Public Policy Research Center. draft. Concept of Local Self-Government: Formation and Development in the Republic of Kazakhstan (the second version)

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1 Public Policy Research Center draft Concept of Local Self-Government: Formation and Development in the Republic of Kazakhstan (the second version) Almaty, 2002

2 Public Policy Research Center 2 Content Introduction General Provisions Goals and Objectives of Local Self-Government Formation and Development Models of Local Self-Government Principles of Organizing Local Self-Government System Functions of Local Self-Government Implementation Mechanism... 9 Legal Section... 9 Financial-Economic Section Organizational Section... 10

3 Public Policy Research Center 3 Introduction Entering the Republic of Kazakhstan into sustainable development phase requires deep changes in administration system of the society. Present system of public administration has highlighted its low efficiency, nonconformity of balance of power between branches and real circumstances. In this light, formation of local self-government as attribute of democracy and civil society becomes crucial. Local self-government deals with needs of every citizen, helps to solve her or his day-today problems because its goal is to be as closer as possible to people. On the other hand, it is important that local self-government can be considered as a form of self-organization of citizens that fosters forming civil society. In such a way, local self-government allows people to be involved in the process of creating good living conditions in their districts. It also forms sense of responsibility for solving local problems and prompts people to be active. Local self-government serves as a mechanism to control activities of governmental bodies by people. Local self-government can also be treated as institution that decreases social tensions, eliminate conflicts between different groups of stakeholders and facilitates social-economic development of certain districts and sustainable development of the whole country. It can be expected that in the case of forming effective local self-government, the processes of creating civil society and social oriented economy will accelerate. Realizing importance of local self-government for solving social economic problems of communities, legislation of almost all developed countries provide conditions for local selfgovernment, which has been stated by the European Charter on Local Self-Government, as well as by the constitutions of Germany, Austria, land laws in Switzerland and certain laws in Great Britain and USA. According to the world practice, there are various types and forms of local self-government, which have been historically established as a result of both objective and subjective factors. Local self-government forms and methods are evolving toward the establishment and development of the civil society. In this regard, self-government models established in these countries are better adjusted to the local traditions, culture, mentality, the level of economic development and other conditions. It is necessary to review the world practice of local self-government development, to adjust it to Kazakhstani realities, national traditions and culture, and consider in order to develop a general strategy of state establishment in the Republic of Kazakhstan. Local self-government should play a significant role in the formation and development of state organization in Kazakhstan. This fact is specifically emphasized in Kazakhstan-2030, a long-term strategy of country development, and in other programmatic documents related to the prospects of Kazakhstan development as a sovereign state. However, the political and public community and population lack both common understanding of local self-government essence, and uniform generally accepted conceptual instrument, which causes inadequate evaluation of local self-government role. Generally, local self-government formation and development in the Republic means allocation of powers among various bodies of government authority and re-allocation of budget revenues thereof. This is obvious from the «Concept of Allocating Power Among the Levels of Government and Improving Inter-Governmental Budget Relations», prepared by the Steering Committee of the Government of the Republic of Kazakhstan. There is no doubt that these issues are extremely important and urgent as a first step toward the formation of self-government institutes. But allocation of powers and improvement of inter-governmental budget relations should not be viewed as an end in itself, tailored neither to the formation of a civil society in the country, nor to the establishment of a real self-government in the Republic. According to the recommendations of the public forum of «Decentralization and Local Self-Government in the Republic of Kazakhstan: Determining Priorities», held in Almaty on February 18, 2002, the Working Group under Public Policy Research Center prepared the draft of the Concept of Local Self-Government in the Republic of Kazakhstan (the first version). In

