Finnish Public Governance A Background Report

Transcription

1 Finland Finnish Public Governance A Background Report March 2010 Ministry of Finance publications 18/2010 Ministry of Finance publications

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3 Finland Finnish Public Governance A Background Report March 2010 Ministry of Finance publications 18/2010 Ministry of Finance publications

4 Ministry of Finance, Finland PO Box 28 (Snellmaninkatu 1 A), FI Ministry of Finance Tel Pagination: Taina Ståh

5 Contents Foreword Structures of administration State Central Administration State Regional and Local Administration Municipalities and their regional administration Other forms of self-government e-government Organization Figures eservices Interoperability Shared IT Services IT Infrastructure / Harmonized basic IT services Information Security and Contingency Planning Municipal IT Vertical steering systems Performance management Market Steering... 48

6 4 Horizontal Steering systems Programme management Horizontal Steering of State Regional Administration Corporate Governance Cases of horizontal co-ordination Multi-level governance Steering across levels of government Municipal relationships State personnel and leadership policy Data on human resources in central government Human resources management principles as an integral part of administrative policy Assistance for restructuring and change management Revamping senior management policy Open Government Short history Current situation and on-going reforms Audit and foresight work National Audit Office and Parliamentary Audit Committee Foresight report and foresight work Useful links

7 7 Foreword This background report on Finnish Public Governance is made in connection with the OECD (Organisation for Economic Co-operation and Development) Public Governance Review of Finland, that was commissioned from the OECD by the Finnish Ministry of Finance. The texts in this paper are collected originally as background information for the OECD review missions to Finland. The chapters of this report describe the basic elements of the Finnish system. Since there existed this collection of background information it was felt that it was well worth putting it into a format that can provide basic information on Finland to those interested. The OECD Public Governance Review is very important to Finland. It will give us an outsider s view on our reforms. The Finnish public management reforms of the 1980 s and 1990 s have earlier been considered to be one kind of a success story. We have been able to implement quite comprehensive reforms. And we have been able to relatively well avoid any failures in carrying out intended reforms. We have also been lucky in having been able to win the support of the state personnel, highest civil servants and decision-makers. The reforms have been going on actively for the whole current decade and the latest Government Programme from 2007 has an exceptionally large amount of public administration reforms. One of the very key founding stones of the earlier success has been the fact that already before the major wave of reforms in Finland and of course even more so during them, we looked very carefully to what was happening in other western countries in their public management reforms. This gave us an advantage of avoiding some of the pitfalls that might have otherwise hindered our reforms. We have learned from other countries experiences what is possible to accomplish and in which cases you have to look for new solutions. We have tried to make this looking for best practices in other countries a tool we use in almost all major reform projects. We have profited from sharing international lessons learned, but we also feel that we have been able to give to this co-operation our share as well and one of the lessons we have and want to share in the future also is the fact that international co-operation in the field of public management pays off.

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9 9 1 Structures of administration 1.1 State Central Administration In Finland State administration is connected to political decision-making through its supreme executive powers. These comprise the Parliament, the President of the Republic and the Government (also called Cabinet or Council of State). There are three levels in the Finnish State Administration. These are the central, regional and local levels. The model for providing basic public services is built on the responsibility and autonomy of the municipal government, and during the years the autonomy of municipalities has been further strengthened. Current Structure of Finnish Administration

10 10 Short history and current structure The structure of the state central administration consists of two levels. The first level includes twelve fairly small ministries with people in each. The ministries prepare and implement policy decisions made by the Government. In addition to this, the ministries have independent decision-making authority and they are responsible for steering their respective administrative fields. They are also responsible for preparing matters relating to the European Union and other forms of international co-operation. The second level consists of quite independent agencies, which have service production and partly also advisory functions as their tasks. This agency structure is a long-standing feature of the Finnish public sector. Central administration agencies and public bodies function under the administrative sector of each ministry. There are about a hundred of these organisations altogether, performing various tasks and of various sizes. They employ over 20,000 persons. Many agencies and public bodies carry out administrative tasks (for example, the National Board of Customs and the National Board of Taxes). Some have extensive information management and registration tasks, as is the case with the National Board of Patents and Registration of Finland and the Population Register Centre. Many agencies and public bodies are responsible for developing a specific sector and producing related information for society as a whole. When the active phase of Finnish public management reforms started in the 1980 s the emphasis was first on structural reforms. The legislation and reform on State enterprises was one of the flagship reforms and in the beginning of the 1990 s a large central government project: Towards a one-tier central administration took place. As the reforms moved on, the focus of the reform policy turned more to the steering reforms, especially performance management, that had already started in beginning of the 1990 s. However when professor Pollitt compared the Finnish reforms in 1995 (Trajectories and options: An International Perspective on the Implementation of Finnish Public Management Reforms, 1997) to those of other countries, he stated that traditional structural reforms played a stronger role in the development policy in Finland than in other countries. Many of the Finnish reforms are actually a combination of structural and steering reforms. The number of ministries has stayed were stable in Finland. For three decades from 1950 s to 1970 s the number was 11, in 1980 the number raised to 12, when the Ministry of Labour had become its own ministry. Another ministry, Ministry of Environment was added in 1987 and the number of ministries stayed 13 until 2008 when the Ministry of Trade and Industry and the Ministry of Labour become one ministry, Ministry of Employment and the Economy. While the number of ministries has been kept steady, it has in some cases resulted in divisions inside the ministries and to the fact that in several

11 11 ministries there are two ministers to whom the ministry is divided. This is with its pros and cons a very Finnish phenomenon. The central administration project (Towards a one-tier central administration) did not result in any major changes in the number of agencies. During the years the administrative fields under different ministries have, compared to the previous situation, become more diverse in how they are organised. Recent and on-going reforms Ministries The Finnish state government got a totally new ministry in the beginning of year 2008, the Ministry of Employment and the Economy (MEE). Ministry of Trade and Industry and most parts of the Ministry of Labour were merged into one new ministry where also functions that relate to the development of regions - previously situated in the Ministry of Interior - were moved, as well as some functions from the Ministry of Social and Health Affairs. The idea of structural changes had been around for a long time, but in the previous Government ( ) the solution was to strengthen horizontal co-operation by policy programmes. Actually one of that Government s horizontal policy programme (more on policy programmes in chapter on horizontal steering) was the programme on employment and entrepreneurship, issues that are at the core of the new ministry. One key reason behind the change and the need to build a new ministry was to boost innovation and competitiveness of the Finnish nation The ministry is responsible for the operating environment underpinning entrepreneurship and innovation activities, securing the functioning of the labour market and workers employability, as well as for regional development within the global economy. After the merger it has been said that 70 % of the European Union Lisbon strategy issues are in this ministry. All EU-countries are actively thinking of how to combine education and employment in a way that creates welfare and competitiveness and the Finnish Ministry of Employment and the Economy (MEE) aims to be the Finnish solution to the question of how to better help work (job opportunities) and people looking for a new job to meet each other. The aim of this merger was to find synergies and not just to cut and paste two ministries and parts of a third into one. The whole structure (eg. departments, horizontality) is brand new, but the core innovation is the leadership structure of the ministry and its whole administrative field. There is in the ministry a corporate governance unit that is responsible for strong co-ordination and performance management of all the agencies, institutions and the whole administrative field that the ministry is responsible for.

12 12 The building of this new ministry is not the only structural ministry reform originating from Prime minister Matti Vanhanen s II Government s Programme. The migration issues that previously were in the Ministry of Labour have now be joined into the Ministry of Interior. Also from beginning of 2008 the units responsible for state regional and local administration and municipal IT, previously in the Ministry of Interior, were merged into the Ministry of Finance s Public Management Department. The Ministry of Finance s Governance Policy side was further strengthened by the Department of Municipal Affairs, also previously in the Ministry of the Interior. These, together with the Personnel Department, form the current Governance Policy pillar of the Ministry of Finance. The expected benefit behind this was to bring all public administration issues into a same entity to allow for better steering, co-ordination and synergies. The strategy of the Ministry of Finance was updated to reflect this integration. In the current Government in the Ministry of Finance there are two ministers: the Minister of Finance and the Minister of Public Administration and Local Government. Agencies In recent times there have been several agency mergers in different administrative fields. In the field of the Ministry of Social and Health Affairs, The National Product Control Agency for Welfare and Health (STTV) and the National Authority for Medicolegal Affairs (TEO) were merged on 1 January 2009 creating a new organisation: The National Supervisory Authority for Welfare and Health (Valvira). On 1 January 2009 a merger took place when The National Public Health Institute (KTL) and National Research and Development Centre for Welfare and Health ( STAKES) were merged and become the new National Institute for Health and Welfare (Terveyden ja hyvinvoinnin laitos). In 2006 the state secretary of the Ministry of Transport and Communications gave out his one-man-committee s proposal on what would be the effects of joining together the three agencies of Finnish Road Administration, (parts of) Finnish Maritime Administration and the Finnish Rail Administration. He estimated that joining-up these three would result in a more comprehensive transport policy, would enhance the efficiency of transport infrastructure operations and would increase productivity. Among the most important gains would be that the quality and service-level would rise, as the transport infrastructure would be more comprehensively planned. It would also secure the purchasing and customer know how. The reasoning behind this reform was that there are so many similarities in these three. They basically have the same goals and mostly also customers are the same, they are experts and hosts of

