REFORM CAPACITY

Institutional reform is an ongoing process, with frequent reorganizations to improve strategic capacity, including changes in ministerial boundaries and portfolios. A notable reorganization was to merge labor policy and social security policy into a single ministry. Another example was the creation of a department of ownership within the Ministry of Trade and Industry to gather all state ownership of firms (including ownership of fully owned state firms and partially owned firms alike) under a single unit. In the past this ownership had been scattered across various ministries.

In addition to the reassessment of the agency system as a whole, there has also been institutional reforms to enhance the strategic capacity of the Central Government Office by reorganizing the group of so-called staff agencies (primarily the agencies for public management reform [Statskontoret] and financial management [Ekonomistyrningsverket]). In this context, it is also important to note the reform currently underway inside the CGO (“RK-styr”) which seeks to enhance coordination among line ministries in order to make steering and control of the agencies more effective.

Although noteworthy changes in institutional arrangements in 2009-2010 have not been implemented, other recent re-arrangements certainly confirm the willingness and capacity of government to initiate institutional reform. The Ministry of Labor was merged as from January 2008 with the Ministry of Trade and Industry to form a new so-called super-ministry (Ministry of Employment and the Economy); in the same reform, regional development issues were transferred from the Ministry of the Interior to the super-ministry. Also, the financial monitoring and planning power of the Ministry of Finance was expanded as economic, administrative and information issues concerning municipal and regional governance were included in its jurisdiction. Sometimes government attempts to change institutional arrangements have met with failure: a proposal that the administration of copyright policies should be transferred from the Ministry of Education and Culture to the super-ministry gave cause to protests from copyright stakeholders, resulting in the copyright issues remaining within the jurisdiction of the Ministry of Education and Culture.

In general, institutional reforms aimed at improving the management capacities of the government are extremely rare in Germany. One exception is the 2006 federalism reform, which clarified the relationship and division of competences between the various levels of government. It contributed to the streamlining of the processes by, inter alia, abolishing the “framework legislation,” a type of federal legislative device that had allowed the states substantial discretion in implementation. It also relocated a number of previously overlapping competences either to the federal or state level and reduced the scope for political roadblocks by reducing the number of laws requiring the consent of the Bundesrat. Between September 2006 and June 2010, 39.6% of laws required the consent of the Bundesrat, compared to 53% before the reform. The number of cases in which the mediation committee between the Bundestag and the Bundesrat had to take action went down from 11.8% between 1998 and 2002 and 22.9% between 2002 and 2005 to 3.2% between 2006 and 2009.
To address challenges posed by the financial crisis and other structural problems, a constitutional debt limit was introduced as part of the 2009 federalism reform, restricting the federal government’s cyclically adjusted budget deficit to a maximum of 0.35% of GDP from 2016 on, and requiring balanced cyclically adjusted budgets for the states from 2020 onward.

Major adaptations to the new system of multiparty system and coalition government occurred in the late 1990s. An effective framework is currently in place with the cabinet manual. Cabinet office circulars are used for minor changes. Particularly after the government change of 2008, a number of such modifications were made.

Flexibility in the organization of the core executive and the ministries is very much at the heart of British prime ministerial government. Under Prime Minister Blair, a clear trend towards more centralization of decision-making and the strengthening of the institutional capacity of the Prime Minister’s Office was discernible. The Policy Unit and the Private Office were merged into a new Policy Directorate, a decision that was reversed after Prime Minister Gordon Brown took office.
However, the Strategy Unit, originally established in 2001 to work on long-term policies, continues to exist, although staffing in the unit was shifted in order to bring in confidantes of the new prime minister.

Cabinet collective responsibility remains important, but it is difficult to judge whether the periodic changes in government structures reduce or increase strategic capacity.

For the most part, recommendations made by reviews of government have been accepted and implemented. These investigations have covered all aspects of government responsibility including, finance, taxation, social welfare, defense, security and the environment. There have been frequent structural changes made to the main Commonwealth government departments, sometimes to respond to changing demands and responsibilities, but sometimes these changes are made simply for political purposes that serve no strategic purpose, and may indeed be strategically detrimental. For example, the main department that is responsible for health has changed its name at least five times in the past two decades in response to changes made in its responsibilities.

There is little evidence that changes in institutional arrangements have significantly improved the strategic capacity of Canada’s federal government to govern. It may possibly have helped on the margin. For example, a major organizational change in the 2000s was the establishment of Service Canada as a delivery platform for government services. There has been no comprehensive evaluation of this reform. In 2008, the Policy Research Initiative, a unit for policy research and potentially for strategic policy formulation that had reported to the PCO, was reorganized and placed instead under Human Resources and Skills Development Canada, which is not a central agency.

