Presentation on “Enhancing the role of municipalities in local & regional economies - Subnational finances to support local development” made at the Seminar on "Innovations and challenges in the management of a regional policy, held in Bratislava, Slovak Republic, 22 February 2017. Presentation by Isabelle Chatry, Regional Development Policy Division, OECD.
More information: www.oecd.org/gov/regional-policy/innovations-and-challenges.htm
Antisemitism Awareness Act: pénaliser la critique de l'Etat d'Israël
Subnational finances-to-support-local-development
1. Enhancing the role of municipalities in local and
regional economies
Subnational finances to support local development
Zdôraznenie úlohy samospráv v miestnej a
regionálnej ekonomike – Podpora miestneho rozvoja
zo zdrojov regionálnej samosprávy
Seminar: "Inovácie a výzvy v manažmente regionálneho rozvoja“
Bratislava, Slovak Republic
Isabelle Chatry
Project Manager, territorial reforms and subnational finance
Public Governance and Territorial Development Directorate
OECD
2. The governance system of subnational government
the OECD
Federations & quasi-federations
Unitary countries
38 960
3 818
360
579
78
2 489
1 788
2451 478310 8 186
36 004
8 176
419
31
74
11 510
446 311
314
255
338
3 197
2 935
2 109
2 320
605
402
2 874
6 272
103
105
212
213
35 countries: 9 federal and 26 unitary including
137 635 subnational governments in 2015-2016:
• 133 007 municipal-level entities
• 4 108 intermediary-level entities
• 520 regional or state-level entities
119
3. • The OECD institutional landscape which has dramatically changed over the
last 20 years, especially since the crisis as a result of decentralisation or
recentralisation processes.
The OECD: an institutional landscape very diverse and
complex at subnational level
9 countries with
only one level:
- Municipalities
18 countries with two
levels:
- States/regions
- Municipalities
8 countries with three
levels:
- States/regions
- Intermediary gov.
- Municipalities
9 federations
and quasi-
federations
Australia
Austria
Canada
Mexico
Switzerland
Germany
Belgium
Spain1
United States
25 unitary
countries
Estonia
Finland2
Ireland
Iceland
Israel
Latvia
Luxembourg
Portugal2
Slovenia
Chile
Korea
Denmark
Greece
Hungary
Japan
Norway
New Zealand
Netherlands
Czech Republic
Slovak Republic
Sweden
Turkey
France
Italy
Poland
United Kingdom3
Notes: 1. Spain is a quasi-federal country. 2. Finland and Portugal have autonomous regions on part of the country. 3. There is an intermediary level only on
part of England.
Almost
138 000
SNGs in the
35 OECD
countries in
2015-2016
4. MLG reforms: three interconnected
dimensions
Institutional:
re-organising powers,
responsibilities and resources
Public management:
re-organising
administrative
processes
Territorial:
re-organising territorial
structures
France,
Finland
Italy
New Zealand
Japan
5. Demographic factors
Economic and social
factors
Local management and
finance
Political factors
Institutional /
administrative
area
Functional
Area
Territorial reforms: why do they happen?
6. Territorial reforms concern all subnational
government levels
Regional level
Intermediary level
Municipal level
7. Territorial reforms: a complex architecture
Deconcentratedadministrations
(centralgovernmentatterritoriallevel)
Decentralisedadministrations
(subnationalgovernments)
Regional level
Intermediary level
Municipal level
Satellites
8. 8
The United States and France account for 54% of
133 000 municipalities in the OECD.