13 13 transport infrastructure, all of them are in charge of transport steering and all of them have changed from producer to provider and their stakeholder groups and their support functions are mostly the same. On 1 January 2010 the six transport administration agencies operating under the Ministry of Transport and Communications were then merged into two new agencies: the Finnish Transport Agency and the Finnish Transport Safety Agency, The Finnish Transport Agency is now managing the fairway operations of the former Finnish Maritime Administration and the central administrative functions of the former Finnish Rail Administration and Finnish Road Administration. The Finnish Transport Safety Agency is managing the functions of the former Finnish Vehicle Administration, Finnish Civil Aviation Authority and Finnish Rail Agency, and the maritime safety functions of the former Maritime Administration. The idea behind these mergers was to result in a more comprehensive transport policy that would enhance the efficiency and productivity and result in rising service level. On 1 January 2010 also the police administration was reorganised. In the field of the Ministry of the Interior a new agency was set up, the National Police Board, Its personnel was combined from the Ministry of the Interior s Police Department and from the Provincial Police Commands. The new Agency directs and steers operational policy activities. Within its direct purview are the local police departments and the national police units, namely the National Bureau of Investigation, the Security Police, the National Traffic Police, the Police College of Finland and the Police Technical Centre, The Board is responsible for the performance steering of these units. The reasoning behind this reform was to safeguard the basic police services to citizens all over the country. As the local police have been reformed from 90 police stations to 24 police regions since beginning of 2009, it is possible to streamline also the leadership structures and to harmonise them also on regional and central level. The reform of police administration is closely linked to the reform of the regional administration. University reform The university reform on 1 January 2010 was one of the big reforms originating from the Government programme of The reform increased the autonomy of the universities, making them independent juristic persons, and improved the operational preconditions of the universities in the international environment so that the universities can now react more efficiently to the changes in the operational environment, have a more diversified financial basis, compete for international research funding, co-operate with foreign universities and research centres, allocate resources to top-quality research and strategically prioritised areas, strengthen the quality and effectiveness of

14 14 their research and teaching functions, and strengthen their role in the innovation systems. The origins of the reform lie in the needs expressed mainly by the university rectors concerning a stronger financial independence, and, to a large extent, the reform has come about as a result of international comparisons of the financial and administrative status of the universities in a number of other countries. As a result of the reform the universities are now independent legal persons supplied with a sufficient capital, and, as independent legal persons they are better equipped to respond to their own needs and to the expectations of society than when in the state budget. Also as legal persons, the universities, having a decision-making power over their own capital, have more scope for operating as based on their own decision. Measures are taken to secure the important role of the university institution in society and to ensure continued international competitiveness of the university system. Even though there was a strong political support and support from the university rectors, the status of the universities as independent legal persons gave rise to some conflicting views on the reform, resulting mainly from the changes caused by the reform in the representation in the university management. Previously, the representation in the university management was strongly based on the tripartite principle (professors, other teaching and research staff and other personnel, and students) now the number of professional outside leaders will be introduced into the university organs. The board is responsible for the finances of the university, and about half of the board members are elected from amongst three different groups in the university These are professors, other teaching and research staff and other personnel, and students. However, at least 40 per cent of the board members must be persons external to the university elected by the university collegiate body. The chair and vice-chair of the board are is elected from amongst the external members. Changes have taken place also in the employment relations of the university personnel. As the universities became separate from the State corporate, the posts and tenures in the universities came under legislation on labour contracts instead of civil service regulations. Consequently, the personnel are now employees of the new universities. The students decree education continues to be free of charge, even if universities can, however, arrange made-to-order degree education to citizens of non-eu/eea countries. In addition, there is a fixed-term trial of charging tuition fees to citizens of no-eu/eea countries in master s programmes taught in foreign languages. The above-quoted changes in the representation in the board and in the employment relations as well as the tuition fees to citizens of non-eu/eea countries have caused fears in certain groups. Part of the university management / staff may have fears concerning the decision making powers in the Board; part

15 15 of the personnel resists the changes in the employment relations and some students may have fears about the tuition fees being at some stage extended to the domestic students as well. Regionalisation Finland s present regionalisation process was launched by Prime Minister Paavo Lipponen s second government. It is based on the Relocation Act (362/2002) on the competence to relocate central government functions and units. The programme has continued during Prime Minister Vanhanen s Governments. The objectives of the regionalisation programme are to safeguard the effective execution of government functions and to ensure adequate staffing for government functions in future, and to promote balanced regional development and foster employment in different parts of the country as well as to base regionalisation decisions on uniform practice and democratic decision making. During the regionalisation programme, the Government will carry out its long-term relocation programme with a view to regionalising 4000 to 8000 government jobs beyond the capital city region by Approximately 4200 person years of the total 5234 person years consist of relocations from the Helsinki area to other parts of the country, while around 1000 person years are transfers across regions outside the Helsinki area. Altogether 2700 of a total of 4200 person years have been materialized, 900 have been decided on and there are plans for another 600 person years. The relocation is illustrated geographically in the following graphic on the next page. As set out in the Government Programme of Prime Minister Vanhanen s second Government, further measures have been carried out to transfer government jobs to the regions more evenly throughout the country. Financial assistance will be granted for arrangements during a transition period. Regionalisation activities are carried out by exploiting and building on existing strengths and know-how in each region. All government functions are included in the regionalisation assessments. Support services will also be transferred to the regions and brought together in units specializing in specific types of services. This is being done in order to boost efficiency in core functions and to streamline administrative structures.

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17 State Regional and Local Administration Short history Currently, the Government consists of 12 ministries. Each ministry is responsible for the preparation of matters within its field of competence and for the proper functioning of administration including steering of regional and local state administration within their administrative field. Regional state administration Due to the increased tasks of the welfare State, the Finnish public administration began to expand rapidly from the 1960s onwards. Until the 1980s, Finnish State administration followed a model in which public tasks were the joint responsibility of the ministries and central agencies. In regional administration, public tasks were the responsibility of Provincial State Offices, with the regional authorities representing various fields. In the early 1990s, the structures of State administration underwent a reform, partly due to the difficult economic recession. The system of central agencies as it was, was abolished; the number of Provincial State Offices reduced and several agencies were replaced by State companies and State enterprises. Finnish regional administration consists of both State administrative and municipal administrative units, but there is no single regional State authority. The Regional Administration Reform implemented in 1997 united separate authorities and introduced a unified regional division. Regional State administration was simplified and unified at the same time. Regional Environment Centres were established in Employment and Economic Development Centres in 1997 were established at the same time when the number of provinces was reduced from twelve to six to comply with the reformed tasks and the six new State Provincial Offices were established. Based on the 2007 Government Programme the Reform Project for Regional State Administration (ALKU) was launched in the summer of 2007 to make the roles, duties, steering and regional division of all regional state administrative authorities clearer. The reform aimed to enhance the citizen and customer orientation of regional administration as well as to increase efficiency and productivity in its functions. All state provincial offices, employment and economic centres, regional environmental centres, environmental permit agencies, road districts and occupational health and safety districts were phased out and their functions and tasks were reorganized into two new regional state administrative authorities from the beginning of 2010, known as the Regional state administrative agency and the Centre for economic development, transport and the

18 18 environment. The new administrative structure forms a backdrop for future changes in regional state administration. By bringing together regional development functions and decision-making powers related to resources for these tasks, the reform aims to enhance the role of the regional councils as authorities in developing the regions. Additionally, the forest centres will be functionally realigned into the rest of regional administration. Local state administration The system of jurisdictional districts was abolished at the beginning of the year 2008 which meant that the previous jurisdictional district offices were divided into sector bases offices (police, local register offices, execution offices and prosecution office. During the past few years the local state administration has been organised into larger geographical area of responsibility. In the field of prosecution former 64 offices were reorganised into 15 new offices in year The former 51 execution districts were organised into 22 execution offices at the beginning of year Also some Local register offices have been merged so that the number has decreased from 37 to 24. Since the beginning of 2009 the local police functions are carried by 24 offices instead of previous 90 offices. Current structure and on-going reforms State regional administration Regional administration in Finland encompasses regional state administration and regional administration within local self-government. State regional authorities perform tasks allotted to them by central government at the regional level and they direct the activities of local State administration. As a result of the administrative reform implemented in 2010, the main regional State authorities at the moment are the Regional State Administrative Agencies and the Centres for Economic Development, Transport and the Environment. In addition, a large number of district authorities operate in different administrative branches. The Regional State Administrative Agencies and the Centres for Economic Development, Transport and the Environment are multisectoral organisations, handling matters falling within the competence of several ministries. The division into regions is the basic arrangement of regional State administration. Accordingly, the forms of regional administration comprise one or

19 19 several entire regions. The division into Local State Districts is the basic arrangement of State administration on the local level. Uniform regional divisions strengthen regional thinking and activities as well as facilitate customer service and co-operation between the authorities. The Regional State Administrative Agencies are regional State authorities directed by eight ministries and they can be described as multisectoral expert organisations. The Regional State Administrative Agencies foster regional parity by executing all legislative implementation, steering and supervision functions in the regions. The agencies strengthen implementation of basic rights and legal protection, access to basic public services, environmental protection, environmental sustainability, public safety and a safe and healthy living and working environment. The agencies work in close collaboration with local authorities, and registry offices operate under the auspices of the agencies. There are six Regional State Administrative Agencies: Regional State Administrative Agency for Southern Finland Regional State Administrative Agency for Southwestern Finland Regional State Administrative Agency for Western and Inland Finland Regional State Administrative Agency for Eastern Finland Regional State Administrative Agency for Northern Finland Regional State Administrative Agency for Lapland The five areas of responsibility of the Regional State Administrative Agencies are basic public services; legal rights and permits; environmental permits; industrial safety; fire and rescue services and preparedness as well as the police. The Regional State Administrative Agencies for Eastern and Northern Finland offer services in all five areas of responsibility. The Agencies for Southern, Western and Inland Finland comprise all areas except policing. The Agency for Southwestern Finland includes all except environmental permits. The one for Lapland provides services related to basic public services, legal protection, permits and fire and rescue as well as preparedness activities. Administratively, Regional State Administrative Agencies come under the Ministry of Finance. When performing different functions, they are steered by the relevant ministries. The Centres for Economic Development, Transport and the Environment foster regional development by implementing and developing government activities in the regions. The Centres promote entrepreneurship, functioning of labour market, competence and cultural activities. They ensure safe and smooth transport operations, healthy environment and sustainable use of natural resources in the regions and are in charge of functions related to immigration of labour force. There are 15 Centres for Economic Development, Transport and the Environment: (Uusimaa, Häme, Southeast Finland, Kainuu, Central Finland, South