4 Public Policy Research Center 4 general, this draft was approved by the public forum of «Decentralization and Local Self- Government in the Republic of Kazakhstan: the First Stage of Civil Society Development», held on April 22, 2002 in Astana. «Panorama» as of July 5, 2002 and «Economika.Finansy.Rynki as of July 12, 2002 published the second draft of the Concept. This Concept has been improved in accordance with remarks and suggestions received after publication of the second version. 1. General Provisions Local self-government is viewed as one of the key institutes of a modern state, which promotes the relations between a state and its citizens, and the possibility for the latter to participate in state administration. The European Charter on Local Self-Government determines selfgovernment as a right and real ability of local government bodies to administer state affairs within their competence, established by the national legislation, and to meet the interests of the population. This right is executed by councils or assemblies, their members elected by a secret, direct, equal and universal vote. The legal framework of local self-government in our country is stipulated by the Constitution of the Republic of Kazakhstan, other laws of the Republic, which regulate the activities of the local governmental authorities. Under the general law, government bodies should create all legal, organizational, financial and resource conditions required to establish and develop local self-government in order to implement constitutional rights of Kazakhstani people. In this regard, the process of reforming a local self-government system and establishing local selfgovernment is an integral part of the general strategy of Kazakhstani state organization under development. By present, in Kazakhstan there is a lack of a uniform opinion of the role and functions of local self-government in the general process of state structuring, mitigation of social tension, the formation of a civil society, resolution of the issues related to the social and economic development of the territory, and promotion of sustainable development of the country. The contradictory and inadequate evaluation of the local self-government institute s role and functions roots in a lack of a uniform conceptual instrument and different perception of the essence of local selfgovernment by various layers of the society and population. The local self-government institute should be differentiated from the institute of local government administration. The local government administration acts as a conductor of government policy at a certain territory; it is an integral part of the state administration system. Local self-government is a specific element of state organization, which is not a part of the state body system, its competence limited by the decisions taken by the national government, and its activities targeted at meeting the interests of a local community. In this regard, the interests of regional and local authorities should be differentiated by the definition, which would become a key tool of curbing the manifestations of local separatism on behalf of the national authorities. Therefore, in our opinion, the institute of self-government should be viewed both as a key element of the mechanism of interrelations among a citizen, a society, and a state, and as a necessary condition of implementing a new paradigm of human development in general, with a human being s interests and needs in its center. The formation of the local self-government institutes is inter-related with the resolution of all social, economic, environmental, and other issues of the country regions. According to the world practice of local self-government establishment and development, self-government models differ even within the territory of a single country, depending on the local traditions and culture, economic and other conditions, which influence the existence of a certain local community. In this regard, self-government, as citizens participation in the administration, takes into account the local specifics and local needs, which are well-known to the members of a local community rather than to the officials of top-level government bodies. That is why

5 Public Policy Research Center 5 local self-government is more efficient in the society with the established elements of a civil society and self-organization. Having considered this point of view, an effort has been made within the framework of the Concept to: systematize goals and objectives of local self-government development in the Republic of Kazakhstan and the sequence of their implementation; formulate principal requirement to the establishment of local self-government model in the Republic of Kazakhstan and its implementation mechanism. 2. Goals and Objectives of Local Self-Government Formation and Development According to the Concept, the local self-government is closely interrelated with the local community, which is a true subject of self-government. However, the society is a more complicated social and economic system, reflecting the combination of all areas of human existence, i.e. economic, social, political, ideological, cultural, environmental, etc., with a specific human being in its center. Therefore, it is important to create a mechanism, which would make it possible for certain citizens and public groups to express their attitude to regional problems and to deliberately participate in the decision-making process. Thus, the main goal of local self-government formation and establishment in the Republic of Kazakhstan is to practically implement the rights of any citizen to take part in the decisionmaking process within the territory of his/her residence, in order to fully reveal the potential of a human being and to create the conditions for his/her self-actualization. Local self-government formation is a long-term, multi-stage and dynamic process, tailored to the formation and development of a civil society, general level of social and economic development of the country, other factors and conditions, which have direct impact over the existence of the local community. As general and local conditions change, the local self-government system should be also modified and adjusted to those changes to provide for an efficient administration. And in accordance with this process, specific tasks should be resolved at each stage of self-government system formation and development. The priority tasks of the first stage of real self-government formation in the Republic of Kazakhstan are as follows: Reforming the system of local government administration within the framework of the general development strategy of Kazakhstani state organization. Developing the model of local self-government in the Republic, defining its place and role within the public administration system. Creating legal support of local self-government. Decentralizing and allocating powers and functions among the bodies of government authorities and local self-government. Creating financial, technical, resource and organizational background for the establishment of local self-government system. Training staff for local self-government bodies. Involving citizens for solving local problems, facilitating for cooperation of citizens and local bodies. Creating social institutions to control activities of local bodies and make this process transparent. 3. Models of Local Self-Government There is no doubt that choice of local self-government model that correspond to kazakhstani conditions and peculiarities of separate regions is important. The world practice demonstrates several types and forms of local self-government, which differ from each other by the extent of top-level government authorities impact over the activi-

