OECD Guidelines

Question 1

Guideline 1: Clarify the responsibilities assigned to different government levels

Answer 1

Guideline 1: Clarify the responsibilities assigned to different government levels

• The way responsibilities are shared should be explicit, mutually understood and clear for all actors. Equally important is the clarity in the different functions that are assigned, within policy areas – financing, regulating, implementing, or monitoring. Since multi-level governance systems are constantly evolving, a periodic review of jurisdictional assignments should be made to ensure flexibility in the system.
• The way different responsibilities across policy areas are decentralised should be balanced.

Question 2

Guideline 2: Ensure that all responsibilities are sufficiently funded

Answer 2

Guideline 2: Ensure that all responsibilities are sufficiently funded

• Access to finance should be consistent with functional responsibilities. Division of financing responsibilities should ensure that there are no unfunded or under-funded assignments or mandates.

Question 3

Guideline 3: Strengthen subnational fiscal autonomy to enhance accountability

Answer 3

Guideline 3: Strengthen subnational fiscal autonomy to enhance accountability

• Subnational governments should have a certain degree of autonomy in the design and delivery of their public services responsibilities within the limits set by normative regulation such as minimum service standards.
• Subnational governments need own-source revenues beyond shared tax revenues – and they need to develop other sources of revenues to have a balanced basket of revenues.

Question 4

Guideline 4: Support subnational capacity building

Answer 4

Guideline 4: Support subnational capacity building

• Central government should assess capacity challenges in the different regions on a regular basis. The policies to strengthen capacities should be adapted to the various needs of territories. Governments should seek to reinforce the capacities of public officials and institutions in a systemic approach, rather than adopting a narrow focus on technical assistance.
• Staff training in basics of local public financial management should be established. Open, competitive hiring and merit-based promotion should be ensured.
• Special public agencies accessible to multiple jurisdictions should be encouraged in areas of needed expertise (e.g. regional development agencies, PPP units).

Question 5

Guideline 5: Build adequate coordination mechanisms across levels of government

Answer 5

Guideline 5: Build adequate coordination mechanisms across levels of government

• Since most responsibilities are shared, it is crucial to establish governance mechanisms to manage those joint responsibilities. Creating a culture of co-operation and regular communication is essential to effective multilevel governance and long-term reform success. Tools for vertical co-ordination include for example platforms of dialogue, fiscal councils, contractual arrangements, standing commissions and intergovernmental consultation boards.
• It is important to avoid multiplying coordination mechanisms with no clear role in the decision-making process.

Question 6

Guideline 6: Support cross-jurisdictional cooperation

Answer 6

Guideline 6: Support cross-jurisdictional cooperation

• Horizontal coordination can be carried out using specific matching grants, and by promoting inter-municipal and interregional cooperation. Metropolitan governance should be promoted as well. The legal system should allow such tools.
• Rural-urban partnerships should be promoted as a form of cross-jurisdiction collaboration to enhance inclusive growth by bringing multiple benefits, such as expanding the benefits of agglomeration economies, to overcome co-ordination failures, and strengthen capacity.

Question 7

Guideline 7: Strengthen innovative and experimental governance, and promote citizens’ engagement

Answer 7

Guideline 7: Strengthen innovative and experimental governance, and promote citizens’ engagement

• Citizens should be empowered through right to know and direct democracy provisions. Ensure that elected local councils have the ownership and control of citizen participation and engagement initiatives.
• Participatory budgeting has the potential to strengthen inclusive governance.

Question 8

Guideline 8: Allow and make the most of asymmetric decentralisation arrangements

Answer 8

Guideline 8: Allow and make the most of asymmetric decentralisation arrangements

• Asymmetric decentralisation should be supported by effective vertical and horizontal coordination mechanisms and need to go hand-in-hand with an effective equalisation system. Asymmetric decentralisation approach should be based on dialogue, transparency and agreements between all main stakeholders, and be part of a broader strategy of territorial development.
• The way asymmetric responsibilities are allocated should be explicit, mutually understood and clear for all actors. To the extent possible, participation in an asymmetric arrangement should remain voluntary.

Question 9

Guideline 9: Consistently improve transparency, enhance data collection and strengthen performance monitoring.

Answer 9

Guideline 9: Consistently improve transparency, enhance data collection and strengthen performance monitoring.

• National governments should develop performance-monitoring systems to monitor decentralisation and regional development policies: they need to remain simple with a reasonable number of requirements/indicators.
• Higher level governments need to monitor subnational performance in critical service areas based upon a minimum set of standardized indicators and provide timely feedback, as well as benchmark inter-local performance in service delivery.
• Subnational governments need to be subject to higher level regulations and fiscal rules to ensure fiscal discipline and fiscal sustainability.

Question 10

Guideline 10: Strengthen national regional development policies and equalization systems to reduce territorial disparities

Answer 10

Guideline 10: Strengthen national regional development policies and equalization systems to reduce territorial disparities

• The equalisation program must not be looked at in isolation from the broader fiscal system, especially conditional transfers. Equalisation arrangements need to be carefully designed to promote tax and development effort of subnational governments. Fiscal equalisation policies need in particular to be accompanied by pro-active regional development policies to offset the potential negative incentives of such systems.