20 20 Savo, North Savo, North Karelia, Southwest Finland, Satakunta, Pirkanmaa, South Ostrobothnia, Ostrobothnia, North Ostrobothnia and Lapland). The Centres operate in close collaboration with the Regional Councils. The three areas of responsibility of the Centres for Economic Development, Transport and the Environment are economic development, labour force, competence and cultural activities; transport and infrastructure ant the environment and natural resources. Administratively, the Centres for Economic Development, Transport and the Environment come under the Ministry of Employment and the Economy. When performing different functions, they are steered by the relevant ministries. Local State Administration Local State administration in Finland comprises Local State Offices, district offices of State Local Districts, employment offices and tax offices. The main local authorities are the District Police, Local Register Offices, employment offices and tax offices. The services of the Police and Local Register Offices as well as enforcement and prosecution services are organised by Local State Districts. There are 90 Local State Districts in Finland. The service office network of local State administration is fairly comprehensive. As regards local government, there are close to 300 service offices of Local State Offices and district offices of Local State Districts, 200 Employment and Economic Development offices, and 23 tax offices and over 100 other service offices of tax administration. The total number of local State administration service offices is over 600. On the local level the service network of the Social Insurance Institution of Finland (KELA) is particularly significant in terms of the availability of services. KELA has 263 offices throughout the country. Furthermore, services of different administrative sectors are provided in the 200 Citizen s Offices (one-stop shops) according to local needs and circumstances around the country. The Citizen s Offices are joint service points of state (mainly the police, employment services, tax services and local register offices) and municipal services and The Social Insurance Institution of Finland. The concept is developed by the Ministry of Finance in co-ordination with the administrative sector involved in the service provision, The Social Insurance Institution of Finland, the Association of Local and Regional Authorities and the trade unions.

21 Municipalities and their regional administration The regional administration of the municipalities comprises Joint Municipal Boards set up by municipalities, the most important of which are Regional Councils and Medical Districts. The Regional Councils are responsible for attending to regional interests and for development related to municipal administration. They act as regional development authorities both in national regional policy and in projects partly financed by EU Structural Funds. The Councils are also responsible for regional plans, i.e., land use planning on the regional level. Regional councils and regional development Finland is divided into 19 regions, plus the autonomous province of Åland. Finland s Regional Councils are statutory joint municipal authorities operating according to the principles of local self-government. The Councils operate as regional development and regional planning authorities and are thus the units in charge of regional planning and looking after regional interests. On the basis of municipal democracy they articulate common regional needs and work to promote the material and cultural well-being of their regions. Regional Councils have also other tasks besides the statutory responsibilities. The delegates on the decision-making bodies of the Regional Councils are influential political appointees of the member municipalities. They represent the political will of the inhabitants of the region according to the results of local elections. Regional Councils are joint authorities formed and principally funded by their member municipalities. The Councils also receive an annual state grant primarily for independent regional development of the business community. The emphasis in the work of the Regional Councils is on both long-term planning and rapid reaction on current affairs. The Councils also implement and coordinate a number of various national and EU projects. Planning for a region covers a regional plan and a regional development programme and its implementation plan. A strategic regional plan is the fundamental document when developing a region. All the other plans and programmes regarding regional development, including implementing EU Structural Fund Programmes are derived from the above mentioned three documents.

22 22 Organisation The Assembly is the highest decision-making body of the Regional Council. The member municipalities elect representatives to the Assembly for a period of four years, the time between local elections. The number of representatives and voting rights are laid down in the Council s charter on the basis of population numbers. The Local Government Act means that the composition of the Assembly has to correspond to the strength political parties in the region. Only Councillors of the member municipalities can be members in the Assembly of the Regional Council. The Assembly normally convenes twice a year. The executive and administrative body of the Regional Council is the Board. Its members are elected by the Assembly along party lines to be politically representative of the region. The Region Mayor has responsibility of leading the Regional Council on operational level. Economic development policy Local authorities economic development and employment policies are aimed at safeguarding the region s competitiveness and viability. Economic development policy covers a variety of issues related to supporting business and industry, ranging from the development of city centres to the building of technology centres; from enterprise start-up to establishing Web presence. Active economic development policy can also involve the development of public services through private service provision, or co-operation with businesses aimed at improving local skills and competencies required by active involvement in the information society. The management of economic development policy is increasingly spread out across the entire municipal organisation. The policy is implemented through economic development companies, business partnerships, enterprise agencies, or incubators, to name a few. Also, local authorities have entrusted the management of EU grants to public authorities responsible for rural economic development. Many municipalities are also involved in business mentor projects that are aimed at reinforcing local business operations. International co-operation The Regional Councils take care of international relations and international affairs connected with their work. Since Finland entered the European Union, the international role of the Regional Councils has expanded and international relations and interaction between different regions have become part of the daily routine.

23 23 The foundation of the Committee of the Regions of the European Union at the beginning of 1994 formalised the representation of local and regional interests in the Union activities. The Regional Councils propose their candidates for membership and deputy membership of the EU Committee of the Regions. Many Regional Councils have their own permanent representations in Brussels in addition to the representation of the Association of Finnish Local and Regional Authorities. The Regional Councils representatives also participate in the Council of Europe s Congress of Local and Regional Authorities of Europe and its Chamber of Regions. The regional self-government experiment in Kainuu The Act on the regional self-government experiment in Kainuu (a region in North East Finland) was passed in the Finnish Parliament in February The aim of the self-government experiment is to gain experiences of the effects of the regional self-government enforcement on regional development work, basic services, citizen activity, the relationship between the regional and the state central government as well as the municipal and the state local government. The Act is valid from 1 June 2003 to 31 December The main reason for launching the administrative experiment in Kainuu was a concern over the direction in which the region was developing. The region was (and still is) an area of population loss, with an employment outlook that is one of the worst in the country and where it has been difficult to develop the region. As a result, local government finances in Kainuu were in many respects one of the weakest in the whole country and core public services were deemed to be under threat as a consequence. The trial project serves a number of purposes. Development measures and similar actions were boosted in the region by increasing the powers of Kainuu regional authorities and by allowing them to cover the allocation of central government resources. To make it possible to develop public services more effectively, to increase cost-effectiveness and to safeguard the availability and quality of services, public services and their funding were brought together at the regional level. The evaluation of the project is still in progress, so it is not possible to provide any conclusive results. When assessing the project and results, it must be borne in mind that regional administrations are self-governing units. They prioritize their targets and measures independently and exploit assessment information from their own perspective. They are very closely connected to the municipalities in their region, and are financed mainly by local authorities and related decision-making processes. Virtually all tasks of the regional administrations are functions of the municipalities. An independent interim evaluation report

24 24 on the progress made so far was published in autumn 2008 by the University of Tampere. A final report will be completed in spring The Government will present its proposals on follow-up measures in autumn 2010 and the trial will terminate at the end of The evaluation report indicates that the targets have been met successfully from the viewpoint of developing administrative structures. All planned structures have been set up and are operational. Views on whether the changes achieved to date are of the right sort differ across the region. The majority of those included in the assessment deemed the structural changes to be of the right kind. The use of statutory legislation for implementing structural reform has proven to be an effective tool, allowing resources to be brought together in a quick and efficient way. The use of opportunities created through the trial have according to the evaluation been successful in the case of services. Services have undergone changes that would not have been feasible under the old structure. However, where regional development is concerned, the assessment indicates that the region has not been able to use its powers to the fullest extent. The savings in costs and cuts in expenditure growth in local government finances has been a success in the project. Common understanding across municipalities in how to develop social welfare and health care services has proven to be fairly good according to the assessment. A hierarchical administrative structure in decision-making has, however, also created resistance to change. Public servants and local union representatives in regional administration have been dedicated to the trial project. However, little dedication does occur in local union representatives and senior public servants in the core municipalities. Highly critical attitudes to the trial among staff members in the region demonstrates the difficulties of managing change and reflects partial failure. The conflict experienced between financial objectives and service targets has also given rise to negative attitudes towards the project. Communication and dissemination of information was evaluated to have failed at least in part. It is worth noting, however, that the changes did not impact the daily work of most staff members. Industrial and business policy and the development of the regions have received less attention than developments in services and service structures. Extremely demanding financial objectives have created an atmosphere of failure, even though the cost savings achieved to date are substantial and unique in Finland. There is concern over a decrease in municipal self-government, but whether it has actually occurred is yet to be ascertained. The full extent of the powers of regional administration relative to central government has not become effective yet.

25 25 Municipalities In Finland, local authorities or municipalities play a highly influential role in society. On a European scale, Finnish local authorities are responsible for an exceptionally wide variety of duties. The Finnish municipalities have a broad responsibility for the provision of basic services to citizens. Municipalities have strong, constitutional self-government based on local democracy and decision making, and the right to levy taxes. Finnish municipalities are directed by local councils, whose members are elected through direct elections. Studies show that Finns attach great value to municipal services and like to use them. There are 342 municipalities in Finland at the beginning of Out of these 31local authorities are classified as bilingual, which means that there is an adequate number of speakers of both Finnish and Swedish, Finland s two official languages. From local authorities 19 are entirely Swedish-speaking. The annual budgets of all local and joint authorities put together exceed is around 36.5 billion euros (2008). The local authorities employ about employees, a fifth of Finland s employed labour force. In Finland, local authorities are responsible for providing welfare services to their residents. Studies show that residents value municipal services and use them exceedingly. Local authorities are responsible for the provision of primary care, specialist health care and dental care, provision of child day-care, welfare for the aged and the disabled and a wide range of other social services, running or financing the country s comprehensive and upper secondary schools, vocational institutes and polytechnics, providing adult education, art classes, cultural and recreational services, running libraries, water and energy supply, waste management, street and road maintenance and environmental protection, developing and supporting public transport, seeking to promote commerce and employment in their area, supervising land use and construction in their area, and promoting a healthy living environment. Municipal management system The Finnish municipal management system is characterised by division into political and professional management. The local authorities can organise

