Švaljek: For the success of the reform, good preparation, political leadership, and partnership with citizens are important

In the continuation of the forum “Citizens in Focus”, the emphasis was placed on the importance of fiscal consolidation, development, transparency, dialogue, and the inclusion of all stakeholders in policy-making at the local levels.

At the forum, Professor Zdravko Petak from the Faculty of Political Science spoke about the issue of policy capacity at the regional level of government in Croatia and what the general role of regional authorities can be in coordinating policies and providing specific public services. Speaking about forms of decentralization, he highlighted devolution (democratic decentralization), which represents a partnership of horizontal and vertical actors in public policies (from craft chambers, government organizations, unions, etc.).

– Local policy is not only made by those who won the elections, but also by those who are interested in providing the highest quality and cheapest services. I would like Croatia to move in that direction and to head towards some form of devolution, that is, very strong involvement of actors at the local level. The key criteria for shaping policies at the local and regional levels are fiscal capacity, administrative capacity, and the capacity to create policies for the community – emphasized Petak.

Regarding the levels of participation in shaping policies in the EU, he singled out partnership as the best tool, as it represents the deepest level of participation of actors in policy-making because it is based on taking responsibility for decisions. Partnership also provides a wide level of transparency.

– Croatia belongs to the group of highly decentralized countries. We need to think about how Croatia can move into the group of decentralized countries, with a very clear stance on the role of regional authorities. It seems to me that the format of decentralization should be comparable to the way we entered the EU and that all stakeholders should be included; from the business community, the academic community, etc. – believes Petak.

Sandra Švaljek from the Economic Institute followed up with guidelines for the reform of fiscal relations. In her lecture, she emphasized the necessity of implementing a comprehensive reform of fiscal relations that should be carefully prepared and executed in Croatia. As essential components, she proposed the implementation of territorial reorganization aimed at reducing the number of local self-government units, a new distribution of competencies among levels of government, reforming the financing methods for lower levels of government, the fiscal equalization system, and amending fiscal rules for local and regional self-government units.

– The reform of fiscal relations in Croatia is necessary, and there are many reasons and challenges. These include demographic trends, advances in information technology and literacy, the expansion of urban areas around the largest cities that require boundary changes, new financing methods that require greater administrative and financial capacities, technological advances that increase fixed costs in some sectors, and specialization that requires specially educated individuals – she listed some of them.

The goals of the reform of fiscal relations are to provide better services for citizens, she continued, clearer allocation of competencies among levels of government, strengthening administrative and financial capacities for the implementation of capital projects, creating a fiscal framework that will enable stable sources of income for lower levels of government, establishing fiscal equalization that will reduce differences in financial capacities of lower levels of government, and establishing clear fiscal rules.

Speaking about territorial fragmentation, Švaljek said that Croatia has a degree of territorial fragmentation comparable to that in EU countries, although we think that Croatia is an extremely fragmented country. Namely, comparisons with EU countries show that Croatia is above average in terms of the degree of fragmentation, but around the median. This is because there are a large number of countries with high fragmentation in the EU and a small number of countries that have implemented reform. In territorial consolidation, Švaljek warned, all reasons for and against should be considered and weighed wisely.

– There are almost as many reasons for as there are against. The main reason for is that larger units are economically stronger, can offer more services, and are more efficient. On the other hand, consolidation incurs costs – emphasized Švaljek, adding that the countries from which we should learn are Germany, Italy, Latvia, Denmark, and Ireland. There has been a reduction in municipalities, she explained, and in some cases, complete abolition at the central level.

She also touched on financing, where there are also numerous problems, and on the non-transparent criteria based on which approvals from the central state for borrowing are obtained. The dominant role of income tax, which serves as a source of financing and simultaneously serves the state as an instrument of fiscal policy that changes at will, is particularly problematic. This creates an unfavorable situation.

– For the success of the reform, good preparation, political leadership, attention to communication, connecting multiple elements of the reform, partnership with citizens and other stakeholders, and choosing the right moment are important. Reforms that are implemented during an economic upturn are more successful – concluded Švaljek.

Anamarija Musa, the Information Commissioner, also emphasized the need for transparency, openness, dialogue, and orientation towards citizens and the economy.

– Without this, there is no development or development policies, and thus no decentralization. Transparency and openness are prerequisites and represent the first phases in solving any problems. There is a necessity for maximum proactive disclosure of information, public work, and actions according to the law regulating access to information, encouraging the inclusion of citizens, the civil and private sectors in decision-making processes and mechanisms for controlling work, focusing on providing services, e-public services, and information about projects to promote economic and social development – concluded Musa.