectoral lobbies and as they think that it is much easier to govern in a centralized state. Trade unions are opponents of decentralization too, as they can manifest their power and influence negotiating labor agreements with central administration.

It is much more difficult to find supporters of decentralization processes. Practically only local governments represents a political power positive in that respect. So, a precondition for any steps in decentralization depends on increase of importance and political influence of local bodies. In Central Europe reconstruction of self-governmental system started at lowest level and developed upward. So, regionalisation was possible only in those countries where local governments became sufficiently strong.

10. Decentralization can be defined in a double way. Traditionally is a transfer of means and responsibilities to local and regional governments. But it may be understood as a relation of power between central and local/regional bodies. And this relation may result not only from the transfer mentioned earlier but also from increase of power and influence of local/regional bodies thanks to their own activities. During the last decade Poland became much more decentralized a country as local bodies became much more powerful in comparison to the central administration. This relative increase in power resulted only partially from transfer of responsibilities and resources downward. In great part it was a result also of the increase of economic importance of municipalities due to their effective management and of the increase of societal support as local societies acknowledged a general success of earlier municipal reforms. Thus, regionalisation was in Poland possible, as local governments became politically strong enough and their success generated public support for further decentralization.

11. The necessity of establishing an upper level of territorial self-government was in Poland obvious. The transformation of the function of the state and its economic successes demanded a change of the model of state administration. Central governments in Central European countries still dispose of a much broader scope of influence and power than in any one of the Western states. To adapt those states to new tasks and roles it is necessary to implement major changes: to restrict the scope of state’s responsibilities through privatization and deregulation, and to decentralize the power being in the hand of central administration to local and regional governments. Therefore it was necessary to create relevant bodies on each level.

II. POLISH REFORMS 1998/99

12. Nine years of the on-going transformation process allowed for many significant social and economic changes to be achieved. It also helped to clearly define the barriers that had prevented the country from achieving further development and progress. It became clear that without vast institutional changes, the further transformation and economic development would shortly be halted. That is why the governing coalition made a decision to design and implement a set of key reforms that would include reforming:

- public administration,
- public finances,
- education,
- health care system,
- social insurance system,
- welfare system,
- police and public safety system, and
- judicial system.

13. All of these reforms are inter-connected and are being implemented at almost the same time, but with different speed. Since administrative structures and state’s organization were inherited, as was mentioned before, from the authoritarian and centralized regime implementing the reform listed above, the central government and state administration were forced to deal with a huge number of details and problems. Lack of higher levels of the local government resulted in the development of many administrative bodies subordinated to particular ministries. At the same time great resources of initiative and public activity were not used to its full potential.

14. Public finance management was not clear and understandable enough for the public. Central bureaucracy still had too much influence on the disposal of resources and was doing this outside of public and parliamentary control. This was especially the case when it came to non-budgetary funds where revenues from many kinds of public payments were collected. These funds continue to be dispensed from the state budget, which means that in practice they are out of any kind of control. The scale of this problem was very serious; it is estimated that the expenditures of non-budgetary funds constituted over 35% of all public expenditures in Poland.

15. The health care system required a deep reform. The existing system was established and based on the principle that the health care should be completely free of charge and financed from the state budget. In practice it was not possible, and the patients have been forced to assume bigger and bigger shares of the cost of health care. At the same time the common lack of respect for money awarded in the form of grants has resulted in huge, totally unjustified costs and in corruption, while salaries for the medical staff at the same time remained very low.

16. The social security system was to be deeply transformed also. In the past, when the Polish population was young, revenues from social security payments greatly exceeded pension expenses. The authorities at the time used the surpluses to cover current budgetary expenses. The Social Security Office had an entire monopoly in this domain and did not function as a separate entity, but as an element of the state administration. As a result no capital for future investment was created. Now the situation has changed. Due to the demographic changes, every working person has to cover the expenses of 0.4 pensioner. It is quite apparent that out-payments exceed the revenues of the system and that this imbalance has to be covered by the state budget.

17. The educational system was also created by the totalitarian state, which wanted to have full control over the up bringing of young people and to limit the role of a family as an institution politically uncertain and often antagonistic towards the state. The judicial system, not functioning efficiently, was not adapted to play its proper role in a democratic country and also needs to be reformed. Finally, the police and the entire public security system must be changed since in the past the role of the police was to control citizens and not to protect them. The dramatic rise of crime, especially organized crime, has forced the government to undertake intensive activities in this field. However, for the proper functioning of this system one more element becomes necessary, i.e. the close co-operation of police and the public, which would only be possible when there is mutual trust between the citizens and the police force.