26 26 the municipal administration relatively freely. Each municipality must have a municipal council, a municipal board, an auditing committee for auditing municipal administration and finance, and an election committee that is responsible for organising elections. The council also has to elect one or more auditors to audit the administration and finances during the years of its term. The highest decision-making body of a municipality is the council, whose members are elected in general and equal elections (municipal elections). The council appoints the members of the municipal board, which has the task of preparing and executing council decisions. The council also selects committees, which direct the provision of public services in the municipality. The most common committees include those for education, social welfare and health, and land-use planning. These committees have previously been responsible for the production of services, but are increasingly becoming purchasers rather than producers of their own services. A municipality must also have a municipal manager, elected by the municipal council. The municipal manager is not a member of the municipal council. According to the amendments made to the Local Government Act in 2006, a municipality may also be managed by a mayor appointed by the municipal council. Mayor is an elected official and, is appointed for the same term of office as the municipal council, and works as the chairman of the municipal board (not of the council). Addition to a mayor, the municipalities may have deputy mayors also appointed by the council. There are currently two municipalities in Finland that have chosen a mayor instead of a municipal manager. The municipal council expresses the will of the residents. It lays down the general operative and financial outlines and decides on the main objectives. The council is a future-oriented strategic director that defines long-term objectives and goals. The municipal board is responsible for municipal administration and financial management. It prepares matters to be decided by the council, executes the decisions and watches over their legality. The board s responsibilities are more practical than those of the council. Municipal boards hold a strong administrative position in Finland. There may be committees working under the municipal board. The committees perform the permanent duties assigned by the municipal council. The responsibilities of the committees may include, for example, social and health care services, education, urban planning, environment and cultural and leisure services. The municipal manager or a mayor works under the municipal board as the head of municipal administration, financial management and other functions.

27 27 Municipal Service production Municipal authorities can provide services to residents in different ways. As local authorities cannot manage everything on their own, it often makes most sense to provide services jointly with other local authorities, communities and enterprises. Municipal authorities can produce the services they offer the residents themselves, but they can also procure them from other service providers, both public and private. They can also privatise their operations within the limits laid down in the law; they can, for instance, set up limited-liability companies. Many of the vocational institutes and polytechnics are private organisations, where municipalities may be the only or one of the stakeholders. A municipal authority can function jointly with one or more other local authorities. They can enter into cooperation agreements or found a separate organisation - a joint municipal authority - to handle their combined affairs. Total number of joint municipal authorities is around 185 Many of the services are produced jointly with other local authorities. For example, hospitals and many educational institutions are maintained by joint municipal authorities. Municipal authorities often set up a joint municipal authority to establish co-operation on a more permanent basis. Joint authorities typically provide educational and social and health-care services. Several local authorities can together establish a joint health centre or vocational institutions. Joint authorities include regional councils, which define regional policy, and hospital districts, which are responsible for specialist medical care. Each municipality forms its own political system or micro-society. Municipalities are political organisations in terms of their basic character: their activities are guided by means of political decision-making and their operations must comply with the principles and rules of democracy. Municipal personnel In total, the local and joint authorities in Finland employ nearly people, which constitutes one-fifth of Finland s entire workforce. In comparison, the state only employs some people at its various levels. Due to the demographic age imbalance in Finland, it is estimated that by 2020 half of the current personnel will retire. This leaves municipalities competing against one another for employees. Ongoing Reforms: The most important reforms on this field are described in chapter on multi-level governance.

28 28 Recent and on-going national reform projects at the municipal level There are numerous reform projects going on at the municipal level related to broad field of public service production, structural reorganisation and process reengineering. The municipalities are represented in around 200 unofficial and official working groups established by the ministries and other central agencies. The aim is to ensure good quality and feasibility of all legislation concerning municipalities, as well as accurate financial and administrative impacts. Important reforms in terms of horizontal co-operation are The Basic Public Services Programme and the Project to restructure municipalities and services, described shortly below. Project to restructure municipalities and services (PARAS-project) Government launched the project to restructure municipalities and services in Framework legislation concerning the reform came into force in Feb 2007 and is in force until the end of The legislation sets certain obligations to the municipalities they have to perform. The main obligations are described later in the text. The main reason behind the project is to secure the basic services also in the coming decades. The right to basic services comes from the Constitution of Finland. It will be a challenge to provide welfare services in a situation where the population ages, the post-war baby boom generation retires, internal migration increases, and where external economic changes e.g. in the wake of globalisation pose serious challenges. More efficient and effective services have been one of the aims of the project. Municipal mergers are expected to increase effectiveness. The availability, quality and productivity of municipal services need to be secured also in the future. Objectives of the reform to Restructure Municipalities and Services are a sound structural and financial basis for the services that municipalities are currently responsible for, in order to secure the organisation and provision of such services in the future, with due regard to the required standard of quality, effectiveness, availability, efficiency, and technological advancement. With this project the municipal structures are to be strengthened by merging municipalities and by incorporating parts of some municipalities into other municipalities. The changes in municipal boundaries are to be put into effect and their implementation supported in the manner laid down in the Act on Local Authority Boundaries, which was recently renewed (1698/2010). Furthermore service structures are to be strengthened by forming larger catchment areas for services for which the population basis provided by individual municipalities is insufficient and by increasing cooperation between municipalities.

29 29 Operational productivity is also to be improved by making the organization and production of municipal services more efficient and by strengthening the operating prerequisites in the Helsinki Metropolitan Area and other built-up regions with problematic urban structures. The obligations include, for example, that there has to be a population of about at least in a municipality or a partnership area that is responsible for primary health care and closely associated social services. A population of about at least is required from a municipality or a partnership area authorized to provide vocational basic education. This sort of demographic structure can be reached either by merging small municipalities or by setting up partnership areas. The municipalities may choose what measures they use when aiming to implement the act. With a view to this, local authorities will look for suitable partners themselves. This means that the State does not dictate how local authorities should meet the obligation for a minimum population base. New and stronger public bodies will then decide how they wish to deliver their services. When talking about services, customers are always the main focus. At present, the aim is to find into ways to better allow customers to choose whom they want their services from. Government report concerning the project and the challenges in implementation The Government gave its report concerning the project to the Parliament in November In the report s context, an evaluation about the progress was made and guidelines for the reform s continuation and possible legislatory or other changes was made. The Parliament will give its statement in the spring In the report an extensive evaluation both on the results and impacts of the reform was made. It was stated that the reform has proceeded towards the aims of the framework legislation, but the focus has been more on structures (municipal and administrative) than in the development of services. In the report it was remarked that the reform is still unaccomplished. The fact that the legislation concerning the reform has been in force only about 2,5 years also made and makes it difficult to evaluate the impacts of it on e.g. productivity, service development etc. However some rather tentative evaluations were made. Renewal of municipal structures was considered rapid, but this structure is still not cohesive enough. There is also about 60 municipalities that have not made decisions concerning their means to reach the population basis of inhabitants in social- and healthcare. One may find several reasons behind this. Probably one of the biggest is that according to the constitutional independence of the Finnish municipalities it was up to the municipalities themselves to choose between the means offered

30 30 in the Framework Act. If a municipality has under inhabitants it could choose between two means to reach this population base, which the Framework Act demands for primary health care and closely associated social services: a municipal merger or a partnership area (cooperation). Most municipalities under have found their solution during the programme implementation. After the Act came into force municipalities had little over half a year (until end of Aug 2007) to report to the government how they were going to implement the reform. The reasons why they haven t found the solutions are several: Neighbouring municipalities might have decisions with other municipalities in another geographical direction Some municipalities wait for their neighbours decisions before they know the whole situation Problems between neighbouring municipals relations, political party power dynamics etc. Also some municipalities deliberately refuse to do anything. Their decision makers may not see the need for the reform as their economical situation in the short term is seen to be in balance enough and they do not find it necessary to form a larger catchment area or increase the population base. In specific areas one reason has been the deviations made from the population base on the grounds of an archipelago environment, long distances or Swedish-speaking residents or language and culture rights of the Sami people in Lapland. According to the framework legislation, this right to deviate concerns only the population base, not the other aims or obligations of the law. Despite this specially those municipalities that have long distances have however been rather passive during the reform. The productivity nor the overall development of services has not been strongly in the focus of the reform, which was stated also in Governments report. Especially the development of social and health care services has many challenges partly due to the missing decisions on the structures. The integration of social- and healthcare in the partnership areas has proceeded slowly, even though the situation has developed into a more positive direction. Also planning and co-operation in the urban regions has had many challenges and has not been implemented strongly enough. It seems that without binding legislation, it is problematic to reach sufficient cooperation, coordination, co-financing and co-implementation of infrastructure, housing and other matters in the build-up urban areas, which are split into several municipalities. On the contrary the development in the vocational basic education has mainly reached the reform s aims. The state grants system has been partly renewed, the Basic Public Services Programme has been made statutory and some duties of local government have been transferred to central government accordingly the legislation concerning the reform.