6 Public Policy Research Center 6 ties of local self-government bodies. This is caused by the fact that local self-government contains the elements of both governmental and public organization. And in accordance with the fact, the local self-government system reflects the following: The right of citizens as members of a local community to participate in a deliberate decision-making process related to the issues of developing the territory of their residence; The principle of hierarchical government administration, when a vertical administration system is formed alongside with the horizontal allocation of powers. Based on the world practice, three types of local self-government models can be identified: Anglo-Saxon type this type is remarkable for a larger extent of local bodies autonomy and a lack of their explicit subordination to the Center. For this type of model, a high-degree decentralization of state functions in social and economic area is typical. French type of local self-government is characterized by the fact that key administrative and territorial units are both local formations and government administration bodies. The supreme body of the community is a municipal council. A Mayor and deputies thereto are elected from the members of the municipal council. The Mayor represents an executive power of the community, playing two roles: acting as a head of local self-government and a representative of the central power, as the community is both a state body and a local formation. Mixed type of local self-government is typical for Japan and Germany. Thus, the Japanese Law on Local Self-Government regulates its structure in details, as well as an internal organization and competence of local bodies at all levels city, town, and village. In Germany, basic local self-government units are represented by communities, towns and districts. In the country, the requirements to the communal administration bodies are not unified; in different lands they possess individual features, demonstrating a broad range of local self-government types and forms. Direct borrowing by Kazakhstan of foreign experience of local self-government can not be considered as an optimal option due to a number of peculiarities, associated with mutinational composition of the republican population, huge territory, various natural-climatic and socio-economic conditions. Taking into consideration regional specifics of Kazakhstan, one can suppose that independent models of self-government, which meet local peculiarities and interests, can be applied in certain regions to a greater extent. This is due to the fact specific regions of the country differ not only in natural-climatic conditions, but in ethnic composition and economic structure. Probably, in the cattle-breeding areas the self-government model will significantly differ from those of the Northern or Eastern Kazakhstan. The most acceptable form of local self-government for Kazakhstan can be a mixed type of local self-government, certain elements of the French model dominating, which envisage effective governmental control over local self-government bodies in the socio-economic area. This is caused by the reason Kazakhstan is a unitary state, and the established regional administration system is based on the vertical power, which provides for a uniform socioeconomic policy. In order to effectively combine local self-government with the governmental administration, it would be reasonable to couple primary administrative and territorial units with local self-government bodies. Thus, combination will take place of the functions carried out by heads of the representative and executive power at the primary level, i.e. in towns, villages, districts. It might be required to revise administrative and territorial division of the country so that local self-government bodies could operate effectively and become closer to the territory population, and local communities could possess sufficient human, economic and financial resources to resolve local issues, and while exerting their powers to be independent from top-level authorities.