18. During the past ten years many serious changes have been introduced in all the above listed domains. However, these changes were the results of modifications of the old system, old institutions, and the state organization which was inherited from the communism era. The inherited structures, solutions and procedures were characterized by a number of negative features that made the further changes impossible. Among these features the most important were:

- excessive centralization
- well developed but not efficient bureaucracy
- unclear system of intergovernmental transfer and system public finances generally
- inadequate public control over state administration

As a result use of public resources has been ineffective. It has become clear that the series of small amendments and corrections is at the end of its effectiveness and that the time has come to undertake sweeping reforms of the state system.

19. The reforms that are being implemented by the Polish government constitute an ambitious attempt to find practical ways of solving the above listed problems. Most of the reforms started on 1 January 1999. When implementation of these reforms is completed the transformed political system and administrative structures will be based on the principles of:

    - democracy
    - subsidiarity
    - effectiveness
    - transparency and accountability
    - flexibility and openness for future evolution.

20. The administrative reform was the most important reform to transform public administration sector. Since the system was to be decentralized it was necessary to create entities to devolve power from the central level. Members of some milieus have criticised this approach, proposing that the first reforms to be undertaken should concern health care or education, the domains of public life where the effect of the changes will be more tangible for the public at large. But such demands are evidently illogical.

21. Traditionally in Poland a three-level administrative system has been in place. It included, from the lowest level: municipalities (gmina), districts (powiat) and regions (województwo). In the first half of 1970s, the leadership of the communist party, being afraid of the growing influence of regional organizations, decided to introduce an administrative reform. The number of regions was increased from seventeen to forty nine, and at the same time the districts were eliminated and the number of municipalities was decreased.

22. In 1990 the authorities of municipalities were given self-government character. However, in the regions the central government administration still wielded power. The reform started in 1999 and brought back the old tradition. Two new levels of local government were created. In this way a two-tier model consisting of 2489 municipalities and 49 administrative regions was replaced by a new three-tier system, established with the creation of 373 districts and 16 regions. The sixty-four biggest cities function as both municipalities and districts. All entities have character of self-government with an elected council. Each entity has its own properties and own financial resources. Each of them will also have the right to join into voluntary chosen associations and to co-operate with other local governments both in Poland and abroad.

Municipalities, established in 1990, continue to be the primary and fundamental units of public administration that perform public tasks on their behalf and on their responsibility. The legal status, as well as scope of their responsibilities, was not changed. Municipalities are responsible for all local public affairs. They focus their tasks on meeting the collective needs of the communities for public services.

Districts, which came into existence as of January 1, 1999,
- are communities of citizens living in a given area,
- constitute legal entities, independent of the state, as well as of municipalities,
perform public tasks on their own behalf and responsibility,
- possess own fixed assets and control their own revenues.

The major task of the districts includes:
- management of secondary schools, and schools for handicapped children,
- management of hospitals,
- sanitary and epidemiological supervision,
- public order and safety,
- supporting cultural institutions whose activities exceed the municipal level,
- district roads construction and maintenance,
- development control and land register,
- water management and environmental protection,
- flood and fire precautions, natural disasters prevention and management,
- fighting unemployment,
- protection of consumer rights,
- maintenance of district facilities and public utilities.

The above two levels of local government deal with the provision of services to the citizens. All services and utilities, formerly in the hands of the state, were transferred to these governments.

23. Regions are in turn responsible for economic and cultural development in their geographical areas. Their tasks concentrate around four fields:

- promotion of economic development
- public services of a regional character,
- environmental protection and management of natural resources
- development of regional infrastructure, including maintenance of roads, transport and communication networks.

Regions are also legal entities, with their own budgets and ownership rights.

24. State administration is present only at the regional level. However, the government representative, the Voivode does not deal with current management. His role is to protect the interests of the state as a whole and to supervise the activities of regional and local authorities with respect to their legality. The Voivode is, therefore, responsible for all supervisory and inspection bodies (e.g. health inspection, environmental inspectors, etc.) All of these entities form part of the state administration. Yet only very few of these services remain in the hands of ministries and other bodies of central administration.

III. IMPLEMENTATION OF THE ADMINISTRATIVE REFORM

25. Work on the administration’s reform could be divided into two basic phases: a legislative one and another for the implementation. The reform was undertaken on the government’s initiative and the Parliament passed bills on:

    - district government,
    - regional government,
    - state administration at the regional level,
    - administrative division of the country,
    - electoral law,
    - division of authority among the three levels of administration (modification of 147 already existing laws),
    - introduction of administrative changes and interim regulations,
    - public finances.

Following these laws the Council of Ministers issued many executive decrees.

26. The elections to all three levels of local and regional administration took place on 11 October 1998 and the new administrative system came into effect on 1 January 1999. The following numbers could easily illustrate the scale of the reform:

- 16 office of the state and another 16 offices of regional state administration were created,
- 49 offices of old administrative regions were dissolved,
- 308 new district offices were established and 64 town offices transformed into urban district offices,
- 287 offices of the previous state administration were eliminated,
- 2211 administrative units subordinated to particular ministries became incorporated into state or regional administration,
- about 10500 institutions such as: schools, hospitals, libraries and others, were handed over to local governments.