31 31 The report also concluded that at some areas new measures are needed in near future. In the report, 57 actions in total were introduced to fulfil the aims of the reform. The main guidelines for the future work were following ones: Social and Health Care legislation needs to be reformed in near future as planned in the Government Programme in order to safeguard the permanent regulations concerning these services after the reform legislation (from beginning of 2013) The renewal of the ways to produce services as well as specific measures to improve the productivity of basic public services is needed In order to safeguard that every municipality will fulfil the population base from beginning of 2013, the government will have authority to oblige the municipalities to form a partnership area(s) In order to enhance co-operation in 7 largest urban regions, the government will start to prepare more binding legislation concerning land using, transport and housing. Concerning urban regions in general, the government will prepare a special legislation on account proceeding. This proceeding will be applicable in regions where the need for co-operation is unquestioned, but the implementation has not advanced by measures taken by the region itself. 1.4 Other forms of self-government In Finland, municipal self-government is the most important form of self-government. Other associations or organisations with the right to self-government include the Provincial Autonomy of the Åland Islands, churches, other religious communities and universities. These forms of self-government vary in relation to their status and execution. The Provincial Autonomy of Åland Islands The autonomy of the Åland Islands is established on the basis of the autonomy granted to it by international treaties and confirmed in the Finnish Constitution (Paragraph 120). Within the framework of its autonomy, the Province of the Åland Islands has its own political and administrative bodies responsible for decision-making. The Åland Islands are autonomous, as enacted in the Autonomy Act. The Åland Legislative assembly represent the people of the Åland island in matters relating to its autonomy. Only a person with the right of domicile may participate in the elections. The power to grant the right to domicile is vested the

32 32 Government of Åland. The legislative powers are enacted in the Autonomy act. The Parliament of Åland (lagtinget) exercises legislative power within the framework permitted by its autonomous position. Otherwise the laws enacted by Finland s Parliament apply. The Government of Åland (landskapsregeringen) is responsible for regional administration. Churches and religious communities Churches and other religious communities that function in Finland have their own autonomy, which is founded on the freedom of religion defined in the Constitution of Finland. The Evangelical Lutheran and the Orthodox Churches have special status under public law. Indirect Public Administration Indirect public administration comprises organisations which are not authorities, but which carry out public tasks or execute public powers. Indirect public administration, which functions under the supervision of the Government and ministries, is termed indirect State administration. Indirect State administration supplements and supports the authorities in managing the tasks of the welfare society. Although the organisations of indirect State administration are not part of the actual State administration, they carry out statutory public tasks and, in some cases, execute public powers. In accordance with the Constitution, tasks involving significant execution of public powers can only be delegated to public authorities. There are an average of fifty units of indirect State administration operating under Government supervision in Finland. Their size varies from large pension institutions to small fishery and reindeer herding associations. The importance of indirect State administration increased in the 1990s, as the functions of the State were corporatized and privatised. Indirect administration has played a significant role as the production of public services has been dispersed and reformed to meet the requirements of customers in an improved capacity.

33 33 2 e-government 2.1 Organization The Ministry of Finance (MoF) has the main responsibility in the development of ICT within government. The Public Management Department of MoF is responsible for management policy in central government and serves as the Government s expert on administrative development. The department is also responsible for the steering of IT in State agencies and co-ordination of IT in Municipalities as well as development of structures and steering of the whole public sector. State IT Management Unit (ValtIT) founded in 2005 in the Public Management Department of MoF is the main responsible for developing IT-functions common to the whole of a government. ValtIT drafts and updates the State IT strategy and oversees that the common flagship projects and services introduced in the strategy are implemented. The services are developed and managed by Government IT Shared Service Centre, which started its operations January 2nd It offers common IT services to the whole of state government and also certain services (for example eid and Citizen s Account) for municipalities.

34 34 State IT Management Organization GOVERNMENT Ministry of Finance State Valtion IT Steering IT-johtoryhmä Committee State ValtionIT IT-johtaja Director State IT Management Unit State IT Services State Valtion IT Coordination ITkoordinointiryhmä Committee VAHTI Administrative Areas Ministry1 IT Manager M2 M3 M4 M5 IT Manager IT Manager IT Manager IT Manager V1 V2 V3 V1 V2 V3 Agencies V1 V2 V3 V1 V2 V3 V1 V2 V3 Municipal IT Management Unit (KuntaIT) founded as a project in 2006 in the Ministry of Interior was moved to Ministry of Finance in 2008 and the existence of the unit was reinforced in KuntaIT co-ordinates the networked IT development among municipalities. It aims at creating nationally interoperable, customer oriented and productive services for all municipalities. It supports the reform of a municipal service structures. The Ministry of Transport and Communications chairs the Advisory Board for the Ubiquitous Information Society that steers the implementation of the government resolution on information society policy In the resolution Finnish Government outlined the aims of the national information society policy (Government resolution on the Objectives of the National Information Society Policy for ) and appointed the advisory board. The board has issued a program, in which the main focus is on the practical implementation of the strategy. The projects of the program are promoting electronic identifi-

35 35 cation, electronic invoicing and computer-aided teaching. Practical applications for public health services are also among the lead projects. There is a national CIO, State IT director, who is the head of State IT-management Unit and responsible for coordinating governmental IT and developing IT services and solutions common for a central and local government. The State IT Steering Committee consists of general and IT directors from all administrative branches. Main task of the board is to steer implementation of the State IT Strategy. There is also a governmental council of CIO s, State IT Co-ordination Committee, which consists of CIO s of all ministries. Overseeing the implementation of the IT strategy is the main task of the committee. Committee members are responsible for the development programs of their own administrative branch. 2.2 Figures The Finnish government s ICT expenditure was totalled 802,5 million euros in The major items of expenditure were wages and salaries and purchases of services, as in past years, which accounted for 28.0% and 51.6% respectively of all expenditure. Spending on software grew by 22% and on service purchases by 15%. There were altogether 4,281 full-time information management employees in The overall labour input of information management was estimated at 5,071 person years in Information management personnel accounted for 3.9% of all human resources in government organizations in There was an increase in staff numbers in 18 agencies and a fall in numbers in 23 organizations. The government administration has approximately 166,000 workstations, which means on average 1.4 workstations per employee. In this number the universities are included. The number of eservices in government organizations exceeds 300 and will be increasing quite fast in the next few years. Two third of the government bodies who responded to the survey reported on existing services and 23 per cent are planning new services in Altogether 71 per cent of current eservices are directed at private companies, 59 per cent at citizens and 18 per cent at public organizations. Some services have customers from two sectors. Growth potential will be significant in the future too, especially in organizations dealing with large volumes of transactions.

36 eservices The development of eservices has been rapid in Finland. Many high impact services are the high volume e-services developed and offered especially by thetax Administration (taxation services for citizens and enterprises), the Social Insurance Institution of Finland (social security services for citizens) and the Ministry of Labour and Industry (employment services for citizen s and different services for enterprises). National eid solution, Citizen Card, has been implemented in It is limited to public sector services and is not widely used.. Net bank IDs are widely used at the private sector. From 2003 they are also accepted in the public sector. Almost 100 per cent of identification is done by net bank IDs also in the public services. Public-private co-operation has been successful. A new egovernment, eservices and edemocracy program (SADe, ) sets the following priorities for public services: They are available through multiple channels, easily found and supporting the life situations of the citizens or enterprises. Customers see public administration as a coherent entity. The goal is that e-services will be available for citizens and enterprises in all key areas of service by the end of the year Priority is to offer high-quality customer-centric e-services from one or few access points with strong authentication and a single-sing on principle to all customers (citizens and corporations). The main challenges are getting the customers to use the developed e-services in high volumes, to develop the services with the best possible usability and the modernization of back-end systems at the same time with new e-services development. There are still legal constrains like the limits of data exchange (interoperability). Under the program there is working group to develop legislation and other methods for better horizontal steering. The biggest challenges are at the area of interoperability. The SADe program will deal with several essential issues including: Multi-channel public service development Extensiveness - entire public sector in point of view High development degree of eservices Customer orientation Life situation based service entities/categories Minimizing administrative burden Coherent visibility in national portals Development of IT management as a part of public management Improved productivity and profitability

37 37 Common services for whole public sector Stronger horizontal steering, a development of steering methods Higher interoperability Citizen participation and edemocracy Utilization and development of public sector IT markets. The key projects include development of Citizen s Account, national portals, eservice entities and national contact centre for customers. The first spearhead project in e-services development program is Citizens Account. The service will offer citizens a personal view to all transactions they have with public sector and one safe electronic channel for administration and citizens to exchange messages and documents. It will be a place where citizens can receive information from administration. There is also going to be a temporary archive for documents. Citizens will be notified by either or SMSmessage after something has changed in their accounts. First pilots for the service are planned to start late Interoperability The ongoing IT strategy work of the Finnish government is among other things pursuing common architectures and integrated systems to efficiently and cost-effectively provide unified services to administrations, businesses and citizens in accordance to the EU guidelines. Among the first tasks is the definition of the IT architecture baseline and the creation of a common enterprise architecture approach, a framework and methodology, for the Finnish government with further plans to extend it to the whole public administration. An interoperability framework and a governance model for state IT architecture has been developed, but the actual enterprise architecture definition work is currently under way. At the moment an architecture portal for whole of government is also being constructed. Common Integration solution for whole of government is currently in implementation phase by the Government IT Shared Service Centre. The upcoming legislation will make central elements of information architecture compulsorily for whole public sector.

38 Shared IT Services Common Service for document management, collaboration tools and archiving (excluding the final archives) for whole of government is being implemented in VALDA project. The document management and archiving will be offered as a service from the Government IT Shared Service Centre, first pilot being the new regional authorities. Rights management of civil servants is developed in VIRTU project. Requirements for authentication and rights managements of civil servants have been defined. The Government IT Shared Service Centre will coordinate the trust network and organise support services. 2.6 IT Infrastructure / Harmonized basic IT services Implementation of secure communication network for state government (excluding security authorities, who will have their own network) is currently under way. The need to accept also municipalities to the governmental network has been recognised. Also unified communication solutions are under development. Structural changes in central and regional government have created a need to harmonise the workstation services quicker than it was planned in the IT strategy. 2.7 Information Security and Contingency Planning The government Resolution on Enhancing Information Security in Central Government (issued in December 2009) sets out guidelines for central government to enhance information security as a key aspect of leadership and management, competence, risk management, and administrative reforms and activities. Adequate levels of information security, preparedness and protection must be specified and implemented with due regard for all pertinent legislative provisions and building on the respective organization s operational objectives and on the value and relevance of the information content of the operations to central government, to citizens and to public bodies. Besides legislative provisions and each organization s individual objectives, operations and information, material for specifying and implementing preparedness and protection levels is available in the overall guidelines and recommendations on information security and preparedness levels issued by the Ministry of Finance. Each public authority is responsible for ensuring that information security and personal data protection are sufficiently well secured in their organization

39 39 and when collaborating with stakeholders or procuring services from outside the organization. The provision of administrative services to the citizens and public communities and the exercise of other public power must be organized in such a way that all existing information, services provided and systems used are properly secured. 2.8 Municipal IT A strong independency of the municipalities has hindered horizontal steering. Municipal IT Management unit has developed common architectures, services descriptions and the models of co-operation. The work has been done at the open networks. Next challenge is an implementation and a take-up of the current results. The need for organization to support this next phase has been recognised. The work group as a part of SADe program is planning co-operative organisation (government and municipalities).

