Mechanisms for enhancing multi-level governance effectiveness Evaluation, Monitoring and Incentives Mechanisms for Sub-national Capacity Building: Regional Policy in Italy Flavia Terribile Ministry of Economic Development - Italy Department for Development Policies Global Forum on Governance, Rio de Janeiro, Brazil, 22-23 October
Overview of the Presentation 1. Italy: a high income country with large regional disparities 2. Institutional framework 3. What is regional policy in Italy? 4. How to deal with the complexity arising from multi-level governance while ensuring efficiency and quality of public spending? 5. Reward/sanction mechanisms: comparison between two different schemes (targeting intermediate objectives on institution building and targeting final objectives on public service provision)
Italy: large regional disparities Italian regions in the EU Regional disparities in per capita GDP (in PPS), EU-27 = 100 2004, NUTS 2 Source: Eurostat New Cronos
(%) Italy: large regional disparities also in the provision of essential services 35 31,8 30 25 25,5 20 15 16,8 15,5 10 8,7 5 4,2 0 Centre-North South Centre-North South Centre-North South early school leavers (2006) child care coverage (2004) Recycled urban waste(2005) Source: Istat
Institutional framework: major steps towards the decentralisation process Electoral system reforms Direct election of City Mayor and Province President (since 1993) and of Regional Governors (since 2000) aimed at increasing stability of regional political systems and enforcing their constituencies. New distribution of powers and functions amongst levels of government - Reform of the Public Administration Transfer of functions and tasks from the State to sub-national governments; reorganisation of Central Government; streamlining of administrative procedures and legislation (since 1997). Constitutional reform Regions entrusted with legislative powers and increased financial autonomy as to revenues and expenditures (since 2001).
What is regional policy in Italy? Key elements: In compliance with the indications of the European Union Treaty and the Italian Constitution (Art.119, Para. 5) regional policy is characterised by: Geographical targeting It is a geographically differentiated development policy focused on specific territories (Southern Italy and some Central-Northern areas), aimed at redressing regional structural imbalances and strengthening territorial competitiveness. Additionality of resources It is a development policy that supplements ordinary actions carried out by central or regional governments. In the South, these funds account for 50% of total public administration capital expenditure.
What is regional policy in Italy? Strategy and resources: Strategy Regional policy aims at enhancing the growth potential of specific geographical areas by providing public goods necessary to improve local context conditions for citizens and firms agglomerations (transport and communication structures, research and innovation, but also essential public services such as education, water provision, waste management etc). Policy acts as a broker and catalyst for change. Financial dimension Unified strategy for planning and use of regional policy resources that originate both from the EU budget and national budget. Definition of a medium-term financial plan and ex-ante allocation of resources to Regions: 124.7 billion euros for the period 2007-2013, of which 101.6 billion euros for Southern regions.
Regional Policy: multi-level institutional setting compliant with the new decentralised framework Central State Sets key priorities for regional policy within a national strategic perspective; sets general rules for policy implementation; allocates funds (earmarked grants) to Regions and sets conditionality criteria for funds allocation; provides technical assistance to Regions; monitors programme implementation; promotes incentive schemes (with attached rewards and sanctions) for Regions. Regions Identify priorities for regional development and select projects; allocate resources to projects and monitor their implementation. Local Governments Play a role in pooling local actors, designing projects and promoting their implementation.
How to deal with complexity arising from multi-level governance while ensuring public spending efficiency and quality? Enhancing the capacity of coordination amongst institutions (within an incomplete information framework) (1) Use of contractual mechanisms in public investment policies, with support of incentive schemes. Focus on: Transparent process of negotiation on objectives and instruments; clear ex-ante definition of commitments amongst actors; When commitments are not completely verifiable, definition of procedures that can guarantee the necessary continuity to ensure performance assessment, correction of assumptions and refinement of targets (i.e. filling up ex-post contract incompleteness through continuous interaction and exchange of information among administrations). Implementation of a monitoring system and attached reward/sanction mechanisms (speeding up spending; improving monitoring process; etc.)
How to deal with complexity arising from multi-level governance while ensuring public spending efficiency and quality? Modernising administrations involved in the design and implementation of regional policy (2) Setting up evaluation and monitoring structures at central and regional levels: creation of a network of regional bodies to evaluate and monitor public investments. Strengthening the level of capabilities and expertise of sub-national authorities through specific technical assistance (promoted by central government) on evaluation, project planning, monitoring of investments. Reward/sanction mechanisms for Southern regions targeting intermediate objectives of institution building: Regional Policy 2000-2006. Reward/sanction mechanisms for Southern regions targeting final objectives of public service provision (i.e. administration capacity to satisfy citizens needs): Regional Policy 2007-2013.
Focus on: incentive schemes for sub-national capacity building Reward/sanction mechanisms for Southern regions: incentive schemes evolution Targeting intermediate objectives on institution building (the case of 2000-2006 regional policy in Italy) Targeting final objectives of public service provision (the case of 2007-2013 regional policy in Italy)
Difficulties in setting binding targets for policy objectives Policy objectives - whether intermediate or final ones - are difficult to be translated into quantitative and verifiable measures The causality link between policy actions and objectives is hard to be established, as numerous variables and actors affect results Criteria to select indicators and apply binding targets: Measurability Visibility Relevance for public actions Identification of the chain of responsibilities to attain objectives Cooperation with regional decision-makers in selecting indicators and defining targets
Targeting intermediate objectives on institution building: the case of 2000-2006 regional policy for the South System of financial rewards/sanctions for Southern Regions to spur modernisation of Public Administrations 4.6 billion euros were made conditional on the achievement, over a given period of time, of a set of targets representing goals in terms of capacity building and implementation of market reforms. Two Regions were sanctioned, losing about 60% of financial resources at stake (170 million euros).
