The
International Conference on Poverty Reduction
Beijing, 16-18 May, 2000
Organized by the Government of China, the World Bank,
United Nations Development Program (UNDP) and
the Asian Development Bank
Given
the fact that China has different policies and systems for social security in
urban and rural areas, the Government of China is working on how to conceive a
national framework for its social security. Being the co-author of the book
“Public Sector Reform in Sweden” I am expected to share with the
conference participants the case study of Sweden as a good example of a
“social security continuum”.
The
Swedish welfare state is, to a larger extent than ever before, run and
administered by the municipalities. There is a long tradition of local
decision-making in Sweden. The central government directs local government by
framework legislation. The municipalities have the right to levy taxes and
determine the size of the tax rates. In Sweden local government provides most
of the community services. Local governments are responsible for more than 2/3
of the total public consumption.
The
purpose of the book was to provide a description and analysis of Swedish
government and recent efforts at restructuring and reforming it in such a
manner as to make it more effective in dealing with complex, contemporary
public problems. In so doing we are hoping that these insights will be useful
to individuals in other countries concerned about the reform and modernization
of their own governmental institutions. I am of course aware that there are
many ways to finance, steer, regulate, structure, organize, manage and operate
public sector activities. Moreover there is no single set of structures or
reforms, which will fit all countries and economies. Cultural background,
resources, traditions and other conditions all have to be taken into account.
The system has to suit the country and the situation.
I
do however believe that knowledge of the Swedish experience may help to
provide a context and perhaps even a challenging agenda for public
administrators in other countries as they seek to play a key role in the
implementation of development objectives. A number of critical issues have to
be examined regarding the means by which to achieve complex development goals.
One of them - and I believe the most important one - is how change can be
managed in a way that empowers people. Promoting reform requires shared
visions and the active participation of a wide range of the key factors
involved in implementing changes; including politicians, senior officials,
business and labor representatives, the private sector and the non-profit
sector involved in public service delivery, as well as the general public.
The
general development tendency, which has most affected the organization of work
in recent decades in Sweden, is decentralization.
This has meant that multiple interests must be brought into a participatory
policy-making process, without jeopardizing the capacity to govern. This is
not always an easy task but it is always worth the effort. Local
self-government creates a link between the central government and civil
society, which can provide the basis for the effective use of resources.
Consequently it can help create the established democracy that is a
prerequisite for building a stable society.
A
second key Swedish reform has involved the development and introduction of
management by results as an administrative philosophy. This is a natural
consequence of the focus upon the decentralization of government organization
which leads to a clear focus on results. Performance management strategies
involve a shift from traditional procedural approaches to a more
results-oriented culture where priority is given to the outcomes of public
policies. The aim in Sweden has been to move from a mode of operation based on
ex ante control of resources, extensive regulation to prevent abuse and ex
post inspection to ensure compliance with legal standards, to continuously
monitored performance and management with accountability for results and all
dimensions of performance (economy, efficiency, effectiveness, service quality,
financial performance).
These
efforts need to be woven into a framework where the central capacity to govern
is enhanced, especially in the face of globalization; where an appropriate
balance is struck between central direction and local discretion; where the
interests of many policy actors are considered; and, where democratic
accountability is protected. Traditional values of neutrality, integrity, and
equity must also be married with today's demands for value-for-money and
quality of service.
The
relations between central and other levels of government are an ongoing and
increasingly important consideration in Sweden. As a country’s income grows,
the amount of its social services usually increases. This is because
governments very often need to do more in those areas where markets alone
cannot be relied upon. Above all, in Sweden this has meant investing in
education, health, childcare and care of the elderly and disabled; the
building of social, physical, administrative, regulatory and legal
infrastructures of better quality; the mobilizing of resources to finance
needed public expenditure; and the providing of a stable macroeconomic
foundation. There has been an important change in attitudes in all governments,
including local, to define these issues as investments for a more positive and
prosperous future.
Another
main theme
of the changes affecting public administration has been the attempt to
distinguish more clearly between governmental and judicial administration. To
strengthen the individual's legal protection, more and more tasks have been
transferred from government agencies to administrative courts of law.
The
demand for public accountability has often meant that many government service
programs focus upon issues of “value for money”. Today, an increased
orientation towards the market, performance-linked incentives and new
management information systems have meant that government operations have
begun to attempt to adapt more rapidly to changing needs.
In
the process of decentralization - that is to say, the redefinition of
structures, procedures and practices of governance to be closer to the
citizenry - the importance of a general sensitization of the public and a
heightened awareness of costs and benefits, especially for direct stakeholders,
both at the central and local levels, has to be emphasized. We would like to
underscore the necessity to understand the process of decentralization from
such a perspective, instead of seeing it in the over simplistic, and
ultimately inaccurate, terms of a movement of power from the central to the
local government. The reality is that government capacity is not a simple zero
sum game. In fact, the Swedish experience shows that strengthening local
government inevitably requires, and produces, enhanced capacity at the center
as well.
Therefore,
the challenge facing both central and local governments is to gain or re-gain
political strength by being more explicit when defining goals and more
consequential in achieving them. Quality improvement and cost-effectiveness
should be encouraged by using market mechanisms when and where appropriate.