40 40

41 41 3 Vertical steering systems 3.1 Performance management Short history and current situation The public services production came under heavy criticism in the 1980 s. Researchers were increasingly critical about the quality, quantity and accessibility of public services, and administrative studies showed that citizens were to an ever-greater extent dissatisfied with the quality of services and bureaucracy involved in their production. Another finding highlighted in the research was the inefficiency of service production. Preparations for the steering model known as performance management were, consequently, started in Finland based on a Government Resolution in Performance management and performance budgeting were introduced over a period of several years by revising one part of the budget at a time. The transition took five years; the reform was started in the early 1990 s as pilot projects and by 1995 it was carried out. The target of the reform was to increase the freedom of action and accountability of government agencies and institutions in order to gain better services and more efficient use of resources. The core of this reform was, on the one hand, to combine the numerous agency-specific expenditure appropriations into one single lump sum for each agency and to give agencies much greater latitude in how to spend their appropriations, and, on the other hand, to require agencies to commit themselves to the agreed performance targets in return. The performance management reform was extended to the relationship between the state central government and municipal government by delegating authority previously held by central government to municipalities. The grants paid out to municipalities from state budget were revised and the sector-specific division into appropriations for schools, hospitals, social welfare etc. was abolished.

42 42 What became the most important practical application of performance management was the performance agreement, concluded between a ministry in charge of an administrative field and a government agency subordinate to that ministry. Large agencies operating nation-wide also soon established a practice of concluding performance agreements internally between the various hierarchy levels (central - regional/district - local). An important factor underlying the introduction of the performance management reform was the exceptionally deep recession in Finland s economic history in the early 1990 s. The recession served to accelerate the implementation of the reforms and to enhance its impact. In the ministries, enthusiasm for pursuing development of the steering model waned considerably in the early years of Finland s EU membership in the late 1990 s. The Ministry of Finance initiated an evaluation of the steering system in the mid-1990 s, but this led to no significant reappraisals. The financial administration reform was continued with the introduction of business accounting alongside administrative accounting at the end of the 1990 s. Business accounting has enabled the development of modern financial steering and control procedures. Here, too, results have been very uneven, and indeed a large proportion of the central government administration has not even taken up the potential afforded by business accounting. The model now incorporates both commercial accounting and budget accounting. Government assets were also inventoried in the reform and a national balance sheet was created. Evaluation of the performance management system was taken up strongly in the early 2000 s. The Ministry of Finance conducted and commissioned evaluations of how the steering system was working. The results were discussed by the Central government administration reform ministerial working group appointed by the Government. The working group produced and presented its own recommendations and suggested areas for development. At the same time, Parliament appointed a working group consisting of Members of Parliament and senior experts to evaluate performance management from the point of view of Parliament s budgetary authority. Both of these highlevel working groups reached the same essential conclusions: it was observed that in a number of aspects performance management required a higher degree of tangibility and discipline. Parliament was strongly critical of the lack of specificity and content in the performance reports submitted to it. It was also noted that the reports too often discussed something quite different from the performance targets submitted to Parliament in the budget. The ministerial working group on central government administration reform addressed this matter by voicing a need to present targets and report on them in a tangible manner, using indicators. Both working groups (the central government and Parliament) considered that the ministries had not fulfilled their role as performance-steering bodies. By contrast, government agencies had developed quite extensive skills and

43 capabilities in self-control and in the use of indicators, as per the aims of the reform. Indeed, a significant part of the development proposals and reforms subsequently carried out involved the enhancing of the leading role of ministries in target setting. The purpose of the budget legislation reform in 2004 was to significantly enhance performance management and accountability in the administration. The budget legislation now contains, among other things, new provisions on the Central Government Final Accounts Report and on the Government financial controller s function, on performance and management accounting on annual report and reporting on performance and on statement of the ministry on the final accounts. The annual government budget is the key document in the Finnish performance management process. It shows the performance targets of all levels of the hierarchy covered by the steering system in a general form. Apart from the budget, the performance agreements between ministries and agencies and the agency performance reports are also important; all of these are appended to the Central Government Final Accounts Report submitted to Parliament each year. Since the performance management system was introduced, the status and nature of performance agreements have been subject to debate. The agreements are not legally binding, and performance management instruments cannot bypass or alter statutory duties; instead, such duties form the basis of both performance management and agreements. The Government Programme forms the basis for outcome targets. This is, essentially, an agreement between political parties entering into co-operation in forming a Government. These days, it is customary for a newly appointed Government to draft a Government Strategy Document (GSD) immediately upon taking office. The Government Programme and the Government Strategy Document form the basis on which ministries draft their outcome targets. Each ministry drafts outcome targets for its administrative sector independently. Outcome targets typically extend beyond the purview of any single ministry. Indeed, outcome targets require as matter of course co-operation between the ministries on the one hand and between ministries and other national and international actors on the other. Outcome targets are thus typically horizontal. The ministries are responsible for the performance of their respective administrative fields. Ministries should ensure that proper performance targets are set, also for their own operations, and that the agencies present true and fair information on the outcomes of their operations in their annual accounts. Social impacts and outcome targets are emphasised for the ministries performance targets. Operational performance targets are emphasised for other agencies and institutions. The fact that the principal concept is always generating added value for the agency s customers and for the society as a whole has been equally emphasised. 43

44 44 The targets set should be connected with the respective operations and resources as closely as possible. Alongside with the positive performance targets set, also the unintended or side effects of the set targets should be taken into consideration. Performance targets are primarily set as indicators and only secondarily as verbal targets. It is generally accepted that performance targets do not need to cover the entire range of operations; instead, the performance agreement can focus on the most important points and results of the budget year. However, the guiding principle is that performance targets apply to both the agency s basic operations and its development measures. The Final accounts report is an instrument of the accountability of the Government and ministries to Parliament and the public concerning national financial administration, the effectiveness of social development policy and the performance of the administration. The annual state central government budget is both the principal fiscal policy document in the public sector and a key document in performance management. The budget combines fiscal control with the managerial foundation of central government service production. The performance targets are explained to Parliament that has the authority to decide on the budget, in the context of and explanation to the budget appropriations. The hierarchical nature of the target setting is shown in the traditional budget appropriation hierarchy as follows: General context describes the Government s fiscal policy and principal actions aiming at implementing the Government Programme and strategy document during the budget year. This also describes the horizontal cross-sectoral programmes as necessary as well as their outcome targets. The main title level describes the outcome targets set by each ministry for itself on the basis of the Government Programme and the strategy document and the targets aiming at these during the budget year. Chapter level describes the performance targets set by ministries within their policy sectors; these constitute a logical link to the performance targets agreed between ministries and agencies. Budget line level describes the preliminarily agreed operational performance targets of agencies in efficiency and quality; the targets are confirmed after Parliament has approved the budget so that the performance targets and the appropriations granted are in balance to the satisfaction of both parties to the agreements (final performance agreement). The introduction of performance management in Finland has been hindered and slowed down by the lack of a clear-cut definition for the hierarchical nature of performance targets and consequently for the hierarchical responsibility for their implementation in the instructions issued in Outcome targets and output targets were lumped together in a way that served only to confuse the responsibility and role of the ministries in particular as regards policy effectiveness in the performance management process. The conceptual model of the reform the performance prism illustrates the principal concepts of performance management:

45 45 The performance prism Societal impact targets (outcomes) Operational performance: outputs Management by results Societal effectiveness Acco u n tabilit y Operational Outputs and efficiency quality management economy commodities and public productivity goods profitability service ability and cost-recovery rate quality Societal impact: outcomes How operations and use of finances have influenced the societal impacts Operational results (outputs) Human resources development There are duties in agencies for which it is difficult to develop quantitative indicators, therefore the concept of systematic evaluation has been added as a replacement for the more technical indicators in such cases. Evaluation here means analysis of qualitative material collected with predetermined information collection and processing methods. The Budget Framework - Central prioritisation arrangement At the beginning of the electoral period, the Government gives a decision on the ceiling for the Budget expenditures over the entire electoral period. The allocation of expenditures by administrative branches is revised yearly with a decision on central government spending limits. The overall spending limits set by the Government provide a framework for the ministries in preparing their proposals on the following year s Budget. The draft budgets handed in by the ministries are processed at the Ministry of Finance. The Minister of Finance decides its position on the budget proposal and hands the proposed budget to the ministries. Based on the position paper of the Ministry of Finance, a series of negotiations on the draft budgets are held between the Ministry of Finance and each of the other ministries with a view to settling any differences of opinion on the size of appropriations. Following this round of negotiations, the entire Government considers the draft budget prepared by

46 46 the Ministry of Finance in the Government budget session held in August; this nowadays lasts from two to three days. At the budget session, the Government substantively endorses the contents of the budget proposal. Once the Ministry of Finance has finalised the budget proposal, it is officially approved by the Government and the President of the Republic and is submitted to Parliament for consideration. On-going reforms and challenges In April 2009, a project on the evaluation of the functioning of the performance management system was launched by the Ministry of Finance based on the annual report of the State Audit Office calling for government measures to evaluate the state of the performance management system. This project will evaluate the operability of the present performance management system from the perspectives of the steering of the public service production for which the state is responsible; the management of the fiscal policy; and setting and evaluating the performance targets set across the various sectors. From these perspectives, also the functioning of the present performance management system in relation to other systems of management will be evaluated as part of the corporate steering system. The central future challenges of the performance management system will be evaluated, and, based on these measures, proposals will be made on the needed future measures to develop the performance management system. Performance management assessment View point Financial policy management Public service production Horizontal targets setting and monitoring Parliament Assessment of current situation Government and ministries Development needs for the future Agencies

