4. DECENTRALIZATION OF STATE ADMINISTRATION AND REFORM OF TERRITORIAL ADMINISTRATION

4.1 Objectives, Principles and Priorities

One of the essential and still unresolved problems of social transformation in the Czech Republic consists in the conversion of the still excessively state-controlled and centralized public administration into a system of modern European public administration. We are at the beginning of the second phase of the decentralization process the core of which consists in the establishment of regions and the second tier of territorial self-government laid down in the Constitution of the Czech Republic. Following the abolition of the communal system of the "national committees" and the restoration of self-governing communes after 1989, this will be the most important change in the territorial and administrative structure of the state and in the organization of the public administration system as a whole, its individual components and the relationships among these components.

The existing analyses, proposals and statements of politicians, experts and representatives of the public have revealed that a comprehensive concept of the restored and newly introduced self-government and of the general organization of public administration is still missing. Substantiated proposals concerning this matter of public interest par excellence have yet to be drafted and subjected to professional and public discussion. Decisions taken in this matter will have far-reaching and long-term consequences. Hence their thorough preparation must be based on clearly and openly formulated criteria and full information. Without these prerequisites, it would be impossible to make a responsible selection of a two- or three-tier model of territorial administration or of an institutionally separated or combined exercise of state administration and self-government at these tiers, and to make any decision on the structure, competences and mutual relationships of particular public administration subjects.

The key issue and strategic objective is not the separation of state administration and territorial self-government, but the transfer of competences from state administration to territorial self-government.

Evidently it will be appropriate to differentiate the present phase of the reform, the legislative preparation of which is under way, from the target state to be achieved in a longer-term perspective, for which it is necessary to gradually create the necessary prerequisites. Resolving problems created by the disintegration of the communes and overcoming a shortage of personnel for a qualified and efficient exercise of public administration will loom large among these prerequisites. Further factors likely to impact on the decisions concerning the scope and pace of decetralization, and on other reform tasks and goals, include the reforms of financing of territorial administration and of information systems and the use of information technology, and the modernization of administrative procedure and administrative judiciary. A comprehensive strategy is required. This strategy ought to be made more specific and adjusted to new conditions likely to emerge in implementing the territorial administration reform. The consecutive steps should follow a logical time sequence.

The reform must resolve the aforementioned specific problems and simultaneously aim at the compliance with the whole set of principles and requirements of European standard, expressed primarily in the European Charter of Local Self-Government and the European Charter of Regional Self-Government. The EU opinions on the membership applications of candidate countries do not contain any concrete recommendation for the system and organization of territorial public administration, but merely state that the regional tier of public administration is missing in some countries and recommend the creation of a system enabling the implementation of European regional policy and effective control of the use of funds earmarked for this purpose.

The following principles and requirements command priority:

• the principle of subsidiarity, according to which the decisions should be made at the level where the problem has originated; the competences should be transferred to higher levels only when solving the problem at the lower level would not be rational or efficient. The objective of this principle is not to achieve maximum decentralization, but to comply with the criteria characteristic of subsidiarity in public administration, i.e. to achieve the decentralization standard commensurate with the possibilities of decentralized bodies to carry out their competences. The long-term strategy must insist in consistent application of the principle of subsidiarity in which the requirements of both democracy and administrative efficiency are embodied. The task consists in creating the necessary prerequisites for a broader application of this principle and, consequently, for getting closer to the citizens and achieving higher efficiency and cost-effectiveness;
• the requirement that the territorial communities should be able to organize and administer a substantial part of public affairs on their own responsibility and in the interest of local population. This implies reversing the approach currently taken by legislation, which regards state administration as a basis and decides which competences will pass to territorial self-government. It is of course essential to take into account what the local self-government bodies are actually able to administer with regard to their material and financial resources and staffing potential. In this respect the same conclusions apply as have been mentioned at the end of the preceding paragraph;
• strengthening the regulatory and supervisory functions of the state so that it would be able to guarantee the fulfilment of its own tasks and international obligations, and adequate relationships between state administration and self-government, including the enhancement of participation, cooperation and supervision of the legality of self-government activities;
• the benefits to the citizens and the public must be the principal guiding criterion for the decisions on the decentralization and territorial organization of public administration. The objective is to assure quality, comprehensiveness and accessibility of public services (including administrative services) to the population.

