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Finnish Municipal Reform - State of Play

Finnish Municipal Reform - State of Play. Nordic and Baltic States’ Conference 12-13.6.2006, Laulasmaa, Estonia Dr. Cay Sevón, Director General, Ministry of the Interior. Why a reform of municipal and services structures?/1.

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Finnish Municipal Reform - State of Play

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  1. Finnish Municipal Reform - State of Play Nordic and Baltic States’ Conference 12-13.6.2006, Laulasmaa, Estonia Dr. Cay Sevón, Director General, Ministry of the Interior

  2. Why a reform of municipal and services structures?/1 • Finland – unitarian state with 2 levels of government: state and municipalities, shared responsibilities for the execution of basic rights of inhabitants • Municipalities differ in - nr. of inhabitants (131-559.046), - population density (0,2–3034,2/km2), - geographical size, - economic capabilities, … but all have the same responsibilities • The scope of municipal tasks is perhaps the broadest in the world (no intermediate level)

  3. Why a reform of municipal and services structures?/2 • Democracy: 431 municipalities but some 900 municipal administrative structures – municipal cooperation has been alternative to an intermediate level • Municipalities cannot effectively control their network of cooperation but become paying machines • Economic strains and external pressures (to keep taxation level low, businesses moving out…) • Aging population, changes in demands • Recruitment problem to the municipal sector

  4. Municipal division in Finland 2006 • 431 municipalities • number has been declining in recent years (84 mergers since 1970) • municipal division is based on mid 19th century parishes and towns

  5. Challenges facing municipalities by 2015 Inter-municipal cooperation (region, province, extended region etc.) Changes in age structure: ageing, retirement, birth rate Change in demand for services Immigration Migration, Population trends Other internal structural factors: availability of labour etc. Reassignment of duties EU integration Tax pressures/ financing problems Changes in financing Changes in job structure/ regional development Democracy deficiency Municipal border

  6. Local government – responsibilities and economy • Municipal expenditure accounts for over 30 % of the total public sector expenditure, 2/3 of public consumption, and • 20 % of GDP. • Primary responsibility for social welfare, health care, education and culture • Provider of infrastructure: traffic, power, water, sewerage, waste, ports, public transport and environmental protection ( carried out through the joint authorities or the municipal companies and corporations) • Important regulatory functions: monopoly on building supervision – control over town and land use planning • **** • 50 % revenues spend on social welfare and health care, ¼ on education and culture, 10 % of the total expenditure on investments • Municipalities have considerable freedom to decide how to spend their money • Staff costs account more than half of expenditure

  7. 27 % of all employees work in the public sector • Over 75 % of all public employees work in local government

  8. Aging population: people over 65 years in 2003 and 2020 The whole country 15 % The whole country 22,8 % % of population % of population Sources: Statistics Finland, Association of Finnish Local and Regional Authorities.

  9. Age and costs: Total expenses of health and elderly care according to age group in 2002 & 2020 Million € 2020 2002 age group

  10. Social and health services’ expenses according to benefit form and age group in 2004 € age Medication and services covered by health insurance Social services Health services

  11. Age and costs: Effect of population factors on the demand of basic services (index 2005=100) Source: Ministry of Social Affairs and Health

  12. Loan stock and cash of the municipalities and joint municipal boardscurrent prices, billion € Loan stock Cash Source: Years 1985-2004 Statistics Finland. Prognosis for 2005-2009: KUTHANEK 1.3.2005. Association of Finnish Local and Regional Authorities.

  13. The Project to Restructure Municipalities and Services was set by the Govt 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.

  14. MUNICIPAL ECONOMY Framework criteria and working tools of the new welfare model STATE ECONOMY POPULATION AND AGE STRUCTURES Municipal tasks Municipal financing DEMOCRACY GLOBALISATION Municipal restructuring CITIZEN Organisation of municipal services TECHNOLOGICAL DEVELOPMENT EUROPEAN UNION Municipal cooperation PRODUCTIVITY INDUSTRY AND COMMERCE AND EMPLOYMENT MUNICIPAL EMPLOYEES

  15. Organisation Cabinet Ministerial Working Group on Basic Services Programme Working Group on Restructuring Municipalities and Services Secretariat Preparatory Working Group on Education, Culture, Recreation and Sports Services Preparatory Working Group on Social and Health Care Issues Preparatory Working Group on Technical and other services Preparatory Working Group on the regional implementation of the project

  16. Task 1 • Based on the key findings made in the first stage of the Project (summer 2005), the Restructuring Group evaluated 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.

  17. Task 2 • In Sept. 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 which was the basis for the regional stage. • In the regional stage of the Project, the measures outlined for the regions in the position paper were be evaluated in order that the feasibility of various options be debated, with due regard to the specific features of each region.

  18. Task 3: The Regional Stage • The regional stage was carried by the municipalities and the Regional Councils in cooperation with the Association of Finnish Local and Regional Authorities from October 2005 to February 2006. • Due consideration was to 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.

  19. Task 4 • The Ministerial Working Group in January, decided on tasks to be reassigned, tasks to be further prepared with regard to possible reassignment, and tasks not to be reassigned from the municipalities to the state. • Reassigned from municipalities to the state: • Health care costs of foreign residents • Investigation of children’s sexual abuse and other forensic psychiatry settlings • Consumer guidance • Public advocacy according to the guardianship law

  20. Task 5 • In August 2006, the Cabinet will pass decisions on the future financing, organisation and production structures (possibly as a Framework Act). • The Ministerial Working Group has decided that financial support to municipal amalgamations, included in the Municipal Grouping Act, shall be changed by 1.1.2007.Support to strategic mergers, incl. multi-nr. of municipalities, will be • increased. • Preparation of basic bills on legal reforms will start immediately after the possible Framework Act is adopted by Parliament.

  21. Project to restructure municipalities and services Draft timetable 2005 – 2011 Planning V/2005 – V/2006 Decision making and execution VI/2006 –XII/2008 Execution I/2009 – XII/2011 Execution of the reform Planning phase II II-V/2006 Preparation of the execution THE 2ND PHASE OF THE PROJECT Regional phase X/2005- II/2006 Planning phase I V-IX/2005 Decision making In the Cabinet XI/2005-VI/2006 Reform legislation Framework legislation Development phase organised by Association of Finnish Local and Regional Authorities VIII/2006-XII/2011 Control and evaluation phase organised by the Ministry of the Interior VIII/2006 - XII/2011

  22. Execution of the reform / 1 • 2006 • framework legislation in the Parliament • detailed sectorial preparation based on the framework legislation, material to the new government programme • 2007 • framework legislation in force on January 1st 2007 • legislation drafting in the ministries • 2008 • new legislation on elections in force • municipalities and regions prepare the execution of the reform • autumn 2008: municipal elections according to the new legislation

  23. Execution of the reform / 2 • 2009 • stronger municipalities and cooperation organs begin on January 1st • many new laws in to force • 2010-2011 • execution of the legislation • follow-up of the reform

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