47 There is also work going on to further develop the budget legislation. The current project maps out the situation and provides a preliminary evaluation of the planned reform activities. The project also assesses how well a budget model based on business bookkeeping principles would apply to government activities. This project has thus linkages to the performance management system renewal. The fact that in some cases the performance negotiations are not taken seriously enough seems to remain a challenge in performance management at least to some extent despite development measures and the attention paid to these issues. The negotiations are carried through but there may in some ministries exist what one might call a belittling attitude. Another problem is that numerous reports are produced by agencies that then have nothing to do with the operational effectiveness or operational performance. Neither have economy, productivity and service targets been set by all the agencies. The performance agreements have been criticised for their time-span (one year) though in some cases longer periods have been used. The agreements have also been criticised for their lack of strategic approach as well as for the fact that performance targets that are defined by a performance area reinforce a taskoriented approach that prevents co-operation between administrative fields. The Finnish public sector institutions are relatively strong and effective. Regardless of the challenges remaining, their efficiency and effectiveness are very strong in the vertical management, in the target setting and in the performance orientation. This is on one hand due to the long tradition of developing performance management. The strong emphasis on verticality in the Finnish public administration results also from the tradition of strong ministries, including the sc. ministerial responsibility and thus the political side. In the coalition Governments the distribution of portfolios strengthens this phenomenon. The minister is responsible for the vertical silo and will want to keep that power steady, and the current performance management system works well for this end. The silo-oriented performance management also has reflections to the public management reform work. The public reformers do not have in very many areas strong reform tools such as horizontal target setting. In the more extensive reforms things can be solved with amendments to legislation, but in many areas the success of a reform lies solely on very soft tools that the public management reformers have at their disposal (e.g., joint development projects, pilots, training, encouraging). Therefore the success of a reform is often really in the hands of the different administrative fields, and it is very much up to them how well, completely and fast they implement the different parts of the reform. This again may depend on the view and development orientation of the leaders of that particular ministry, and thus be perhaps too much in individual hands. This silo-type administration and procedures is thus clearly one obstacle. The silos are very strong indeed, and they are very effectively managed. This means that the development measures inside the silo depends, as said above, 47

48 48 on the enthusiasm of that particular field. Thus horizontal or whole-of-government reform initiatives have to have very strong tools (e.g. legislation, central funding) and strong and unanimous political, and rather also administrative, support. This also results on the other hand in the information about the achievements and visions about what should be done in public management reform being often fragmented by the silos and not forming a coherent picture of what has been achieved or what needs to be done. All the bottom-up information does not always reach the central development actors, but rather stays in the administrative field. 3.2 Market Steering Short history and current situation Hand in hand with the performance management reform started also marketisation, the process of switching agencies into state-owned enterprises and shareholder companies. The Act on State owned Enterprises was introduced in 1987 and entered into force on 1 January The Act concerned a new form of organization, the State owned enterprise. From the organizational point of view, a State owned enterprise came between a State agency and a Public company. State owned enterprises are institutions outside the State budget operating under commercial business principles and as based on the service and other objectives set on it by Parliament The issuing of the Act on State owned enterprises involved no political passions in Finland; irrespective of their composition, the Governments have supported the development of State activities towards market and customer orientation. Besides the Act on State owned enterprise s, the field of activity and the tasks of state owned enterprises are regulated by enterprise-specific laws. The first enterprises started operating at the beginning of 1989, bringing an expanded use of competitive market circumstances into the public service production. The state owned enterprise reform then brought the first experiences of managerialism into the public sector in Finland. The pressure factors behind the reform at this stage included productivity pressures and pressures to increase the quality and availability of public services as well as in general a growing pressure also on the state administration to modernise itself. The goals of the reform included improving the competitiveness of State owned enterprises as well as developing the quality of services. The idea was also to improve the general operating conditions. With the reform the intention was to improve the management possibilities and, on the other hand, to emphasise the economic responsibility of the enterprises themselves. Compared to the state agencies the

49 aim was also that the new enterprise model would give a possibility to have a more competitive personnel policy. In addition, the possibilities to slim the management of the enterprises and to simplify and speed up their decision making were seen as objectives of the new law on State owned enterprises. The reform was in general supported by both politicians and the civil servants. The Act on State owned enterprise s was revised in the early 1990 s to take into account the relations of a state enterprise and its subsidiaries, and the concept and ways of operating of a consolidated corporation began the emerge. At that time the reform policy was still relatively new, and an accelerated move towards market-based production was introduced concerning services that the users always paid for (Post, Railways, Personnel canteens) and the internal or business-to business services (the Centre for data processing, the Government printing and publishing centre). These were what one could call more obvious cases for corporatisation. During the nineties also some more difficult cases were turned into state enterprises. Institutions with limited or hardly existing market experience were thrown into competition. These were more or less in a monopoly position at the time a position that was then legally abolished in the reformation process (examples including the National Board of Forestry and the National Aviation Authority). As the reform was launched, the State owned enterprise format was considered to be a more stable state of affairs for the organisations than it has proven to be. In quite a few cases, the period of an organisation being a state owned enterprise has been relatively short-lived and they have, after a few years, been turned further into state-owned shareholder companies. Thus the state owned enterprise has in many cases been an interim phase but as such an important stepping-stone towards becoming a company. It would probably have been considerably more difficult to turn the agencies directly into companies. The interim phase has been important for the personnel to adjust as well as for the new more market-oriented management culture to root in. In 2008, beginning from the year 1989, sixteen state agencies or parts of them had been turned into state owned enterprises and of these, eleven had been incorporatised during the years of Six of these enterprises had been privatised. As a result of the most recent state owned enterprise reform, still two more state owned enterprises have been incorporatised as of January 1, 2010 (the Finnish Civil Aviation Administration and the Shipping Enterprise), and the position of three more state owned enterprises (the Forest and Park Service Metsähallitus, the Senate Properties and the Finnish State Pilotage Enterprise) is being considered at the moment. As a result of the public management reforms, the number of the personnel financed directly by the budget was reduced from 213,000 to 130,000 during the period from 1989 to The state owned enterprises, as defined in the Government Bill of 2002 (161/2002), remained principally under the market steering of the ministries, although outside the state budget. The Council of State plenary session would 49

50 50 only deal with far-reaching matters that had a significant weight in principle. Also those enterprises that were switched over to companies remained under the ownership steering of their previous respective ministries. In some special cases the companies are still steered by their original owner ministry. In general, however, the ownership steering of the state has nowadays been centralised to the Prime Minister s Office, i.e., the Ownership Steering Department responsible, among its other duties, for state ownership policy, the ownership steering of state owned companies under the PMO, the co-ordination of the ministries ownership steering procedures and the inter-ministerial co-operation. The State owned enterprise reform has, to a large extent, been continued with until recent times. Previously, there have been no sudden reversals or abandonment of the main lines or contents of the reform during or between the various Governments. Due, however, to a recent decision of the European Commission (C7/2006) discussed below, the status of the state owned enterprises has been re-examined resulting so far in the incorporatisation of two of them. Recent and on-going reforms The European Commission decision (C7/2006) was partly negative in regards to the Finnish State Owned Enterprise model. The Commission stated that the existing protection against bankruptcy and the different tax treatment both giving the state owned enterprises a competitive advantage compared to private market operators - of the state owned enterprises are against the EU legislation. The Commission decision directly concerned only the Finnish Road Enterprise (since January 1, 2008 Destia Ltd.) but has had an effect on the entire state owned enterprise system and the five state owned enterprises existing at the time of the decision. Consequently, the Ministry of Finance set up in 2008 a working group (Suitability of the State Owned Enterprise Model in the Common Market) to study the situation and to make proposals for the changes needed in the state owned enterprises organizations (at that time, the Finnish Civil Aviation Administration (Finavia), the Shipping Enterprise (Fintaship), the Finnish State Pilotage Enterprise (Finnpilot), the Senate Properties and the Forest and Park Service Metsähallitus). In the Government s Finance Committee, a decision was made on the 6th of March 2009 to prepare new enterprise legislation allowing a state enterprise to function only in an in-house position, providing services only to state agencies and institutions. The working group gave its final report in December Prior to that, during the mandate of the working group, the Ministry of Transport and Communications introduced to Parliament law proposals concerning the incorporation of the Finnish Civil Aviation Administration (Finavia) and of the Shipping

51 Company Administration (Fintaship). Both laws entered into force on January 1 st, The Finnish State Pilotage Enterprise is in the process of being incorporated, the aim being that it will function as a corporation beginning January 1, The Senate Properties is planned to continue as an in-house state owned enterprise, a government proposal including this aspect being planned to be given to Parliament during the early months of The future status of the Metsähallitus is at present being worked on in co- operation between the Ministries of Agriculture and Forestry and of the Environment. 51

52 52

53 53 4 Horizontal Steering systems In the Finnish state administration the word horizontality is used to describe different steering mechanisms that work across administrative fields. The term refers for instance to programme management (horizontal policy programs of the Government and the Government Strategy Document GSD), state corporate governance and it is also used in relation to different cross governmental working groups (both on political level and on civil servant level). The policy programs of the government (together with the Government Strategy document) form the core of the so-called Program Management System in Finland identifying the horizontal priorities of the current government. The corporate governance is more a question of practical steering of common mechanisms of the state corporate. The cross-governmental working groups (or advisory boards and committees) is a traditional working method in the Finnish government bringing together all the actors having a role (or an interest) in a matter in hand. This way of working is used in all major reforms and projects (often including the participation of the trade unions). Also non-governmental actors are often included when required. Even though horizontality is considered a weakness of Finnish Public administration it has always been a tradition and strength to involve other ministries and stakeholders in the development projects often from the very beginning. Also the general openness, like informing the public about new projects, the traditionally very strong consultation processes is a strength that helps not just in giving out information and building trust but also in bringing more information and expertise in. 4.1 Programme management The Programme Management system was designed by the Ministry of Finance as part of the Finnish Central Government Reform, which took place during the years The reform was partly based on the Potential Governance Agenda for Finland report of the three international experts (Bouckaert, Ormond, Peters; Ministry of Finance, Finland, 8/2000).

