Abstract
Portugal is working on the reform of its local government. Although amalgamation was one of the recommended strategies, as a consequence of the European Union/International Monetary Fund bailout process, an alternative approach has been suggested. This reform is mostly a development of inter-municipal cooperation mechanisms combined with partial devolution strategies. However, as the bailout agreement was its main catalyst, the urgency to cut public administration costs required in the memorandum and the imposed deadlines gave a perverse incentive for central government to produce ad hoc and fragmented modifications. I argue that these political and economical demands, which sanctioned the argument for rushed measures, together with the country’s strong local identities, historical municipalism, political centralism and the political costs of significant territorial changes, can explain the absence of a comprehensible reform strategy and the singularities of its policies. This article explores the framework that justifies the reform and assesses the impacts of the bailout agreement.
Introduction
Portugal was urged to reform its local government. The government’s Green Paper on Local Administration Reform set a number of challenges that needed to be accomplished in 2012. Although amalgamation was one of the recommended strategies, as a consequence of the European Union/International Monetary Fund (EU/IMF) bailout process, Portuguese government and local authorities are suggesting an alternative approach. Portuguese reform will not include municipal amalgamations, and it is mostly a development of inter-municipal cooperation mechanisms combined with partial devolution strategies. It will allow the competencies widening of Inter-municipal Communities (IMCs), based on voluntary agreements between municipalities.
This article aims at presenting the drivers and the tensions within the process of reorganisation that is taking place and explores two perspectives: the framework that would justify the recommended strategy, given local government’s scale problems in Portugal; and the arguments that support the sceneries established by the Green Paper. For that reason, it examines this effort to tackle a conflict between public policy efficiency and local identity. It is organised in three main sections: it starts by presenting the reasons for local government’s reform, then analyses its programme and, finally, presents the arguments that explain the singularities of the suggested reform policy, namely local identities and historical municipalism, Portuguese political centralism and the political costs of significant territorial changes.
Trends of local governance reform
The conception that local governments are increasingly facing added pressures is not novel. Such pressures are multifold, ranging from the increasing scale of production of public services to meet the standards claimed by the public, particularly when faced with growing economic pressures (Haveri and Airaksinen, 2007; Hulst and Van Montfort, 2007); to socio-demographic changes – as some communities face an overall increase in population, which can create pressures for increased effectiveness, others face the declining of population, necessarily reducing the demand for certain services and making it more difficult for local governments to maintain an adequate level of services at a reasonable cost; to the ‘externalities of local policy-making’ that impel local governments to deal with the consequences of their neighbour decision-making; the increased role of markets in the provision of services (Hulst and Van Montfort, 2007).
The European context can also pose added pressures on local governments, by redefining the procedures related to the decision-making and management of European structural funds and vigorously embracing the ideas of partnerships as its own core principles (Ansell, 2000; Hulst and Van Montfort, 2007; Piattoni, 2009). This is partially due to EU complex mechanism to fund regional development programmes. Besides imposing a specific policy framework on the member states managing authorities that distribute the Structural Funds, EU regulations and policy documents force local authorities to follow new procedures – particularly concerned with considering regional policy as an innovation-oriented or regionally initiated development – and to meet new standards in a set of policy areas, which require new expertise and problem-solving capacity. As a result, the European financial framework for 2007–2013 has put an emphasis not only on actor and territorial networks, but has also encouraged inter-institutional partnerships. In this sense, EU cohesion policy has been imposing a multi-level mode of governance that challenges the centralist traditions of many European countries (Bachtler and McMaster, 2008; Bruszt, 2008; Dąbrowski, 2011; Zerbinati, 2012).
The prevailing narrative has, thus, become one of a redefinition of local government, as they are now operating on a scale that exceeds their territorial dimension. Several strategies have been used to cope with these new dilemmas: territorial amalgamations; involving private actors in the provision of services; transferring responsibilities to upper levels of government; and engaging in the joint provision of public services through inter-municipal cooperation (Hulst et al., 2009; Hulst and Van Montfort, 2007). Regardless of the strategies used to cope with issues of scale and rising pressures on local governments, it has been widely accepted that they allow municipalities to combine and coordinate resources and amenities, thus promoting greater effectiveness – more services and better delivery at a lower cost (Fageda and Bel, 2008; Kersting and Vetter, 2003). These are also considered to provide better opportunities to combine knowledge and abilities; manage interdependencies more effectively; combine operations for economies of scale; attract more resources; and address complex problems (Sorrentino and Simonetta, 2011).