When the first government under Prime Minister Anders Fogh Rasmussen came to power in 2001, it abolished some ministries and merged others, and there were various internal reorganizations. Rasmussen also closed a number of councils and committees (råd og nævn). In his New Year’s speech he criticized so-called judges of taste (smagsdommere), or experts he felt had too much influence. The government’s first reform program was entitled “With the citizens at the helm” (Med borgeren ved roret). A number of reform plans were introduced in the following years.
In 2009, Lars Løkke Rasmussen took over as prime minister from Anders Fogh Rasmussen, who then went on to become NATO Secretary General. He inherited Denmark’s National Reform Program of October 2008. Another program, Denmark’s Convergence Program 2009, set a number of goals to be reached by 2015. After this followed the plan, “Denmark 2020: Knowledge>Growth>Prosperity>Welfare.” in February 2010. In this the government announced 10 ambitious goals for 2020:
(1) Denmark is to be among the world’s wealthiest countries.
(2) The Danish supply of labor is to be among the tenth-highest in the world.
(3) Danish schoolchildren are to be among the cleverest in the world.
(4) At least one Danish university is to be listed among Europe’s top 10 universities.
(5) Denmark is to be among the 10-top countries in the world where people live the longest.
(6) Denmark is to be a green, sustainable society and among the world’s three most energy efficient countries.
(7) Denmark is to be listed among the best countries in creating equal opportunity for its citizens.
(8) Denmark is to be amongst the freest countries and among the best in Europe at achieving integration.
(9) Danes are to be among the world’s most trusting and safe people.
(10) The Danish public sector is to be among the most efficient and least bureaucratic in the world.
While a tax freeze will remain in place, taxes on cigarettes and alcohol will increase as well as the registration tax for cars. Since cars already cost two- to three-times what they cost in most countries, this may not help to attract foreign workers.
These goals are extremely ambitious, especially given the economic downturn caused by the global economic crisis. It is tempting to see a certain amount of wishful thinking in this. In 2000, the European Union announced ambitious goals for the European economy to become the most competitive in the world within a 10-year period, through the so-called Lisbon Strategy. These goals were not achieved. Will Denmark be able to go through the required reforms over the next 10 years? Will Danish society be able to integrate and attract foreigners to work? Will Danish universities be able to pay competitive salaries to attract and retain talent? Will the culture in Danish schools allow for more competition? A number of similar questions arise, yet only time can answer them.

The government is trying to strengthen its strategic capacity by changing and merging ministries. The government in office during the 2007 – 2009 period took some steps in this direction, and further mergers have been announced by the current government. At present, some ministries are too small, constituting a weak link within the state administration. The capacity of these small units to cope with complex and complicated issues such as international negotiations and contracts is questionable. Further, the informality of such small units is seen as a disadvantage. On these grounds, the government is pursuing its plan to merge ministries to form larger units. It is understood, however, that mergers by themselves are not enough to ensure better functioning. Coordination must take place in connection with such measures.

Governing institutions are periodically reorganized in the interest of greater efficiency or of bringing them up to date. The process of democratization rendered some longtime institutional arrangements anachronistic, and thus triggered substantial institutional reform efforts over the last decade. Most of these institutional changes have been for the better, although there have been mistakes. One of the challenges, for instance, has been the process of decentralization, which has led to increasing responsibilities for subnational entities that sometimes lack the capacity to cope with these additional duties.

Improvements in strategic capacity have been made by changing institutional arrangements (for example, with the reform of the Budget Office, Dirección del Presupuesto), but these efforts generally encounter very substantial bureaucratic resistance.

In 2008, the French constitution was substantially revised, one of the most encompassing constitutional reforms in 40 years. One of the main elements of the reform was a strengthening of parliament. For example, the government will not be able to control the parliamentary agenda alone anymore. In addition, the possibility for the people to initiate a referendum has been introduced. It is obviously too early to assess how these changes affect the strategic capacity of the government, however. On the one hand, it could be argued that these changes may actually reduce the government’s strategic capacity because it might have to make more compromises with parliament and potential initiators of referenda. On the other hand, this pressure of parliament and the public might also lead to a more long-term perspective in policy-making.
Apart from the constitutional reform, the government tries to improve its strategic capacity by changing institutional arrangements below the constitutional level. One example concerns the current reforms following the general assessment of public policies mentioned above. But very often, the government is obliged to use very unsophisticated tools, such as cutting jobs across the board without distinction between services and sectors, such as the decision to replace only one position out of two left by retiring civil servants, a policy which has been pursued since 2008.