France
27%
United States
27%
Germany
8%
Spain
6%
Italy
6%
Czech Republic
5%
Canada
3%
Hungary
2%
Slovak Republic
2%
Poland
2%
9. Municipal population and area: great variations
between OECD countries
1 850
9 570
0 20 000 40 000 60 000 80 000100 000120 000
Czech Republic
Slovak Republic
France
Hungary
Switzerland
Austria
Iceland
Luxembourg
Spain
Estonia
Germany
Italy
Canada
United States
OECD34
Slovenia
Norway
Poland
Finland
Belgium
Israel
Portugal
Greece
Sweden
Australia
Netherlands
Mexico
Chile
Turkey
Denmark
New Zealand
Japan
Ireland
United Kingdom
Korea 224 440
166 060
149 530
Average municipal population (nber of inhabitants, 2015-2016)
17
251
0 1 000 2 000 3 000 4 000 5 000
Czech Republic
Slovak Republic
Luxembourg
Germany
Austria
Spain
Netherlands
Poland
Japan
OECD34
Greece
Denmark
United Kingdom
Norway
Finland
Sweden
Ireland
Australia 12 369
Average municipal area (km2, 2015-2016)
11. 11
« Upscaling » and/or « transcaling »…
Municipal mergers and inter-municipal cooperation
0
1 000
2 000
3 000
4 000
5 000
6 000
Austria(1950,2015)
Sweden(1952,1963)
Japan(1953,1999)
Norway(1957,1967)
Denmark(1970,2007)
Finland(1976,2010)
Belgium(1975)
NewZealand(1989)
Greece(1997,2011)
Turkey(2008-2012/14)
Number of municipalities before the reform
Number of municipalities after the reform
Number of municipalities in 2015-2016
9 868
Alternative
to municipal
mergers
Efficiency
gains
Costs
savings
I M C
Better local
services
Staff
performance
/ expertise
Innovation /
high tech
Drivers of Inter-municipal co-operationSome examples of mergers policies in the OECD
and EU since 1950
12. 12
SNGs are key economic and policy actors across
the OECD
29%
45%
38%
10%
55%
20%
12%
Greece
New
Zealand
Greece
New
Zealand
Chile
Estonia Greece
Denmark
Japan Italy
Denmark
Japan
Japan
Norway
16,1%
37,0%
19,7%
0,5%
25,4%
4,1% 5,2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Expenditure Staff
expenditure
Public
procurement*
Current
social
expenditure*
Investment Tax revenue Debt**
OECD (unitary countries) Minimum Maximum Slovak Republic% of general government - 2014
*: No data for Chile
**: Debt OECD definition ie including, in addition to "financial debt", insurance reserves and other accounts payable. No data for Chile and New Zealand
13. 13
SNG expenditure in the OECD: 40% of total
public spending i.e. 17% of GDP in 2014
AUS
AUT
BEL
CAN
CHL
CZE
DNK
EST
FIN
FRA
DEU
GRC
HUN
ISL
IRL
ISR
ITA
JPN
KOR
LUX
MEX
NDL
NZL
NORPOL
PRT
SVK
SVN
ESP SWE
CHE
TUR
GBR
USA
OECD34
OECD25
0
10
20
30
40
50
60
70
80
0 4 8 12 16 20 24 28 32 36
Subnationalexpenditureasashareoftotalpublic
expenditure(%)
Subnational expenditure as a share of GDP (%)
14. 14
Spending decentralisation process between
1995 and 2014
JPN
IRL
HUN
NDL
LUX
EST
NOR
KOR
GBR
ISR
ISL
AUT
USA
NZL
PRT
CHE
MEX
EU28
AUS
GRC
FRA
SVK
CZE
BEL
ITA
SVN
DEU
FIN
DNK
POL
CAN
SWE
ESP
-15 -10 -5 0 5 10 15
%
∆ 1995-2014 as a % of total public expenditure ∆ 1995-2014 as a % of GDP
Subnational expenditure as a share of total public expenditure and of GDP in 1995 and 2014 (changes expressed in % points)
15. Wealthier countries tend to be more
decentralised…
TCDGIN COGKHM MLTGRM DOMJAM AZEBENMWIBFA CRI CYPTUNSEN MUSMLI JORARMPRYSLVZWE MYSCHLHNDUGA PSEKEN GRCMARTZA THA IRLTURALB
CPV
ECU NZL
NGAKGZ GEO ISRMNE
SVK
PRT
IDN
HUNGHA SRB BGR LTUPER ROU KAZMNGMDA SVNEST CZELVA
GBRFRAPHL HRVMEXCOL POL ISLKOR NLDIND ITAUKR NOR
JPN AUS
AUT
USA
VNM CHEDEUCHN
ESPZAF
BRA BEL
FIN
RUS SWE
CAN
DNK
ARG
R² = 0,3555
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 10 000 20 000 30 000 40 000 50 000 60 000 70 000