Such a redefinition has been conceptualised as a movement towards local governance (Andrew and Goldsmith, 1998; Stoker, 2004), marked by a plethora of public and private bodies and the complexity of policy networks both horizontally and vertically. An important, albeit relatively unexplored dimension of local governance pertains to the challenges in making the resulting denser institutional fabric work effectively. Partly, it is a question of decision-making efficiency, in a context where the achievement of the goals of each individual actor requires mutual adjustment, as different actors can bring their own perceptions on the local problems and preferable solutions and strategies resulting in greater complexity of negotiation processes between different actors, whose resources are necessary for a joint undertaking (Teisman and Klijn, 2002).
The reform of local government is not a new phenomenon and has been on the European political agenda since the 1960s. Kersting and Vetter (2003: 11–26) suggest that these reforms took under consideration two main principles: (1) an enhancement of local democracy and autonomy and (2) an improvement of local public policy efficiency. These objectives resulted in a variety of models in different countries. However, all tried to convey more competencies for local authorities and higher levels of political and fiscal autonomy. The same authors suggest that these reforms are always shaped in normative approaches from decision makers, which explains variations between countries regarding motivations, design and implementation. Nevertheless, one of the most common features of local government reform throughout Europe has been the debate about its optimal size (De Ceuninck et al., 2010) and the concerns about the consequences on democracy effectiveness and local identity, and on system capacity and public policy efficiency (Schaap et al., 2010).
Amalgamation policies, one of the most common strategies (De Ceuninck et al., 2010), were initially suggested and justified as ways of answering to governance and scale challenges, but met with some kind of scepticism over the years regarding their success in achieving such objectives (Copus, 2006). Furthermore, it is still rather difficult to demonstrate the correlation between policy efficiency and larger territories. Keating (1995: 117) suggests that municipal size depends significantly on local identity and intrinsic and differentiated characteristics, which makes it impossible to determine optimal-scale dimensions.
The success of amalgamation policies and its limitations are identified by Game (2009) when, using the United Kingdom’s ‘exaggerated in size’ example, the author explains how it undermined even the notion of ‘local’ government. Nevertheless, relevant reforms occurred and suggest that such policy efficiency can only be assured if territorial amalgamation is accompanied by significant devolution strategies and by the enhancement of local governments’ autonomy.
There are some common trends in these local governance reforms: (1) decentralisation and/or devolution through the transfer of competencies from central to local authorities; (2) the reinforcement of local government institutions, with new mechanisms of accountability and enhancing democratic and civic engagement processes; and (3) the improvement of public administration’s efficiency.
Is there a need for reform in Portugal?
Centralisation
The degree of centralisation in Portugal – one of the most centralised countries in Europe – is often quoted as a reason for engaging in local government reform. If one takes into account the number of local public servants, local taxes and public spending, all these values represent, approximately, 15% of their national totals. This disproportion – shifting power balance to central government – finds no parallel in Europe.
Although Portuguese governance is apparently simple to understand, as it has only two formal levels of governance (national and local), its complex legal framework makes it hard to manage. At the local level, each one of the 308 municipalities is divided into civil parishes (freguesias) with their own elected bodies, but with few competences. Regional coordination commissions, and regional departments, appointed by the government, establish a quasi-regional governance level, although its competences stick mainly to some few areas of national governance, for decentralised coordination.
The degree of decentralisation can be measured in several different ways; however, one of the most relevant tools is to ask for the share of government expenditures that is spent by local government. This ranges from 12% in Portugal to the Canadian’s highest value of 60%, accordingly to the IMF Government Finance Statistics Yearbook. The same source reveals that, even if we distinguish between federal and unitary countries, since the former show, as expected, higher decentralisation ratios, non-federal Scandinavian countries show significantly high degrees of public spending decentralisation, closer to the 50% ratio, and still keeping Portugal at a remote and isolated position at the bottom of this rank. Although over time these figures have changed, decentralisation ratios in Portugal do not fluctuate remarkably and have remained at similar levels. In fact, as Magone (2011) emphasises, ‘although the local authorities have gained many competences in the past thirty-five years, their financial means are not extensive’ (p. 395). Eurostat data from 2010 confirms that the Portuguese public expenditure at the local level (10% of the national expenditure) represents approximately 6% of the gross domestic product (GDP), which is one of the lowest figures in the EU.