The Ministry for Public Service and Administrative Reform created in 1995 is not among the most dynamic and effective departments, but has over time reached a modest but steady pace of reforms. The 2009 government program foresees a series of administrative reforms. One of the most ambitious, the general opening of the civil service to citizens of the European Union, with the exception of some positions relating to the exercise of national sovereignty, has already been voted through and came into effect on January 1, 2010.
Most other reforms are in the domain of e-government, such as the planned implementation of electronic internal and external document exchange, or the following developments of the past two years:

1) LuxTrust, a certification authority based on a public-private partnership between the Luxembourg government and major private sector actors in Luxembourg, in particular the financial sector, which issues and manages electronic certificates.
2) Guichet.lu, Luxembourg’s Citizen & Business portal, a unified on-line office targeting both citizens and businesses for dealing with administrative formalities, and offering the possibility of on-line income tax submission for individuals.
3) The year 2009 has seen many new Web presences among various administrations: Luxembourg.lu for general information and national branding; “Luxembourg for ICT” to promote Luxembourg as a center for online and ICT business and as central gateway to European markets, with the same concept as the older “Luxembourg for finance” and “Luxembourg for business” websites; and more specialized portals for health services and volunteering.

The first “Master Plan of Electronic Governance” was dated 2002, but its implementation has taken much time. It was accelerated by a presentation charter and project tailoring definitions, known as the “new normalization reference” in 2007. Since then evolution has been very positive.

The Tusk government has launched a number of institutional reforms. It has streamlined policy-making in EU affairs and has undertaken some attempts at strengthening the position of the prime minister within the cabinet. It has also sparked a debate about limiting the powers of the president, in particular by reducing the parliamentary majority required for overruling a presidential veto. However, since the governing coalition has lacked the majority necessary for changing the constitution, no changes have been adopted.

The government has shown itself willing to adapt institutional arrangements at the top, as evidenced by the amendment to the Council of Ministers’ rules of procedure in December 2008. This was aimed at improving the functioning of the government, at providing better ex ante and ex post oversight of proposals, at ensuring the use of RIAs, and at ensuring draft legislation fit more smoothly into the existing legislative framework. There have also been attempts to generate a larger quantity of information within the public administration, notably via the Rede Interminsterial de Technologia de Informação e Comunicação (Resolution 109/2009 2 October), which aimed at providing electronic links for businesses and citizens to public administration services. However, challenges remain in terms of improving the public administration’s human resources. Beyond these issues, there has been little reform in terms of providing greater strategic capacity. The primary means of generating strategy remains the semi-permanent task forces and unit missions highlighted above.

There have been massive institutional reforms in the last two years, with the goal of creating a smaller and more efficient government. Many agencies and ministries have been merged, renamed and downsized. For example, through the merger of the Ministry of Finance and Economy and the Ministry of Planning and Budget, President Lee created a new superministry, the Ministry of Strategy and Finance. However, it is too early to say whether the goal of creating a “small and efficient government” will be successful or not. Some of the reforms proved not to be successful; the reorganization and downsizing of Blue House staff, for example, ultimately led to the reinstatement of many of the abolished positions (such as the senior officer for public relations). However, most experts believe that the merger of ministries and agencies will create some synergistic effects.

Changing institutional arrangements may be an easy task in theory, but is hard to put into practice in the short term. Maximizing strategic capacity requires a full inventory of resources, expert knowledge, an adequate budget and a participatory approach. Taking a strategic approach can also seem time-consuming for countries like Turkey, in which needs are big and urgent and resources are limited. Under these circumstances, one cannot practice a strategic approach, but can respond only to urgent demand. However, there is good will and effort to develop strategic capacity in the public administration in the long run. It is expected that full implementation of Law No. 5018 on Public Financial Management and Control may provide a sufficient channel to promote strategic capacity in the public administration. As outlined above (see Strategic Capacity), the government lacks sufficient personnel to meet the requirements of strategic planning, performance-based programs and activity reports. In this respect, several training and internship programs have been put in place.
However, in early 2010, the government majority in parliament passed a comprehensive constitutional amendment, focusing on reform of the high judiciary whose rulings have hampered government policy implementation and seriously limited parliamentary action. At the core of the amendments are changes to the staffing of the Constitutional Court and the High Council of Judges and Prosecutors. The amendments were adopted with 330 votes out of the 550 members of the Grand National Assembly, and the whole package was approved with a 58% vote in a public referendum on September 12, 2010 .