54 54 The Government Programme is the most important steering document for the administration, and it has developed towards more horizontality compared to previous decades. The Government also has besides its normal meetings and Evening School unofficial negotiations that have become more official as the amount of memorandums has grown. The chairs of parliamentary groups of the Government parties also attend the evening school. There are also Government negotiation sessions and meetings for the leaders of the parties represented in the Government., all this aim to some extent to a more whole-of-government view and working. However individual ministers are very strong in the issues that concern their administrative field. This can be seen especially when people are nominated to their post in ministries. The minister is representing the whole Government, and that means that he/she represents the political will of the Government and also that of his/her political party. But he/she is also at the same time driving the interests of his/her ministry and its administrative field. The cornerstones of Programme Management are as follows: The Government Programme identifies horizontal priorities of the Government. The most important horizontal priorities identified in the Government Programme are organized as Policy Programmes The follow-up of the Government Programme is focussed around the horizontal policy priorities of the Government, with the emphasis on the Policy Programmes but also so called other horizontal policies ; these are included into a new instrument called the Government Strategic Document (GSD) There is a full time Programme Director nominated to manage each Programme For each Programme a Coordinating Minister is named, with the political responsibility over the Programme area, larger than his/her own government portfolio A horizontal Group of Ministers deals with all the political questions and decisions related to the Programme The role of the Prime Minister s Office is strengthened, including resources for the policy analysis and follow-up of the Government s horizontal objectives Evaluation of the Government policies gains new impetus as part of the annual Government Strategic Document process The Government Programme follow-up is closely linked with another powerful process, namely the budget process; this means e.g. that the schedules of the political handling of both relevant information budgetary and substantial have to be coordinated and linked.

55 The Government Programme is implemented and monitored with the means of the Government Strategy Document. It covers the horizontal policy programmes agreed upon in the Government Programme. In addition to the policy programmes, the Government attaches particular attention to some broadbased policy themes. The implementation of the Government Programme is monitored on the basis of indicators described in the Strategy Document. Most of the indicators reflect the state of play and development of phenomena, which are key to the Government policies. Certain indicators are process indicators describing the achieved policy progress. The setting up of indicators will serve a more thorough monitoring and assessment of the Government Programme to be carried out half-way through the electoral period at the latest. The assessment is to provide the Government with relevant information on the main trends of societal development. This will enable the introduction of new and more effective tools to direct the development. In the present Programme Management System clear effectiveness targets are set for each horizontal policy area and are included in the annual Government Strategy Document. Particularly in the cases of the cross-ministerial Policy Programmes a remarkable step has been taken in the formulation of such targets. Policy Programmes are also the areas where choosing the set of indicators for policy evaluation has been most developed i.e. they are concrete, quantifiable and relevant. In practice collection of the information needed and the assessment of the successfulness of the policies is carried out in close collaboration between the PMO, the Policy Programmes and ministries. In Policy Programmes and ministries there is a special network of officials who are responsible of the coordination of the data collection and the preparation of the positions that Policy Programmes and ministries represent in the GSD evaluation. The implementation and monitoring of the Government Programme was renewed by the GSD. The different phases of the process are the preparation of the GSD, its monitoring and effectiveness evaluation and the policy forum when the Government is in the middle of its term. These Policy forums are now established. Last time the Government devoted two days for this midterm Policy Forum. In the Policy Forums the members of the Government had an opportunity to concentrate on major policy developments and discuss them freely without a necessity to make concrete decisions in that particular situation. The idea was not only to evaluate the effectiveness of the policies but also to form the overall picture of the major developments in the society by the middle of the election period, and to draw policy conclusions for the remaining election period. This was the part of the process that was not foreseen or planned but on the contrary emerged spontaneously based on political will. The Governments budget forum concentrates on the financial issues and the policy forum on dialogue about achievements and further action needed. 55

56 56 The budgetary process has during last years gained more and more political importance as in many other countries - and has in fact quite naturally become the monopoly for the keenest public and political debates. The problem with this has been that the fact material for those debates has been limited mainly to economic and financial data. Also the political handling has for long been following established rules of the game and is difficult to change. Anyhow, even budget officials themselves have criticized the present situation. Therefore, in practice it has been most important to create ways for a new and closer cooperation between the Prime Minister s Office (PMO) and the Ministry of Finance (MOF). The most important thing is that the schedules for the two main processes of the Government are annually linked together. In practice for the annual frame budget negotiations (in March every year) the PMO provides the Government with a draft Government Strategic Document with an overview of the realization of the Government Programme. This analysis is prepared by the PMO based on the material collected from the ministries and Policy Programmes. After deciding the financial frame for next four years from the financial point of view, the final GSD is discussed within the Government. Changes on proposals by ministries are done if there is no financing reserved for the purposes proposed. In addition to PMO and MoF the Ministry of Justice has a role on monitoring overall government priorities through a legislative plan of the Government including the most important legislative projects for the Government s term of office. The plan is a part of the Government Strategy Document. The legislative plan describes the measures through which the Government and the ministries aim to improve the quality and comprehensibility of legislation and promote the implementation of the principles for good legislative drafting. The legislative plan also includes 22 legislative drafting projects prepared in different ministries. The Ministerial working group on better regulation follows the preparation and progress of these projects with regard to the principles of better law drafting. For the co-ordination challenges one is the budgeting of the policy programs and the relation between the Government Strategic Document (GSD). The idea is that since the annual budget document is basically still structured according to Ministerial sectors, a way has had to be established in which the Policy Programmes are visible in the budget. At the moment the system is such that all the appropriations that contribute to the Programmes are listed in the budget document. On the other hand, the same list of resources is included in the text concerning the Policy Programmes in the GSD. The connection between the GSD process and the budgetary process is also very important due to the evolving roles of the various actors. The goal behind this reform has been genuinely horizontal. It has not been the idea that the different policy programmes would after their mandate is over be turned into units in some administrative field. The role of the ministerial groups of the policy programmes towards the other ministerial groups that

57 the Government has, has remained a bit vague. The co-ordinating minister is minister in the Government who besides his/her own portfolio/ministry has also the responsibility of leading a programme. e.g to start the programme, to chose the programme director, the co-ordinating minister also has the right to attend the budget negotiations between the ministries in the programme and the MoF. Their role has perhaps not risen to the level that was expected at the first stages of the reform. In the present Programme Management System clear effectiveness targets are set for each horizontal policy area and are included in the annual Government Strategy Document. Particularly in the cases of the cross-ministerial Policy Programmes a remarkable step has been taken in the formulation of such targets. Policy Programmes are also the areas where choosing the set of indicators for policy evaluation has been most developed i.e. they are concrete, quantifiable and relevant. In the GSD-based evaluation process the developments of the policy sectors are analyzed and evaluated systematically to form a picture of the most urgent challenges that the Government faces, and the effects and sufficiency of the government activities. This, accordingly, is supposed to lead to the necessary conclusions in the following Government Strategy Document, budgetary decisions and other decision-making processes. The main actor in the preparation of the Government Strategy evaluation is the Prime Minister s Office. The PMO officials conduct most of the work related to the preparation of the evaluation report as well as the overall guidance of the process. The co-operation between PMO officials and Prime Minister s political special advisors is also highly important. Budgetary arrangements form a challenge for the Programme Management system (and specifically the horizontal policy programs). There is a need to sharpen the possibilities to allocate resources according to political priorities. At the moment there are no earmarked finances for the program. Instead the actions are financed within in budgets of each line ministry involved in the program. In an interim evaluation made during the last Government of the first programmes it was stated that it was felt in the administration that the political priorities have been more visible, the steering of the programme through the ministerial groups is positive, the co-operation is more wide between the ministries, different views have been better able to fit together, actions for different administrative fields have been fit together to reach the goals. The programmes have made the co-operation already existing more systematic. According to the evaluation, civil servants consider that Programme Management reform has strengthened political steering in the horizontal policy areas. In contrast, in the eyes of ministers and in the everyday life of the Government, Policy Programmes have not yet been in a very important position. Programme Management has not changed political preparation to a remarkable sense but cooperation and coordination of the preparatory work by the civil servants has been improved significantly. 57

58 58 The main findings of the evaluation can be summarized as follows: The reform is ambitious and long term: one should not expect total changes or complete success in a short time Horizontal working culture is there to stay but it takes time to show concrete progress in terms of policy contents Programme Management is a right step towards a more modern Government work but it is not ready yet Traditional and modern management principles are still controversial and keep being in conflict There is strong belief in the change of the administrative culture. When ministers and civil servants were interviewed for the interim evaluation of the policy programmes many stated that the important thing in the end was that money, as it is a tool in political power, is something that ministers stick to very efficiently and it is really hard to get any cases were money would be switched over to another ministry. Horizontal co-operation is always seen as positive as long as its resources come from outside one s own ministry. This four-year Government period and the silos together form one of the challenges. When Governments are formed after the elections and the portfolios divided between the political parties and ministers, the normal thing to happen is that the minister will start very quickly to defend their ministry and administrative field, they are reluctant to make any such changes during the election period that would weaken their ministry or portfolio in any way. Thus the only timeslot to make such changes (e.g structural, reforms affecting division of labour) seems often to be only right after the elections and before the portfolios have been dealt out, so a few weeks once every four years. If this opportunity is missed the next one does not come soon. 4.2 Horizontal Steering of State Regional Administration The large Regional Administration Reform was implemented beginning of year The reform brought also a horizontal steering system to state regional administration. The main challenge has been that the regional agencies are multi-field agencies and steered by more than one ministry. That is not an ideal situation for performance management. One of the major goals of the Regional Administration Reform (ALKU) was to introduce a system of strategic steering, which would seat the ministries, regional agencies and Regional Councils at the same table. The ALKU project resulted in an innovative steering mechanism of the new regional government agencies. The ELY is steered by 6 ministries, Ministry of Employment and the Economy having a co-ordinating role in the steering process. The AVI steered by 8 ministries, Minis-

59 try of Finance having the co-ordinating role. In the co-ordination processes a strategy document is prepared for ELY and AVI as well as the performance agreements. On the other hand the ELY is responsible for steering the Employment and Economic Development Offices and AVI is responsible for steering the Local register Offices (currently steered by the Ministry of Finance). 59