Diversity and scale
Although stable in borders, which might represent an advantage when focusing on the relevance of community ties, Portuguese municipalities present huge differences. Their dimension, population and socio-economic characterisation are extremely diverse (Table 1). First of all, almost 85% of the municipalities have less than 50,000 inhabitants (35% even less than 10,000 inhabitants), and the total population ranges from almost 2000 inhabitants to more than half a million, with an area of only 8 to 1800 km2. As a consequence, the number of inhabitants per km2 ranges from 5 to 7400. The number of freguesias (civil parishes) by municipality goes from 1 to 89, increasing the complexity of intra-municipality governance interactions with other levels of government. Area and population constitute one of the main differences between municipalities, with significant consequences for the calculus of national funds transfers.
Scale and diversity in Portuguese municipalities.
Data: from INE – Statistics Portugal (census 2011 preliminary data), DGAL and ANMP (Portuguese Municipalities National Association).
All data from 2011, except buildings density, illiteracy rate and mobility (2006).
Proportion of resident population that works or studies in another municipality.
The municipalities from the archipelagos of Azores and Madeira were not included due to their particular geographic constraints.
Also the socio-economic indicators reveal dissimilarities. Unemployment rates ranges from 2.8% to 24.6%. The variation ratio of resident population (2001 to 2011) goes from a decreasing 23.2% to an increasing 41.2%. The mean age of resident population ranges from 30.28 to 52.71. The illiteracy rate goes from 3.75% to 32.1%. The mobility between municipalities (identified as the proportion of resident population that works or studies in other municipality) ranges from 6.12% to 64.11%.
The challenges of contemporary governance at the local level are emphasised when ‘scale problems’ are considered. In fact, all the differences between formal government structures and governance arrangements are amplified when we look at the territorial aspects of communities and their social ties.
If this municipality diversity is taken into account, then an adequate response is demanded when designing an effective territorial arrangement at the local level.
Overarching local governance issues
Multi-level and networked governance in Portugal is pushing forward municipalities to a more decentralised administration, reshaping institutional procedures and searching for more effective and efficient public services. This paradigm shift has been accentuated through a gradual delegation of competences over the past few years. Furthermore, the shift from government to governance (John, 2001) requires an adequate municipal arrangement, taking into account the formal and informal mechanisms of coordination and interaction between public and private institutions (Pierre, 2000).
Local governance comprises a complex set of arrangements of services and responses to local life, from public delivery organisations to private sector institutions, which might go beyond local boundaries. This sets one first challenge for local governance: the control over the complex network. Another consequence is that the ‘local link’ between leaders, politicians or elected bodies and the community might be weakened, therefore undermining accountability. Actually, those responsible for steering the governance arrangement and managing public organisations might be unperceivable for citizens, raising a second problem: discouragement of proximity. This encompasses also questions about responsibility, representation and accountability. A third consequence is the predictable organisational fragmentation: a multitude of organisations manage and control different aspects of public life, each with different scales and overlapping territories of operation. The increasing networks of collaboration deal with spatial and functional activities that extend beyond each others’ borders, and require new competences. The management of some services is being organised at more local levels – for example, neighbourhoods – while other services are being overridden by a more centralised answer – at the regional or national level. A fourth consequence is the multi-territorialisation of identity. Questioning administrative territories and traditional government’s borders is the result of all of the above. Communities override each other in different aspects of public affairs, since social ties, individual interests, particular identities, professional and personal lives do not confine themselves to a particular territory. This goes beyond the more immediate problems of public policy administration. As the institutions have a particular impact on the pattern of attachments to and from places, and on social capital formation, there is a considerable chance of creating an unwanted confusing citizenry with countervailing consequences regarding civic engagement and policy efficacy.
The local government sector in Portugal has made relevant progress in recent years, particularly in providing more transparent and responsive public services. However, one of its main challenges is still to improve performance within the constraint of the staffing and financial resources. This search for efficiency and flexibility and the attempt to develop new policy mechanisms encouraged in recent years the sharing of resources between local authorities and the private sector, namely through an uncontrolled growth of public–private partnerships.