Every U.S. administration is an exercise in self-invention. In this sense, institutional arrangements come under scrutiny every four years. Institutional arrangements, particularly at the top level, are flexible and can be adjusted to the needs of the chief executive. This is also true within departments and agencies. However, the entire institutional set-up can only be changed with the consent of Congress. Congress resists structural change in the executive branch largely because it disrupts the jurisdictions of congressional committees, whose members develop expertise and cultivate political relationships that depend on those jurisdictions for many years. The constraints on institutional change became clear in attempts to change the fractured structure of financial oversight.

There has been only one significant reform in the last three years: In 2007, the maximum legislative period of the National Council was extended from four to five years. As the government (the federal cabinet) is de facto linked to the results of parliamentary elections, this means that in the future a government can expect a working period of five years. This reform has been justified by the need to give governments more time to develop and implement their specific policies.
Other changes to institutional arrangements, such as those changing the relationship between the federal and state governments, are subject to near endless discussion but have not been implemented.

In the period under review, institutional structures have undergone little change. The unclear political majorities limited the strategic capacity of the government, so that no major attempts at institutional reform were undertaken.

The pace of change of institutional arrangements in Greece has always been slow, and the change itself has often looked like a journey through unchartered waters. These patterns were exemplified during the period under review when first the Karamanlis government and then the Papandreou government tried to improve on the strategic capacity of the state by pursuing a “reinvention of government” (under Karamanlis), and by trying to rationalize the cabinet’s size and reallocate ministerial tasks (under Papandreou). The “reinvention of government” represented more of a general vision of reform than a clearly specified plan of change. Papandreou’s ministry mergers and reduction in the total number of cabinet ministers was a more concrete step toward changing the strategic capacity of the government. However, none of these attempts has produced visible improvement in the government’s strategic capacity, though in the case of the Papandreou government it is too early to give a full evaluation. Yet, credit should be given for both administrations’ unusually wide-ranging attempts to review the operation and effectiveness of government, and to take fresh initiatives. This predates the fiscal crisis.
The repeated tendency of Greek governments to change institutional arrangements without really achieving tangible improvements in strategic capacity is the result of prevailing modes of thinking and routines followed by political elites.

The Hungarian government adopted comprehensive reforms of the executive branch after the 2006 elections. These reforms were largely completed before the period under review, the main exception being the reform of human resources management. It focused on strengthening performance assessment in central government. Badly prepared and implemented, this reform provoked strong resistance within the administration and was eventually abandoned. What turned out to be more successful was the creation at the end of April 2008 of a new super-ministry, the Ministry of National Development and Economy, led by Gordon Bajna (who later became prime minister). After the change from Gyurcsány to Bajnai, the interest in institutional reforms declined. Pre-occupied with crisis management, the Bajnai government left the institutional arrangements of government largely unchanged.

In recent years the government has not significantly enhanced its strategic capacity by restructuring its institutional arrangements. The recent (March 2010) reshuffle of ministries was criticized as a lost opportunity to draft talented and expert outsiders into government to help manage the current crisis. Instead, the focus was clearly on juggling existing ministries and ministers to dispel unrest among members of the coalition parties.

In recent years, the most significant organizational reform attempts were then-Prime Minister Koizumi’s measures in 2001 – 2002 to strengthen cabinet-level policy-making. A second major attempt is currently ongoing, represented by the new DPJ-led government’s attempt to put elected politicians in charge of the government apparatus. However, it is too early to pass judgment on the new DPJ-government’s reform measures, particularly as many of them have not even successfully passed the legislative process.

Although there is a considerable degree and scope of self-reflection and monitoring conducted in the Netherlands, the capacity – or rather, the will – to implement institutional reform is lacking. All practical recommendations with regard to electoral reforms, government structural reforms or administrative level reforms have been nipped in the bud because there was no (qualified) political majority in parliament. The only reform proposal actually implemented was the so-called dualization of local government, meaning the abolition of a highly monistic, collegial form of local politics and administration. In practice, this meant that the Board of Mayor & Aldermen and its bureaucratic apparatus were clearly identified in functional terms as the executive, to be controlled by local councils in a legislative capacity. Within the framework of decentralizing policy tasks towards subnational, specifically local governments, Local Audit Chambers were established and provided the legal mandate to assume specific competencies. However, perhaps the most important reform of introducing local elections as the means by which mayors are selected was rejected. During the Balkenende IV years, the only structural reforms pursued were a set of pilot projects targeting improved interministerial coordination and civil service professionalization and centralization.
All this is not to deny that on the level of individual organizations, reforms have become a permanent phenomenon, some of which undermine their precedents. Many professionals and civil servants complain that these organizational reforms actually prevent them from providing high-quality and personally satisfying job performance.
All in all, although some individual state organizations, mainly on subnational levels, may temporarily enhance their strategic competencies, government and administration as a whole most certainly do not.