Personnel prerequisites for decentralization cannot be created without enhancing moral and material appreciation of the public administration function. As in state administration, the basic principles of the status of employees in public self-government will have to be regulated by law with the purpose of granting them the necessary security and guarantees, and increasing their responsibility.

4.2 Changes in Status and Organization of State Administration and Territorial Self-Government

The present situation in the Czech Republic is characterized by a relatively high degree of centralization. Conversely, despite this persisting centralization, the system tends to exhibit certain negative consequences of the decentralization steps that have been taken. This shows that decentralization has not been always well-considered and well-balanced and has not always considered the practical possibilities of administration at lower tiers. Given the shortage of qualified staff, the fuzziness of the legal system and insufficient advisory services available to communal bodies and officials, errors tend to occur in communal ordinances and acts of law enforcement, with subsequent burdening of courts and other bodies. The transfer of competences to the lower tiers of public administration, particularly the communal authorities with delegated public administration powers (the so called "authorized communal offices"), must proceed with full awareness of these problems.

An important cause of excessive centralization consists in an insufficient number of tiers of public administration. In state administration this number is limited to two territorial levels and in the field of self-government (until the higher self-governing territorial administration units, i.e. the regions, start operating) to a single level. This set up has prevented the transfer of decisions on regional problems from the central state administration authorities or their deconcentrated agencies to any other body. The deconcentrated bodies of central authorities have proliferated beyond reasonable limits. In addition, central agencies created a number of decentralized "branches", thus giving rise to a confused and territorially incoherent mosaic of administrative authorities and their "branches". In this situation no problem exceeding the communal level can be addressed by any self-government decision-making mechanism.

The definition of competences must also take into account the tendency of public administration in EU member states to foster privatized and mixed forms of provision of some public services. There is no general concept of the public sector and public services management in the Czech Republic; sector policies are to be drafted within 2-4 years. Therefore, the respective documents will have to be so drafted as not to hinder flexible adjustment to changes (see also para. 5.4).

Considerable impact on the scope and delimitation of competences will be exercised by the changes in the field of administrative decision-making (decisions on the rights and obligations of natural persons and legal entities), particularly a substantial extension of powers of autonomous institutions of judicial type in the field of review of administrative decisions (see para. 5.5).

4.3 Establishment of Functional Administration at Communal Level

Effective structuring of public administration must cope with the problems created by the disintegration of communes and provide arrangements for the exercise of local self-government and state administration at the first level. It would be impossible to return to forced administrative amalgamation of communes. In Europe (even in countries where it was applied previously) this method has been replaced since the 1980s by more subtle approaches including financial motivation, but primarily by various formulas of single- and multi-purpose association. Voluntary amalgamation of communes will have to be encouraged among others in legislation and by granting the individual parts of the communes enough freedom for expressing their specific interests and needs, and assuring adequate review thereof by communal authorities. Also this purpose will necessitate the strengthening of protection against unlawful decisions and procedures (filing an action in the matter of public interest).

Until the effectiveness of public administration at communal level has been increased, an interim solution will have to be sought primarily for the exercise of state administration in the form of some variant of the authorized communal authorities. In such a context, the existing District Offices, which are rightly regarded at the present time as a stable component of state administration and which also fulfil some functions of state supervision of, and informal advisory service to, communal self-government, obviously will retain their role.

If a more economical two-tier public administration system is selected as target solution, it will be possible to concentrate the first-tier state administration in the bodies combining the functions of the present authorized communal offices and those functions of the District Offices that are not considered suitable for the transfer to the regional level. From a territorial perspective, the first tier of state administration could be at the level corresponding roughly to the authorized communal offices existing at the present time (whose number would be adequately reduced). This tier has performed well, although the combination of state administration and self-government has been the source of certain problems.

4.4 The Regions and Regional Public Administration

The adoption of a Constitutional Act on the establishment of regions (Constitutional Act No. 347/1997 CoL) terminated one phase of several years´ political disputes on the need of regionalization and of postponing this step repeatedly, although it represents a prerequisite for the integration of the Czech Republic into the EU. The absence of regional policy and regional authorities capable of adopting and implementing integrated regional policy and making effective use of assistance granted by the EU through the structural funds was pointed out critically in the EU opinion on the application of the Czech Republic for admittance to the EU. This very reason played the decisive role in the achievement of political consensus necessary for the adoption of the above-mentioned Constitutional Act.