Although limited in action, but still able to react to this shift to governance, Portuguese municipalities were adapting and adjusting to new forms of governance. There has been an accelerated growth of the local corporate public sector – approximately 85% of the municipalities invested in public and private corporations. This attempt to establish public–private partnerships to improve municipal management, and developing new forms of governance, only became possible after the Municipal, Inter-municipal and Regional Corporations Act of 1998. Yet, significant budget deficits and the – often unmanageable – critical public debt of more than two thirds of the municipalities allowed for public and political acceptance of the severe measures agreed with the IMF/EU. These included the need for a significant reform of local government and a reduction of the transfers from the national budget.
In order to maximise efficiency gains, local authorities have been under incentives to modernise (Orr and Vince, 2009: 670), to share services and back office functions with private and public organisations, and to improve the rationalisation of organisational structures.
The outcome of these incentives also forms part of the overall justification for a reform process. However, in this context, those political parties in Portugal with more seats in local government and local political leaders have also claimed the need to underline and recognise that local authorities are more than instruments of service delivery. As democratically elected bodies and expressing the priorities of local communities, local government’s decision-making mechanisms, political institutions and election systems should not be excluded from the reform debate.
This context anticipated the need for a change in municipal borders, its scope and scale, demanding for alternative institutional designs. Particularly during 2011, the demand to deal with these challenges was accelerated by the IMF/EU bailout agreement.
Political and economic context
Portugal asked for financial assistance in April 2011 from the IMF/European Central Bank (ECB)/EU troika, and its results were set out in an Economic Adjustment Programme. This programme and the corresponding Memorandum of Understanding contain several obligations related to local authorities with direct or indirect impact on local government affairs. The obligations towards an ambitious deficit reduction forced central government to make important spending and revenue cuts and territorial and administrative reforms of relevance to the local level.
The key commitments were the (1) reshaping of the administrative map reducing the number of local government units, the (2) reduction of the state grants to municipalities, a (3) reduction of the municipality staff by 2% in 2012 and 2013, and the (4) decrease of the local debt limit. Furthermore, it included new rules to be implemented with respect to municipal-owned enterprises, fiscal measures with consequences for local budgets and new mechanisms of risk management control, reporting and monitoring.
After the negotiations on the international assistance package, the government in office (Socialist Party) submitted its resignation and, after the June 2011 elections, a coalition between the Social Democratic Party and the Popular Party gained 132 out of the 230 seats in Parliament. The new government regarded the bailout agreement as an opportunity to achieve major reforms, including organising local government and merging civil parishes (freguesias). This government updated the programme in December 2011 with a ‘Letter of intent’ that committed to the ‘enhancement of fiscal responsibility and transparency’, to ‘prepare a document setting out the key elements of the reform’, and to an assessment and restructuring plan for local State Owned Enterprises.
The agreement with the troika called for wide-ranging reform at the local level: a necessity recognised for a long time but always delayed. It was the catalyst of a reform that the country’s degree of centralisation, its scale problems, local governance contemporary challenges and previous European examples were already suggesting.
The reform programme
The government’s ‘Green Paper for Local Administration Reform’ was approved in October 2011 and provided the framework for the 2012 local government reform. Although the initial content of the bailout agreement clearly suggested the need for a profound territorial reform, namely with a relevant number of municipal amalgamations, this policy paper recommended a slightly different path. The historical roots of municipalism in Portugal, its stability of borders and the non-existing previous policy of amalgamation, or any alternatives, generated popular concern regarding the possibility of undesired and imposed amalgamations, and urged for different solutions.
The government indicated in the Green Paper what the reform would cover: (1) the local business sector; (2) territorial organisation; (3) municipal and inter-municipal management and funding; and (4) local democracy. This general guide for the required legal acts, although with no legally binding effect in itself, implicitly suggested obvious consequences for the exercise of local authorities’ powers. Its political nature gave the opportunity to open the national debate regarding the reform, although with a very limited time frame. It was possible for the local authorities’ associations to discuss and intervene with respect to different aspects of the paper.