7 Public Policy Research Center 7 4. Principles of Organizing Local Self-Government System Local self-government based on the following principles: Independence of local self-government within its authority. It is the main principle that characterizes that nature of local self-government. Within its authority local selfgovernment bodies have the rights to manage municipal property by their own, to form, adopt and execute local budgets, set local taxes and user charges. According to this principle, state bodies and officials are not allowed to interfere in day-to-day activities of local self-government bodies. Separation between local self-government and local government bodies. This principle guarantees independence to local self-government bodies from public administration system. In accordance with the Charter on local self-government local self-government bodies should have wide autonomy regarding fields of activity, have full freedom of actions for implementing their initiatives. That is why local self-government bodies are not included in the system of public administration. It is important that these bodies should de independent not only in organizational but also in legal aspect. As legal entities local selfgovernment bodies have the right to make any legal transactions. The principle of democracy wide participation of population in the decision-making process of regional scale. The principle is based upon the mechanism of public involvement into current activities carried out by municipalities, determining areas of power and responsibility over public organizations established within the territory of the region. According to this principle, local self-government is carried out by citizens directly or through elected bodies. The Constitution of RK states direct forms of expression of people wills are local referendums, direct elections, general meetings of citizens. In case of introducing local self-government, constitutional rights of citizens to participate in managing state will be realized. Interdependence of local, public and state interests. Local issues should be considered taking into account strategies of developing the state and the society. Problems that solved by local self-government are specific because they are connected with local conditions. However, these problems are parts of common ones that are faced by the whole society that is why they should be solved in the frame of state policy. This principle is carried out through coordination of activities of local self-government and public administration bodies. Local self-government bodies having legal independence organizes their activities in the frame of authorities given them by public administration. The principle of openness. One of the main principles of civil society that can be realized in conditions of local self-government. Introduction of this principle provides transparency in work of local bodies. Public control and informing citizens about activity of local self-government bodies allow people to influence the process of decision-making concerning all issues that relate to their interests, rights and freedoms. Public control of local self-government bodies is carried out through reports of elected bodies and their representatives, provision of materials to stakeholders and in other forms as it is stated by legislation about local self-government. The principle of matching material and financial resources to authorities of local selfgovernment. It is obvious that without this principle it is impossible to ensure independence, efficiency and existence of local self-government. This principle can be realized through the rights to manage municipal properties, form and execute own budgets and to establish local taxes and user charges. The state must guarantee observance of balance between minimal level of local budgets, delivery of required resources, compensation of losses. The principle of subsidiary liability - a procedure of power allocation and re-allocation among different management levels. This principle provides for sustainable consequence in the process of exerting powers and authorities, as well as the procedure of allocating these bodies liability before the population. Under this principle, delegation of powers to

8 Public Policy Research Center 8 a higher level can be accomplished only when it is impossible to exercise them at a lower level. This principle justifies a need of efficient allocation of administrative functions among various management levels, the basic criterion of its efficiency being a maximum possible satisfaction of the population demand, and a clear-cut allocation of liability areas among the authorities. In accordance with the principle of subsidiary liability, powers should be allocated among the authorities to basically reduce the distance between the government and the population. It needs to understand that it is important not only to divide power between different management levels but also to define conditions required to implement it. The principle of complimentary nature creating the conditions of even power allocation among the bodies of the vertical administration system. In accordance with this principle, powers are allocated in the administrative system based both on top-down and bottom-up model. This precludes a possibility of illegal administrative centers, which promote the destruction of the society. The principle of department structure a combination of functional and territorial functions within local self-government bodies. The principle of decentralization transferring a number of functions of administering specific territories directly to those territories. As a result of the decentralization process, the state ensures the required integrity by expanding the rights and responsibilities of the territories. The decentralization mechanism requires an availability of transparent borders in the competence and powers of state government and municipal bodies. Decentralization presupposes a delegation of state powers to a local level, with a granted allocation of the resources required to implement them. The procedure of implementing decentralization mechanism comprises the following items: 1. Creating the list of state powers for each municipal unit; 2. Determining the amount of financial funds and resources allocated for the implementation thereof; 3. Formulating the delegation of the state powers exerted in compliance with the existing law; 4. Determining the quality and effectiveness of power delegation mechanism. Local self-government comprises separation of the public interest area from the government competence, and establishment of a management system within the national legal framework by electing independent administrative authorities, which would act within the territorial interest frameworks. The following can be defined as the basic principles of local self-government: 1. Appointment of local government bodies by election; 2. Availability of communal property; 3. Contractual agreement of relations between the local authorities and the population; 4. Meeting territorial needs at the expense of own revenue sources; 5. Specialization of local self-government in the social area; 6. Competitive system of appointment to the municipal staff positions; 7. Accounting and reporting to the population of the territory; 8. Independence in the decision-making process; 9. Legal protectability. The main idea of local self-government is self-organization of citizens in order to implement independently their own initiatives and common objectives taking the whole responsibility.