The main changes in the institutional governing arrangements during 2008 – 2010 were related to Zapatero’s two important reorganizations in ministerial portfolios. The rules of procedure and the work formats of the cabinet, the core executive, the PM’s Private Office and the ministerial advisory staffs, as well as the management of relations with parliament and the conduct of public communication, have been nearly untouched. One reorganization of note was the formal merger of the Prime Minister’s Economic Office and the PM’s Private Office in 2008. The ministerial committees were also rearranged in 2009, but the new configuration in nine committees, most of them without regular meetings, is very recent and has not yet had an impact on governing.
The prime minister’s tendency to introduce alterations in ministerial portfolios, names and jurisdictions cannot be assessed as positive from the perspective of improved capacity or a long-term orientation. In 2008, the Ministry of Environment was merged with the Ministry of Agriculture, while the Ministry of Education received jurisdiction over social policy and sports (although only one year later, the social policy area was relocated to the Ministry of Health, and the management of sports was peculiarly placed under the direct responsibility of the prime minister). Two new ministries were also created in 2008 (the ministries of Gender Equality and Science & Technology) while the experienced Ministry of Public Administration disappeared in 2009, divided into a unit dealing with civil service policy (given to the government office) and a new ministerial department on territorial policy, whose minister was ranked as the third deputy prime minister for party political considerations rather than for organizational strategy reasons. None of these changes, which were made without a previous assessment based on expert opinion or external advice, have substantially improved the capacity of the government to take and implement political decisions, although there has not been a noticeable loss either (in fact, after every change in portfolios, the internal structure of the administration has remained almost unchanged).
It is interesting to note that even given the government’s comparatively weak parliamentary position after the 2008 general elections, the unit dealing with parliamentary relations (the Secretaría de Estado de Asuntos Constitucionales y Parlamentarios) has not been reinforced. The process of transforming the semiautonomous administrative bodies into executive agencies was also stopped in April 2010, and the decision to reduce some high-ranking administrative units (secretaries of state and directors general) was motivated only by the need to curtail public spending.

The federal government tried to improve the institutional arrangements through the adoption of new administrative techniques (New Public Management) and a number of organizational changes. However, whenever the center has sought to bring about substantial change through institutional reform (e.g., through reorganization of the Federal Council and the collegiate system), it has met with resistance on the part of the public and the cantons, which do not want to have a more powerful national government. In particular, they do not want to see more resources or powers going to the federal level. This severely limits the range of feasible institutional reforms.

Although improving the government’s effectiveness and strategic capacity has often been mentioned by the prime minister and members of the governing coalition as an important goal to be achieved during this term in office, no serious studies or discussions of the problem, or of the means to be used in solving it, have so far been undertaken by the government. The discussion has remained rather abstract, without substantiation by empirical evidence. In fact, political power considerations have remained dominant.
Improving the strategic capacity of the government always remains a subordinate process to the operation of the governing coalition’s checks and balances. The debate over a (federal) reform of the public administration as a whole, and over reorganization of the territorial and administrative units and authorities, stops when discussion turns to the national government itself.

Under the Fico government, no attempts at improving the strategic capacity of government through institutional reforms were undertaken. Instead, Prime Minister Fico capitalized on his personal popularity and his position as party leader and used informal means such as patronage or deals with the leaders of his coalition partners to strengthen his position.

Most reforms are the consequence of bargaining between power levels, and an attempt to meet contrasting or asymmetrical demands (e.g., the Flemish would like to obtain a given prerogative, which Francophones oppose; while Francophones have another request, which the Flemish oppose) through a global negotiation at the end of which both sides will obtain some of their demands (but not all, because the deal is always a compromise). Therefore most reforms do not improve efficiency.
For instance, the limitations of the Brussels capital region (which is restricted to 19 communes, i.e., only about one-fourth of the actual Brussels agglomeration in terms of area, and one-half in terms of population) creates a number of overlapping issues with the other two regions (Flanders and Wallonia). Hence, the decentralization of responsibilities such as road building, public transportation, tourism management, airport noise or water pollution, has made many policy aspects extremely hard to manage. However, as the general process has trended toward major decentralizations, some have had positive effects and can be seen as an improvement in strategic capacity, but only on the level of regions and communities. As on example, as regions assumed more responsibility over environmental policies, each territory has improved their policy performance in terms of sewage water treatment.