The Green Paper sets out the key guidelines for the further development of local authorities’ responsibilities and different types of inter-municipal cooperation, and also for the functioning of the country’s governance arrangements: (a) the implementation of the principles of devolution and subsidiarity; (b) focusing on improvement of national cohesion and the promotion of interregional solidarity; (c) giving priority to the efficiency of public management; (d) with an appropriate balance between the devolution of powers and the necessary funding mechanisms; (e) improving the transparency of the local government management system; (f) recording best practices at local level; and (g) strengthening citizenship through civil society monitoring of the action and the exercise of local government, encouraging the creation of resources and mechanisms for greater and easier access to public information.
The expected results are presented as follows: (a) a redefinition of powers, promoting the enhancement of the performance of IMCs and metropolitan areas; (b) differentiation and coordination of powers and responsibilities between parishes, municipalities, and IMCs; (c) reinforcing the legitimacy and democratic supervision of IMCs and metropolitan areas; (d) regulating inter-municipal associations, avoiding duplication and generating savings in the use of resources; and (e) reviewing the funding of local authorities in order to assure financial sustainability and a new paradigm of own resources.
Facing centralisation: central–local relations
Although the Green Paper sets wide-ranging guidelines and principles, the main challenge for the reform of local government in Portugal is to be found in the strong centralised tradition of the country and in the reluctance to test new approaches to distributing powers and responsibilities between central and local administrations. Self-government bodies at the local level should have the capacity to govern a substantial share of public affairs in the interests of the local population with the concomitant resources. However, two – apparently contradictory – mechanisms are being put forward as consequence of the government’s reform strategy: an increase of the central supervision and control tools over local authorities’ activities and, at the same time, a relevant (but still undefined) plan of power devolution to intermediate governance arrangements, namely at the inter-municipal level.
In general terms, central government’s administrative supervision over local authorities in Portugal is restricted to the control of the legality of their activities and therefore aims only at ensuring compliance. However, one cannot consider self-government and autonomy to be the result of such general assumption. State grants provide a good example of centralisation as they play a key role in financing local government in Portugal (these transfers total up to about 60% local revenue), with limited impact of local finances on the state fiscal system (approximately 10%). Municipalities have other sources of income (services charges and municipal assets revenue), but this non-fiscal income has only a small impact and represents approximately 12% of municipal revenues. Furthermore, revenue trends (2005–2011) show a significant increase in central government revenue, but only a slight increase in local funding. Although article 254 of the Portuguese Constitution guarantees the right of municipalities to have tax revenues of their own, local authorities have no legislative power to create new taxes.
Another relevant measure of centralisation results from the unbalanced distribution of political powers and competencies. Since the advent of democratic and of independent local government in 1974, most local authorities’ competencies derive from decentralisation and state–local contract agreements, rather than devolution mechanisms.
The Adjustment Programme for Portugal and its commitments with respect to the reform of public administration put forward relevant changes in the relations between central and local government bodies. The demand to reorganise the interconnections between these levels, the need to increase efficiency of public services at local level and the enlargement of the supervising powers of state administration will certainly produce effects on the autonomy of these government bodies.
The principles set by the Green Paper would suggest the devolution of competences to local government, including the opportunity to organise and develop local interests in a supra-municipal perspective, with mutual economies of scale. It seeks to provide for public service delivery that meets the growing demands of the local communities at the lowest costs possible, strengthening the capacity to cope with the increasingly complex environment, and at the same time leaving the policy domain of local government intact. In fact, it suggested no permanent transfer or loss power or competencies, preventing local democracy from being hollowed out.
However, the legal framework being actually produced and the incentives being given only suggest an intention to strengthen metropolitan areas and inter-municipal associations. Even though it is still not clear if and to what extent the balance will be altered, two recent ‘pilot studies’ commissioned by the government provided results on how to distribute responsibilities between the different levels of government.
The future rearrangement scenarios provided convey also the same contradictory aspects: they suggest a mix of centralisation and devolution. In fact, there are more competencies that seem to be possible to transfer from the municipal level to the IMCs, than from central government to these communities.
When facing the centralisation challenge in Portugal, the projected reform seems to be following a path of (1) central supervision and control reinforcement, (2) transfer of competencies from municipalities do IMCs, (3) a fewer number of decentralised competencies from central administration to IMCs, and – until now – (4) no expected devolution from central government to municipalities.