9 Public Policy Research Center 9 5. Functions of Local Self-Government According to the European Charter «On Local Self-Government» and international practice, the following functions of local self-government can be determined: Directly resulting from the decisions concerning the objectives of the territorial development; Delegated, which relate to the implementation of powers transferred by a higherlevel body to the local one. In the first case, competence of local self-government bodies should be regulated by the law, as well as their liability to the local community. In the second case, a decision on transferring or delegating powers to local self-government bodies should be taken by an executive body. In this case not only power but also resources for its implementation are delegated too. It allows local government and self-government bodies to interact effectively, optimize allocation of functions between these bodies to ensure local and state interests. That is why higher-level authorities in this aspect can directly supervise local self-government bodies. The key functions of local self-government bodies should be targeted at: 1. Consistent policy of protecting local interests in order to comprehensively resolve all issues related to day-to-day needs of population (water supply, land use, road construction and maintenance, environment protection, territory development and improvement, planting of greenery, etc.), which are within the competence of local self-government. 2. Development of social relations comprehensive solution of broad range of issues associated with the existence of each member of the local community, i.e. to the social area. Implementation of this function comprises the development of a proper policy in the area of education, health care, culture, support of the poor, employment and other areas, which should be interrelated not only with the conditions inside the territory, but also with outside affairs. 3. Elaboration of territory development program a local community should take over responsibility for the prospects of its own development, and therefore consider and assess its opportunities and resources. 6. Implementation Mechanism Lack of appropriate legal framework, regulating the activities of the local selfgovernment, is a key reason for a considerable discrepancy between the constitutional right for local self-government and possibilities of its practical implementation. Meanwhile, state authorities should directly participate in the establishment of local self-government institutes by creating required legal, organizational, and financial conditions of their operation. To resolve these issues is a priority of the establishment of a specific mechanism for the implementation of local self-government policy. Such mechanism should include the following: 6.1 Legal Section Within this section, the following should be developed and adopted: The Law of the Republic of Kazakhstan «On Local Self-Government», regulating general principles of local self-government bodies functioning, their interrelation with local self-government bodies. Changes and amendments to the laws and regulatory acts, which regulate the activities of local government bodies. Changes and amendments to the Law of the Republic of Kazakhstan «On Elections». Changes and amendments to the Law of the Republic of Kazakhstan «On Property». The Law of the Republic of Kazakhstan «On Allocating Powers Among Local Government Authorities and Local Self-Government Bodies». The Law of the Republic of Kazakhstan «On Minimal State Social Standards». Other legal and regulatory documents required for a framework regulation of the local self-government system in the Republic of Kazakhstan.

10 Public Policy Research Center Financial-Economic Section This section stipulates specific measures to promote financial and economic conditions for local self-government bodies to exert their powers. In this area, a new mechanism is required to improve inter-budget relations and provide local self-government bodies with financial resources so that they would be able to carry out their functions. Establishment of granted state social standards should allow to accomplish inter-budget regulation based on regulatory quantitative indicators, which would ensure the transparency of transfer system formation. Changes and amendments to the Tax Code, related to including a number of taxes into the local tax category, and expanding the right of local self-government bodies in determining local taxes and regulating tax rates can strengthen the revenue sources of local budgets. Communal property should become a practicable source of non-tax revenues, therefore an effective management of communal property at all levels of local self-government should become of great significance. A natural rent, and namely land rent, should also become a considerable source of revenues collected by local self-government bodies. This is extremely important at the level of rural areas, where there is lack not only proper local self-government bodies, but of any type of communal property, which could be a source of revenues. 6.3 Organizational Section This section envisages the development and implementation of specific measures to manage the process of local self-government formation and development in the Republic of Kazakhstan. In this regard, a national program of «State Support of Local Self-Government Development in the Republic of Kazakhstan» should be drafted and adopted, which would provide for the basic guidelines of local self-government support by the government: Legal framework of local self-government; Establishment of financial-economic conditions for the local self-government; Organizational-methodological support of local self-government; Allocation of functions among local self-government bodies and local governmental authorities, establishment of their interrelation mechanism; Informational provision and support of local self-government activities;. Establishment of a network for training and re-training skilled staff for local selfgovernment bodies. To implement effectively the program of local self-government state support, it seems reasonable to establish a special government body at the ministerial level, which would coordinate and supervise the whole process. All comments and proposals to this draft of the Concept are welcome to the following address: Public Policy Research Center (PPRC), Office 401, 65, Kazybek bi str., , Almaty. Phone (fax) number: 8-(3272) ; pprc@lorton.com

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