Supplementary difficulties resulted from the new subdivision of the country and the change of location of several institutions.

27. Close to one million people are employed in all these institutions. Many of them found jobs in the new institutions, but several others had difficulties in finding new employment. Therefore some special regulations were established to facilitate this period of transition.

28. In order to introduce all these radical changes the Prime Minister created a special team for all matters connected to administrative reform implementation. The Deputy Prime Minister, who at the same time holds the office of the Minister of Internal Affairs and Administration, became the chairman of this team. The members of the team are deputy ministers of all the ministries with interest in implementing the reform. The Team’s secretary is at the same time its executive manager who also holds the office of a deputy minister with a special office at his disposal.

29. In each of the new regions a delegate of the government responsible for organizing the future structures of administration was nominated. The delegates prepared preliminary organizational charters of government administration services and projections of regional and district budgets. Under-secretaries of state from different ministries were nominated as government delegates so that they were be able to remain independent in their decision making from pressures exerted by local interest groups. The new authorities started their formal functioning on 1.01.1999, however, the regional authorities, elected on 11.10.98, immediately began to co-operate with the Delegates of the Government in organizing future offices.

30. Administrative reform started a year ago. It is too early to evaluate its effects. In general the public opinion is favorable. But its implementation is still not completed. Several groups of interest undertook actions to recover some losses of their power. A spectacular fight for labor administration took place last year and was finished by a not very good compromise. The public finance is still too much centralized and regional governments do not dispose sufficient resources to meet new tasks. The central administration is still not reformed despite the fact that several tasks were decentralized.

31. New challenges emerged with increase of EU pre-accession Funds. Those Funds will play a very important role in developing Polish economy, infrastructure and environment help to upgrading their levels to the European standards. They will form one of the most important financial sources. The danger however comes up with the establishment of a proper structure and mechanism for their distribution. If central bureaucracy will take this task in its hand local the regional governments will be put in a role of clients, depending fully of administrative decisions. Thus, the EU assistance may result in re-centralization of public finances. The other danger is connected with empowerment of sectoral organization of the state. One of most important tasks of regional governments is to organize comprehensive policies for the regional development. This can be achieved only if main projects are regionally coordinated. But the EU structural Funds are grouped within six strategies. Resources for implementing each from them will be transferred under the responsibility of a particular ministry. Thus the sectorial organization of the state and economy may become stronger, against the interest of the regions.

IV. RECOMMENDATIONS

32. Based on the Polish experience and looking at the progress of reforms leading to regionalisation in other countries of Central and Eastern Europe, the following set of recommendations is proposed:

- in order to sustain previous achievements of initial steps of undertaken reforms and to promote the establishing of decentralised democratic states in the region it is necessary to build regional structures, which are essential factors of economic advancement and development; to achieve these two goals political forces supporting decentralisation of a state and devolution of power shall mobilize their resources to efficiently disseminate information about the positive results of regionalisation;

- wide dissemination of information about positive results of regionalisation shall be used as an instrument to build coalitions to support ongoing changes or plans under reparation;

- a mechanism of information exchange among countries from the region should be created to facilitate information exchange and sharing lessons learned; in this case local governments shall rely on and use potential of non-governmental organizations that support decentralisation; non-governmental organisation shall be used as a vehicle to carry on ideas and concepts of regionalisation through all these periods when reformers have no support of legislative and/or executive bodies;

- to foster the regionalisation processes institutional changes at the central level shall be initiated as the first step to build an institutional framework for a decentralized state;

- in all countries, but especially in those suffering from economic crisis, arguments of economic nature shall be prepared to support regionalisation concepts; in order to prepare these arguments it is recommended to establish task forces / groups of experts that will react on possible concerns of local communities as well as an opponents from the central level;

- regionalisation should be seen and presented as a measure to prevent conflicts and to encourage the expression of minorities values (language, religion, culture generally); thus regionalisation should be on the agenda of political priorities of decision making bodies (central but also local governments);

- despite problems of a political or economic nature and different types of barriers and obstacles it is recommended to continue preparations for regionalisation through work of independent groups of scholars / experts with a view to prepare a conceptual framework for decentralisation;

- the ongoing changes and results of previous steps of reforms should be monitored, analysed and transformed into a set of recommendations for policy makers; these recommendations should be presented at a forum for discussions established in the form of special political bodies (like joint commissions of central and local governments);

- the preparatory work for the establishing of regions should give priority to issues concerning the division of competencies and the system of intergovernmental transfers;

- human resources development is a key issue for the success of regionalisation and a broadly defined administrative reform; preparations for the training of new cadres for public administration should start as soon as possible.



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