Facing scale: territory and governance
Two major changes are expected to occur within the scope of territorial and administrative reform. First of all, and regarding one of the most important objectives, the government has presented a draft Law 44/XII, which modifies the civil parishes’ demographical criteria with a stronger differentiation between urban and rural areas, and which expects to reduce its total number by half. It is now clear that the Portuguese reform does not intend to increase the efficiency of local administration by means of merging municipalities, but by reducing the number of freguesias. There are more than 4251 civil parishes in Portugal with an upward trend and their structures present several structural imbalances: with weak administrative powers, uneven in terms of registered voters (ranging from 39 to 57,000 voters), limited and completely dependent on the municipality in financial revenue.
The second change regards the functions of IMCs and metropolitan areas. As explained in the previous section of this article, both the principles behind the government’s reform strategy and the results from two pilot studies provide significant evidence that changes will occur within the balance of competencies and power distribution between state, IMCs and local authorities.
The main policy set by this reform to tackle with scale challenges is the enhancement of IMCs’ responsibilities, resources and political deliberative powers. The government is now changing the existing legal framework. According to the Secretary of State for Local Administration, there is the will to respect local autonomy, but reforms are being implemented maintaining the balance between state and local interests in the governance architecture. Although some of the restrictive government measures can be a threat to local autonomy, these are often politically justified as a consequence of the troika programme.
Portuguese reform singularities
It is now clear that the Portuguese reform does not intend to increase the efficiency of local administration by means of merging municipalities. This is understandable because the Portuguese municipalities are already fairly large in terms of population in comparison with other European countries. In fact, as a way to deal with scale challenges without altering ‘municipal territorial maps’, Portuguese reform will follow two simultaneous paths: (1) the amalgamation of small government units and (2) inter-municipal cooperation together with devolution of competencies.
In an article that tries to conceptually promote the evaluation of institutional reform policies, Sabine Kuhlmann and Hellmut Wollmann suggest two types of reforms: vertical institutional reforms and horizontal territorial-organisational reforms (Kuhlmann and Wollmann, 2011: 486). Within this framework, the Portuguese reform presents itself as a singularity: it tries to convey a double-faced strategy. It conveys to some extent a political devolution of public functions and responsibilities to meso-level institutions (vertical reform) and, at the same time, it pursues a territorial reorganisation through the amalgamation of parishes and enhancing inter-municipal cooperation mechanisms (horizontal reform).
A redistribution of responsibilities between central and regional levels of government was a possible strategy. However, the rise of this meso-government arrangement in Portugal has meant above all the strengthening of intermediate levels of government through the attribution of competencies for planning and coordination to regional agencies of non-elected bodies. There are no further plans to make changes in the structures of administrative regions. Existing structures (Madeira and Azores regional governments) shall be strengthened, but as a result of the negative outcome of the 1998 referendum no ‘administrative regions’ will be set up. This means that only two tiers will continue to operate on mainland Portugal.
The evident tension between the multi-tier hierarchical model of government, which would fit into the rationale of this reform programme, and the complexity of multi-scalar intersectoral governance, which would be expectable given the new challenges faced by local governments in Portugal (cf. Silva and Syrett, 2006), are not properly addressed in this process. These tensions would require further analysis and eventually a whole new approach to the Portuguese sub-national governance. However, the reform drivers do not draw attention to it. Essentially, the urgency and the cost cuts approach tend to put pressure on administrative adjustments and functional reallocation between current tiers of government, avoiding further and more complex changes.
The territorial reform involving the amalgamation of municipalities into larger administrative units of local government did not – and apparently will not – take place, and have met with strong resistance. Despite the very small scale of a significant part of Portuguese municipalities, its number has been somewhat stable over more than a century, and the efforts to promote amalgamation only occurred during the 19th century. Identity sets in this case a strong societal base (Stoker, 2011) for Portuguese local government. In fact, although suggested after the bailout agreement, these amalgamations will only take place at the civil parishes’ level and, eventually, in some few municipal cases, if and where the population voluntarily commit to it.
Nevertheless, the reform of the territorial map has been a key element of the programme since the reduction of civil parishes was implemented. However, further thought should be given to the substance of the reform, in particular concerning the criteria on which this reduction would be based, since civil parishes reflect the value of proximity and democratic accountability. Furthermore, a simple merging of these units may not have the desired effects, due to their few responsibilities in comparison with municipalities and the almost insignificant budgetary impact of their political and administrative bodies.