Targeting intermediate objectives on institution building: examples of performance indicators and targets OBJECTIVE INDICATOR TARGETS Implementation of national legislation fostering the process of public administration reform Innovations to accelerate and improve spending effectiveness Implementation of sector reforms Delegation of managerial responsibilities to officials Set up and implementation of an internal control management unit Implementation of one -stop shops Implementation of Public Employment services Set up regional evaluation units (L.144/99) Development of information technology in the P.A. Preparation and approval of territorial and landscape programming documents Concession or management by a private public operator of integrated water services (L.36/94) Implementation for urban solid waste within optimal service areas Set up and operational performance of regional environmental agencies Adoption of the decree 29/93 and managers evaluation for the year 2002 Set up the internal control management unit At least 80% of the population had to be covered by one-stop shops and at least 90% of papers had to be processed on time At least 50% of the regional population covered by employment offices Set up evaluation units by April 2001, appointment of the director and experts by July 2001 Transmission of data regarding at least 60% of total expenditure Meet regional benchmarks of territorial landscape programming Approval of the concession or management by a private-public operator of water services Choice of management mode and its implementation within optimal service areas Appointment of the director of the agency and approval of management rules, resources and personnel
Targeting intermediate objectives on institution building: lessons Financial efficiency has increased and management capacity has improved Cooperation between central and regional governments has improved in a context of delayed administrative decentralisation However, two main limits: 1) Formal compliance with target values for indicators on capacity building tends not to be a sufficient condition for achievement of goals in terms of effectiveness of interventions (e.g. on provision and quality of public services). 2) General communication on policy objectives to the public was insufficient and therefore the impact of the system of indicators on accountability was inadequate. (Citizens expectations displayed some inertia in attributing responsibility for policy failure to sub-national governments)
Targeting final objectives of public service provision: the case of 2007-2013 regional policy The new incentive mechanism aims at: Increasing public support on policy long-term objectives Engaging citizens and increasing local administrations accountability Strengthening cooperation in a multilevel governance framework Explicit targets on provision and quality of essential services (whereby Southern Regions show persistent disparities with Northern Regions) Financial rewards for Southern Regions
Targeting final objectives of public service provision: scheme description 11 indicators on provision and quality of: Education Child and elderly care Water service Waste management Targets are set at minimum standard Financial incentive: 3 billion euros assigned to Southern Regions if quantified targets are met in 2013 Resources not assigned in 2013 to Regions that do not achieve the targets can be assigned to other better performing Regions.
Targeting final objectives of public service provision: selecting objectives and setting binding targets Objectives and targets are established together with regional governments (local consultation with municipalities and other local authorities) and social-economic partners Limited number of indicators to gain public attention and visibility Minimum acceptable level for all Southern Regions in 2013 (compliance with national or European legislation; filling the gap with the Centre-North or Italian average) The system takes into account different starting points (a share of resources is assigned in 2009 on the basis of improvements from the current situation)
Services Statistical indicator Target at 2013 Education Child and elderly care Urban waste managem ent Water sector Early school leavers Students with poor competency in reading Students with poor competency in mathematics Percentage of municipalities with child care Children in child care Share of old people beneficiary of home assistance Amount of urban waste landfilled Percentage of recycled urban waste Percentage of composted waste Percentage of water distributed Population served by waste water treatment plants Reducing the percentage from today s 26% to 10% Reducing the percentage from today s 35% to 20% Reducing the percentage from today s 47% to 21% Increasing the percentage from today s 21% to 35% Increasing the percentage from today s 4% to 12% Increasing the percentage from today s 2% to 4% Reducing the amount from today s 395 kg per head to 230 kg per head Increasing the percentage from today s 9% to 40% Increasing the percentage from today s 3% to 20% Increasing the percentage from today s 63% to 75% Increasing the percentage from today s 56% to 64%
% Early school leavers (%) 30,0 Not only provision but also quality of service 25,0 20,0 15,0 10,0 5,0 0,0 Target agreed at European level for year 2010 (Lisbon strategy) = max 10% 2004 2005 2006 Centre-North Percentage of students (aged 15) with poor competency in mathematics, 2003 50 South 45 40 47,5 35 % 30 25 20 15 OECD countries, year 2003 = 21,4% 19,3 10 5 0 Centre-North South
Emilia - Romagna Valle d'aosta Toscana Marche Liguria Lombardia Umbria Piemonte Trentino-AA Veneto Sardegna Friuli - VG Lazio Abruzzo Sicilia Basilicata Puglia Molise Calabria Campania (%) Child care provision (% of population 0-3 years covered) - 2004 30 25 20 15 Italy = 12% 10 Targets 5 ambitious but achievable 0 Centre-North South
Targeting final objectives of public service provision: tools to support delivery of results Political commitment and clear identification of responsibilities in a multi-level governance framework Political commitment is stated in a formal agreement signed by Regional Governors and Ministers Responsibilities at all levels of government are identified (incentive schemes can also be implemented at local level) Participated decision-making Long process to gather information from different stakeholders, while building consensus on the necessary reform changes Strong engagement to citizens Mechanism transparency (indicators and rules are public); information on progress always available throughout scheme implementation (Websites) Spur democratic control and feedback on policy actions
Thank You for your attention! For further information: www.dps.tesoro.it Flavia Terribile Ministry of Economic Development - Italy Department for Development Policies Global Forum on Governance, Rio de Janeiro, Brazil, 22-23 October