SNGexpenditureasa%ofGDP
GDP per capital (USD PPP)
16. 16
SNGs spending responsibilities in the
OECD and Slovak Republic
0 10 20 30 40 50 60 70 80 90 100
ITA
DNK
GRC
IRL
FRA
PRT
HUN
AUT
FIN
JPN
LUX
ESP
OECD22
SWE
DEU
NOR
OECD28
CHE
KOR
POL
GBR
NDL
USA
BEL
CZE
ISL
ISR
EST
SVN
SVK
%
Education
Health
General public
services
Social
protection
Economic
affairs
Housing and
community
amenities
Other
17. 17
SNGs are major public employers in the OECD
0 20 40 60 80 100
NZL
GRC
IRL
TUR
ISR
PRT
LUX
HUN
FRA
SVN
SVK
GBR
EST
ITA
ISL
OECD24
CZE
EU28
POL
AUT
KOR
NOR
NDL
OECD32
MEX
DNK
FIN
SWE
OECD8
USA
JPN
ESP
DEU
BEL
CHE
CAN
%
Subnational government Central government and social security
Subnational staff expenditure as a share of total public staff expenditure in 2014 (%)
18. 18
In Slovakia, staff expenditure form the bulk of SNG
expenditure while the share of capital expenditure is small
36%
48%
13%
13%
0
10
20
30
40
50
60
70
80
90
100
NZL
TUR
ISR
JPN
IRL
KOR
ITA
DEU
CHE
FRA
OECD25
HUN
AUT
CAN
EU28
DNK
GBR
PRT
LUX
GRC
OECD32
CZE
SWE
ESP
SVN
POL
OECD8
NDL
USA
BEL
FIN
ISL
EST
MEX
SVK
NOR
%
Compensation of employees Intermediate consumption
Social expenditure Subsidies & other current transfers
Capital expenditure Other
19. 19
SNG investment as a share of public
investment (2014)
59%
95%
25%
12%
00%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Canada
Belgium
Japan
Mexico*
Australia**
Germany
Switzerland
Spain
OECD9
CzechRepublic
France
OECD34
Korea
Israel
UnitedStates
OECD25
Italy
Finland
Slovenia
EU28
Poland
Netherlands
Sweden
Portugal
Austria
Denmark
Norway
Iceland
NewZealand*
Luxembourg
Hungary
Ireland
Turkey***
UnitedKingdom
SlovakRepublic
Estonia
Greece
Chile*
States and Local States Local
*: 2013 figures - **: 2012 figures - ***: 2011 figures
20. 20
Economic affairs, education and housing/communities
amenities are the main areas of subnational investment
19
39 22
29
09
18
0 10 20 30 40 50 60 70 80 90 100
SWE
HUN
DNK
LUX
SVK
SVN
NOR
CHE
BEL
DEU
ITA
FRA
EU28
GBR
OECD27 UWA
ISR
OECD21
OECD27 WA
ISL
OECD6
ESP
EST
AUT
USA
IRL
PRT
JPN
GRC
%
Economic affairs General services Education Housing and community amenities Environmental protection Other
Breakdown of SNG investment by economic function (% of total SNG investment, 2013)
21. 21
What are the sources of SNG revenues?
Tax revenues account for 44% of SNG revenue in the OECD
11%
37%
44%
47%
70%
50%
37%
31%
18%
10%
15%
18%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Mexico
Netherlands
Austria
Slovak Republic
Turkey
United Kingdom
Belgium
Ireland
Hungary
Greece
Luxembourg
Korea
Poland
Denmark
Portugal
OECD24 (unitary)
Australia
Norway
Spain
Israel
EU28
Slovenia
OECD33
Italy
Japan
Estonia
Finland
Chile
OECD9 (federal)
France
Czech Republic
Canada
United States
New-Zealand
Switzerland
Sweden
Germany
Iceland
Taxes Grants & subsidies Tariffs & fees Property income Social contributions
22. 22
Subnational government tax revenue as a % of
public tax revenue and as a % of GDP, 2014
AUS
AUT
BEL
CAN
DEU
MEX
ESP
CHE
USA
OECD9
CHL
CZE
DNK
EST
FIN
FRA
GRC
HUN
ISL
IRL
ISR
ITA
JPN
KOR
LUX
NDL NZL
NOR
POL
PRT
SVK
SVN
SWE
TUR
GBR
OECD25
OECD34
0
10
20
30
40
50
60
0 2 4 6 8 10 12 14 16
SNGtaxrevenueasa%ofpublictax
revenue
SNG tax revenue as a % of GDP
23. 23
Subnational government debt as a % of GDP and
of public debt, 2014
AUS
AUT
BEL
CAN
DEU
ESP
CHE
USA
OECD8
CZE
DNK
EST
FIN
FRA
GRC
HUN
ISL
IRLISR
ITA
JPN
KOR
LUX
NDL
NOR
POL
PRT
SVK SVN
SWE
TUR
GBR
OECD24
OECD32
0
10
20
30
40
50
60
0 10 20 30 40 50 60
Subnationalgovernmentdebtasa%ofpublicdebt
Subnational government debt as a % of GDP