Considering the extent of this restructuring, significant consultation with the associations of local authorities would have been advisable. This would require time to implement, test, monitor and assess policies. However, even though the Green Paper suggested the existence of such an approach, it did not happen. This is one of the relevant shortcomings of the reform process, and led the Civil Parishes’ Association to consider this a top-down imposed reform that was attempted against self-established local government structures and local democracy, in conflict with the subsidiarity principle, and promoting identity conflicts between amalgamated civil parishes. By not involving local communities and their representatives in the reform process, it contributed to reinforce disengagement and protest. The public debate in Portugal was inevitably dominated by this theme, and it deviated public attention from other relevant reform issues. Important political capital was spent on explaining the advantages and disadvantages of civil parish amalgamation and it transformed the Green Paper resolutions, with high and broader impact, in short and specific policies regarding this level of governance.
Furthermore, the recent local elections in Portugal – September 2013 – the first ones after this amalgamation, created the opportunity to include in the local political agenda the protest against political parties in government, and against amalgamation itself. One of its consequences was public protest on the election day and even two electoral boycotts.
Regarding inter-municipal cooperation, it may be the result of the fact that the existing governance mechanisms were not able to cope with the challenges and interdependencies of scale. It seeks to combine two of the values deeply embedded in the government systems of many European countries: local self-government and rational governance. Therefore, legal instruments have been designed to facilitate the transfer of responsibilities to a joint body and financial incentives have been created to induce local government to cooperate. It seems that, in the Portuguese reform, this might constitute an answer to the costs and hazards of following other strategies.
Inter-municipal cooperation presents some obvious advantages. Both territorial reorganisations and the centralisation of local tasks to upper level government imply more far-reaching adjustments in the administrative organisation. In fact, there are costs and benefits to any particular model of aggregation. However, in most cases the benefits of aggregation are typically assessed in economic terms, while many of the costs of aggregation are naturally considered in more qualitative terms. The common difficulties experienced with aggregation are that costs tend to be underestimated and benefits tend to be overestimated. Another problem results from the fact that what is considered the optimal size for a given government will vary over time and place, and is dependent upon the functions and services within its set of responsibilities. Also, when aggregating government bodies, the nature of the relationship between the government and the people it serves changes. As such, aggregation always involves fundamental issues of democracy and proximity. On the other hand, it is relatively easy to involve a larger number of municipalities in the cooperative arrangement, or to extend cooperation to other public and private agents. Inter-municipal cooperation may well prove more capable of dealing with the paradigm shift from government to governance. To a certain extent cooperation implies a new tier of decision-making and of policy implementation, and it does not imply a significant loss of municipal autonomy.
As the Portuguese reform does not present a single clear path and political option, the question about the choice between inter-municipal cooperation and amalgamation still makes sense. Both amalgamation and cooperation depend on scale, competencies, level of political and fiscal autonomy, demography, geography, local economy and the structure of political and territorial administrations. None is an easy solution, nor does it give any guarantee of success.
They are possible answers to the same problems, but not just alternative choices. Both are justified (and justifiable) in Portugal, given the economical constraints, and are undertaken in the name of economic rationality. However these incentives tend to overestimate the financial (measurable) impacts and to take too lightly its democratic and self-government impacts and downfalls. Both strategies create a difficult political problem, since there is never an easy political consensus around these issues, particularly when the parliament majorities (both the parties supporting the government and the biggest opposition party) are highly dependent on their local members and, at the same time, are – historically – the ones with most seats at the local level. To produce significant changes, particularly in a country where municipal borders represent long-term unaltered territorial identities, would (and, in certain cases, already is) inflame popular resentment against these parties.
The coexistence of these two strategies – small units’ amalgamation and inter-municipal cooperation – might, also, disclose the national political culture that does not allow for radical reforms of the administrative system, mainly as a result of its stable municipal borders and long-lasting communities’ sense of belonging.
If the general objective is to create a more efficient local public administration, to satisfy public needs at the best cost with transparency and with the proper accountability mechanisms, inter-municipal cooperation mechanisms accompanied with more competencies to the new governing bodies may be, then, an acceptable compromise.