Only by applying these strategies can central and local governments solve the
dilemma of assuming a new relevance through simultaneously juggling the
complexity of protecting stability and consensus while seeking to achieve
significant change.
Some
of the other
most important lessons of experience in central and local government since the
reform program started in the early 1980s are summarized below.
*
Local Governments are the foci of
development. Managing
local governments is beset with contradictions in policy implementation,
plagued by limited capacity, and inhibited by significant financial
constraints. But even more important is both the recognition of and the
existence of policies that reflect the reality that local governments are the
foci of development, are needed for effective governance and are central to
the promotion of participatory democracy. This is only possible if local
government is independent in relation to central government, both financially
and functionally, and is managed efficiently, effectively and productively.
*
Management by results.
Administrative policy and economic policy in the 1980s paved the way for the
major upheavals in public administration that have taken place in the 1990s.
It was above all the ideas about management by results – involving less
detailed regulation of the central government agencies, but more stringent
demands regarding definition of objectives and monitoring of results – and
the state-owned business agencies’ successively increased financial
independence that laid the foundation for these changes. The reduction in
detailed regulation, in the wake of management by results, created scope for
the agencies to choose for themselves the best form of organization to fulfill
their objectives. Management by results has thus contributed to many of the
structural changes that have been implemented during the 1990s.
*
Keep financial risks under control.
Many municipalities have exposed themselves to considerable risks, for example
in financing municipal housing or in overspending when the business cycle
peaked.
*
Public sector reform requires dynamic leadership.
*
Continuity
of measures. There
has been considerable continuity in terms of different governments' measures
to make the work of the central government more efficient and reduce
consumption of central government services. The Government has retained the
initiative for these structural changes and the new Government has, broadly
speaking, taken over where the previous one left off.
*
More
competition, result measurement and quality development in the future.
Measurement
of quality and results is somewhat more common where competition has been
introduced. So far, however, only a small fraction of municipal services has
been exposed to competition. These conclusions are reinforced by a closer
inspection of quality in schools, childcare and care of the elderly. In this
area research quite clearly demonstrates that measurement of quality and
results, and management by results, can lead to significant improvements. Yet
these insights have not pervaded municipalities’ management on a large scale.
*
To achieve a balance between the interests of customers and taxpayers
is an ongoing challenge. Experience
gained from the implementation of Commitment Quality Management, CQM, in
Sweden to date indicates that far-reaching decentralization combined with an
active follow-up of goals to establish how they are applied to working methods,
can create the basis for a balance of this kind.
*
Public Sector
Reform takes time.
The reason for this is simple. First, it takes considerable time to be able to
determine and then focus upon realistic and significant targets of reform
opportunity. Second, it also takes time to then build the sense of trust with
relevant officials and policy makers, stakeholder organizations and individual
citizens that must precede any effort to introduce significant public
management reform. Much time and effort must be spent in dialogue with key
actors in order to cultivate and build the relationship of trust and
confidence that is a necessary prerequisite to initiating real reforms.
*
The achievement of institutional and public management reform requires
flexibility in design and implementation.
*
Decentralization
requires opportunities for local governments to have their own revenue-raising
capacity. There
is no question that the implementation of meaningful decentralization and
reform of local governance has been greatly supported by the revenue-raising
capacity possessed by local governments. Over-reliance on national funds to
finance local government could very easily, over time, serve to promote a
relationship of central government control and local government dependence.
*
The implementation of public management reform requires strong locally
based constituencies to support these efforts.
While in Sweden all central level political and governmental leaders are
embracing the rhetoric of decentralization, some are reluctant to actually
initiate serious efforts toward this end. Moreover, among those political or
administrative leaders who are prepared to initiate efforts at reform, there
was in the beginning of the reform
process a tendency to focus principally on deconcentration (administrative
decentralization with principal decision-making still occurring at the center)
rather than devolution (where both administrative and policy making authority
are turned over to subnational bodies directly accountable to local
communities). The reality is that too many people are quite reluctant
voluntarily to give up authority or power.
*
Local government institutions require strengthening before they are
able to operate effectively in a decentralized environment.
The structures of local government, and the management and delivery of public
services, are by now highly developed and indeed in some instances more
advanced than the central government. But it has not always been that way.
Twenty years ago the mindset of many individuals, both those involved in
government and influential citizens was likely still to be dependent upon
detailed direction from the center. In addition, many local governments did
not at that time even have the infrastructure to take advantage of available
training and technical assistance some decades ago. A considerable number of
local governments employed only a handful of people. Consequently, they
required substantial investment in new resources - both human and capital - in
order to be able to function effectively in a decentralized environment. Thus,
programs of public management reform, technical assistance, training and the
like were very important
*
The
use of a multi-level focus is a great advantage in the effort to implement
significant institutional changes.
One cannot change a major governmental institution in a vacuum - one must work
both with the institution and the various forces that impact upon it as well.
This is especially true when one is trying to convert a highly centralized
governance system into a decentralized one. Consequently, to focus one’s
attention simply upon strengthening the local management in a system where
power is principally held at the center (or at the top) will not carry a
reform effort very far. It is equally, if not more important, to change the
contextual environment in which the government must function.
