Miroslav Beblavý State Secretary Ministry of Labour, Social Affairs and Family Zagreb, 23/01/2006

1. Slovak experience on reforming the territorial administration, and the process of devolution of responsibilities and competences to local self-governments Miroslav Beblavý State Secretary Ministry of Labour, Social Affairs and Family Zagreb, 23/01/2006

2. Some background facts: • 2900 municipalities (average size 1 800) • 8 regions (average size 675 000) • GDP structure: agriculture: 4.5%, industry: 31.8 services: 63.8% • GDP per capita on a PPP basis: EUR 12 000

3. Recent Slovak political history: • 1990 - 1992: In hurry, vol. 1 • 1992 - 1998: Out of Europe • 1998 - 2002: Back to Europe • 2002 - 2006: In hurry, vol. 2

4. Reforms in Slovakia: 2 stages • Back to Europe 1998-2002: macroeconomic stabilisation, regulatory reform, acquis adoption, financial system reform, political decentralisation, partial tax reform • Successful Europeans 2002-2006: Labour market reform, pension reform, fundamental tax reform, social benefits reform, civil service and government reorganisation, primary and secondary education reform, fiscal decentralisation, health care reform

5. Public administration reform as an element of the reform package: • Political reform • Shift to independent regulation in many areas • Political effects of decentralisation • Ethics and anticorruption efforts • Budgeting reform • Strategic budgeting: emphasis on deficit-reduction, programs and priorities, the medium-term outlook • Civil service reform • Pay reform • Creation of the Civil Service Authority • Decentralisation and organisation reform

6. Decentralisation as an element of public administration reform: • 1989: Fall of communism • 1990: Creation of elected municipal authorities • 2001: Creation of elected regional authorities • 2002-2004: Decentralisation of many service delivery responsibilities to regions and municipalities • 2004: EU entry, associated with large influx of funds for regional development • 2005: Fiscal decentralization

7. The new model of local development • Strong role of municipalities – elected mayors and councillors • local development • primary education • basic health care and long-term care • housing and zoning • local „infrastructure“ (small roads, garbage, parks, cultural facilities)

8. Continued: • Supplementary role of the regions • secondary education • regional transport • regional development • Central government • sectoral administrations for service delivery: • pensions, social benefits and active labour market policies • taxes and customs • law and order + the military

9. 2005 – fiscal decentralisation: • Greater emphasis on local/regional resources and stable formula for distribution of central taxes • Municipalities: 100% of locally determined real estate tax + 70.3% of centrally collected personal income tax distributed according to a formula taking into account number of inhabitants, age structure and altitude • Regions: 100% of tax on business-owned vehicles + 23.5% of centrally collected personal income tax distributed according to a formula taking into account size, number of inhabitants, age structure and road density • + direct transfers from central ministries for tasks delegated by them

10. This model places emphasis on: • Strong local accountability (no compulsion to provide certain, „own“ services – kindergarten and after-school programs, long-term care, local roads etc., autonomy in the manner of provision of others – primary and secondary education) • Intermunicipal and interregional redistribution • Uniformity in social policy (pensions, benefits), taxes and law and order

11. Issues and problems: • Efficiency vs. Community and corruption • Insufficient debate on individual, community and national goods • Limited policy capacity of subnational governments and other actors • Lack of public sector ethos