Conclusion
Portuguese local authorities are still working on the basis of a political and administrative system that resulted from the country’s transition to democracy in the 1970s. Neither the public administration nor the local authorities could afford not to change and to keep up with the new needs. The nature of change in Portugal – a country that faces challenges which are different to those of two decades ago – also requires a local government system that can adapt and respond to challenges, which include a more diverse, ageing and mobile population; the need to achieve greater regional balance in a country highly dependent on the European market; a highly unequal population in terms of household income with an ongoing focus on overcoming social exclusion; the need to manage urban development, ensuring regional coherence; facing the problem of rural desertification; and at the same time with public services able to meet the expectations of a highly educated, more environmentally conscious and more questioning public, while ensuring flexibility and cost efficiency.
Given the challenges set by a highly centralised country, with significant problems that result from the diversity of its local government scale, together with the complexities of contemporary governance, it is perfectly understandable that Portugal would – sooner or later – engage in a profound reform of its local government. However, this process was suddenly accelerated by the bailout agreement.
Portugal is engaged in a difficult reform process to restore the country’s access capacity to international financial markets. Central and local governments seem committed to take the necessary measures to fulfil the agreement that resulted from the Economic Adjustment Programme. It has various elements with direct and/or indirect effect on local government’s scope, territory, administration, organisation and finances. Its implementation includes a reform of politics, of management and of territory.
Considering the importance and extent of this restructuring, a coherent strategy, with significant consultation with the associations of local authorities, with time to implement, test, monitor and assess policies is (was) indispensable. Considerations of effectiveness and efficiency also mean that it must be innovative, well-targeted, flexible and responsive to the citizens. Unfortunately, even though the Green Paper suggested the existence of a strategy, there has been no such plan, but only case-to-case – often detached and non-articulated – legislative initiatives and, mostly, ex post information to local government elected bodies. This process shows several shortcomings and needs to be improved.
The above-mentioned Green Paper, if the suggested main policy framework is to be applied, reveals three relevant setbacks: (1) it still results from a heavily centralised approach, not allowing for a real bottom-up (self-government and autonomous) debate on new governance arrangements; (2) it leaves no room for diversity in organisational and governance models, in order to adjust them to local contexts; and (3) it forgets one of the central issues of local autonomy and policy-making: a deep and wide reform of the financing model of Portuguese municipalities, allowing for a higher degree of independence from national resources.
This will also require a rebalance of the country’s fiscal system, particularly in making it possible to improve local fiscal autonomy and give municipal authorities the opportunity to introduce new taxes with a local impact. The tax revenue structure of local authorities is characterised by a strong dependence on the yield of taxes linked to real estate and the construction sector. The whole model of local financing should be also analysed as to what extent revenues depend on particular economic activities and how to reduce these dependencies with a sufficiently diversified nature.
In the long term, the aim must be to increase the local share of revenue and expenditure in the total state revenue and expenditure. This will enhance local authorities’ accountability, their capacity to decide on local investments and thereby improve autonomy.
Local government in Portugal requires a more flexible adaptation programme, rationalising inter-municipal and metropolitan structures as a part of the improvement of the territorial competitiveness together with a stronger commitment to local (municipal) autonomy. The reform of local government must go beyond public debt concerns and public administration cost cuts. It needs to recognise proximity as a relevant determinant of identity and of sense of belonging, and the role of scale as significant to public policy effectiveness. It also asks for a careful analysis of the competencies of each level of government and its concomitant resources. Therefore, it needs to provide an integrated and articulate approach to the different dimensions of the challenge: territory, scale, identity, competencies, political and fiscal autonomy, democracy and accountability (Teles, 2012).
Local government’s reform is one of the highlights of the 2012 Portuguese political agenda. As the bailout agreement was its main catalyst, the urgency to cut public administration costs required in the memorandum and the imposed deadlines gave a perverse incentive for central government to produce ad hoc and fragmented modifications. These political and economical demands, which sanctioned the argument for rushed measures, together with the country’s strong local identities and historical municipalism, the Portuguese political centralism and the political costs of significant territorial changes, can explain the absence of a comprehensible reform strategy and the singularities of its policies. It also discloses a political culture that does not allow for radical reforms of the administrative system.
Local autonomy and self-government – although rhetorically presented as reform prerequisites – are excluded from the real debate and from current policy measures. The result is a mix of new centralisation mechanisms and of partial devolution through inter-municipal cooperation.