Working simultaneously with
Parliament, to change laws, and national Ministries, to encourage their
decentralization, while at the same time trying to assist in strengthening
intermediate and local governments and neighborhood - based organizations we
have found to be most likely to result in mutually reinforcing reform outcomes.
A very important step in the process of promoting decentralization and the
strengthening of local management is the adoption of national legislation -
such as the Swedish Local Government Act, which has strengthened the resource
base of local government as well as allowed municipalities to operate
important locally focused services without detailed central government
regulation. It is only Parliament
that can significantly strengthen local governance and create the
prerequisites for public management reform. In addition, the developing of
information for one level of government can turn out to be very useful for, or
can significantly influence the actions of, another level of government. Yet
another advantage of multi-level involvement for the public management reform
initiator is that it is often possible to play a ”broker role” between the
different levels of government in terms of linking key actors who share
similar views but do not know one another because they work at different
levels or in different branches of government.
*
Models created by others do have some measure of relevance.
Individuals involved in governance reform projects are often very concerned
about not wanting to impose an external model on one or another area of
administration or on policy making activity in other organizations.
Most assuredly it is important to be sensitive to these issues.
Nevertheless, models or practices from other organizations do have some
relevance in terms of the introduction of reforms.
*
The ability to influence public management does not necessarily require
large budgets. In
fact, the building of trust, the exercise of strategic judgment, and the
dependence upon perseverance and continuity can produce public management
reform that is often substantially more profound than that which is brought
about through the investment of large sums of money in the purchase of goods
and services.
*
Public Sector
Reform takes time.
The reason for this is simple. First, it takes considerable time to be able to
determine and then focus upon realistic and significant targets of reform
opportunity. Second, it also takes time to then build the sense of trust with
relevant officials and policy makers, stakeholder organizations and individual
citizens that must precede any effort to introduce significant public
management reform. Much time and effort must be spent in dialogue with key
actors in order to cultivate and build the relationship of trust and
confidence that is a necessary prerequisite to initiating real reforms.
Potential
risks encountered during the implementation process can include:
*
Inter-regional inequalities may increase, which widens poverty gaps and
could foster politically destabilizing forces;
*
Higher risk of resource captures by local elite’s;
*
Possible misuse of authority in an environment of inadequate
supervision;
*
Inadequate implementation arrangements can lead to disparity between
the revenue available and the responsibilities needed to be carried out, which
in turn would render local government systems ineffective.
Because
there are potential risks with the movement to decentralization, it is
especially useful for national policy-making authorities to establish, through
legislative action and other appropriate activities, policy frameworks for
facilitating decentralization and the strengthening of local government. Doing
so not only helps move such processes along, but also it serves as a way to
avoid some of the potential pitfalls that can occur when one implements even
the most progressive reforms. In that regard, while the single most important
element in the movement to decentralization and the strengthening of local
governance may be the demands that arise from the people themselves at the
local level, nevertheless, the support provided by effective national policies
is also necessary. It will serve to make this process move both more rapidly
and more effectively.
By
way of concluding on the Swedish experience, it is useful to review some key
issues in the area of providing the effective service delivery necessary to
adequately define and implement these changes. These include:
*
Establishment of a clear division of functions between central and
local governments.
*
Ensuring financial capacity through adequate tax bases or sufficient
transfers; higher utilization of existing tax capacity or fees; less central
control in fixing tax rates, prices and borrowing.
*
Establishing local, administrative and financial autonomy by:
-
Assignment
of revenues to meet all obligations;
-
Predictability
and certainty in transfers/grants;
-
Full
local control of revenue mobilization;
-
Administrative
flexibility.
*
Ensuring public accountability in terms of:
-
Transparency
and high ethical standards
- Ultimate accountability to users/public.
*
Effective targeting of relevant programs
*
Developing the institutional capacity needed through:
-
Increased
administrative efficiency;
-
Developing
adequate skills and expertise;
-
Maximizing
staff motivation;
-
Effective
war against corruption;
-
Employing
modern management techniques
*
Minimizing managerial interference by central government in terms of:
-
Less
complicated rules and procedures;
-
Less
central control
*
Integrating users’ participation in planning, costing and delivery
mechanisms.
*
Establishment
of fair and effective service standards.
*
Increasing
competitiveness in service provision by use of out-contracting in conjunction
with regulation, competitive bidding, efficient contract management, etc.
*
Developed procedures in budgeting, accounting, auditing, appraisal, and
monitoring and evaluation; also access to modern information technology and
tools for personnel procedures in terms of recruitment and promotion; and
*
Establishing
effective dialogue between central/local/user groups/NGO's with the full
involvement of local governments; and allowing full flexibility for local
governments in planning projects utilizing national and international
assistance.
Gustafsson,
Lennart and Svensson, Arne, Public Sector Reform in Sweden, Liber, 1999
Svensson,
Arne, Commitment Quality Management (CQM) – Strategies for Effective
Local Governance and Service Delivery, United Nations Global Forum on
Local Governance and Social Services for All, Stockholm, 2-5 May, 2000