The adopted form of regional system is a compromise between a number of political and technical (geographic, demographic, economic, social, cultural, etc.) perspectives. As a consequence, an arrangement meeting the Eurostat (EU Statistical Office) criteria respecting the area and population indicators of EU member states had to be sought immediately in order to integrate the Czech Republic into European regional policy. According to these criteria, it will be necessary to create a smaller number (the respective studies mention 3 to 8) of territorial statistical units (NUTS, in this particular case NUTS 2 as defined by Eurostat i.a. for assessing the necessity and suitability of support from EU structural funds).

If the model enacted in 1997 is retained (obviously primarily for fear of challenging the idea of regionalization and opening another round of political haggling) both systems will have to be harmonized. It is obvious that regional self-government will take care of the economic and social development of the region and that the elected self-government authorities will aim to exercise sufficient influence on the integration into European regional policy. Therefore, it will be necessary to find a way of settling possible disputes of regional representations in applying the interest of the regions of the Czech Republic vis-a-vis the EU.

Rational reasons for the revision of the adopted solution include the complications connected with dual division of the territory - into regions and into economic regions differing from the former in population and area - and perhaps also the high cost of a relatively large number of regions (14 regions for 10 million people - the size of the regions will be below the European average of 1-1.5 million per region). Conversely, it is necessary to take into account opposite arguments, particularly the difficult sustainability of a two-tier territorial administration in the case of a substantially reduced number of regions.

However, the establishment of the regions cannot be interpreted merely as the creation of an "intermediate management tier" filling a gap in the current organizational structure of public administration. It is more than a simple transfer of selected competences to self-government authorities and a simplification of state administration management.

The Constitution of the Czech Republic defines regions as territorial self-governing units, territorial communities of citizens entitled to self-government. They are administered by boards of representatives elected in direct elections. The regions are administrative areas, if so provided by the law. The law may delegate the exercise of state administration to regional self-government. The regional representatives have the right of legislative initiative and the right to issue generally binding ordinances. Thus the Constitution has constituted authentic self-government at regional level. The competence and power of regional self-government authorities must be so defined as to enable the assumption and exercise of fundamental responsibility for the economic and social development of the region and the administration of an essential part of public affairs. These criteria must be applied fully to the decisions concerning the organization and competence delimitation at the level of regional public administration.

The transfer of competences from central to regional authorities must be governed by the principle of subsidiarity. It is necessary to consider what cannot be efficiently ensured at regional level, not what central authorities are willing to cede from their "bailiwick". At the same time, it is desirable to avoid unnecessary horizontal and vertical doubling and overlapping of competences, in particular to prevent the temptation to construct parallel self-governing and state administration competences (with separate staff) in the territories unless it is indispensable and fully justified.

The Resolution of the Government No. 202 of 1998 envisages the establishment of a single regional authority for the exercise of both self-government and state administration. This model has its advocates and opponents. Obviously the positions which have been formulated in recent years as well as their substantiation will have to be subjected to a new analysis and professional and public discussion before taking a political decision.

4.5 Relationships between State Administration and Territorial Self-Government

One of the objectives of territorial administration reform is the transfer of decision-making to the lowest possible tier to enable central state administration to concentrate on its conceptual, regulatory and supervisory tasks. High-quality fulfilment of this role, however, necessitates the creation of personnel prerequisites. Competent staff for these tasks will have to be developed or recruited from other areas.

The Government will have to provide policy guidance and assume its coordinating role in developing the conceptual design of self-government and the relationships between the Government (state administration) and self-government (including professional self-governance), and in harmonizing the activities of central authorities in this field. These tasks will also require an appropriate institutional framework (see also para. 11.3).

Policy considerations concerning the relationship between state administration and self-government in the framework of reform strategy must be based on priority objectives and seek the ways and means for their achievement. Obviously it is necessary to create legal, material, financial, personnel, organizational and other prerequisites for a fuller application of the self-government principle and efficient functioning of self-government and state administration, rather than to overestress the errors committed both in self-government and in state administration in the short period following November 1989, or in preceding practice taking place in a different socio-economic setting.

In this respect, a particularly thorough review and re-assessment should be made of approaches advocating "strict" separation of state administration and self-government and the elimination of the influence of representative bodies on the exercise of their own executive power, as stipulated in the Communal Act in force. This review may be based on the following points:

• In a state ruled by law legality and the necessary unity of decision-making in the interest of the protection of legal rights of citizens must be achieved by legal regulation and by the means of administrative and judicial procedures - of key significance is the strengthening of guarantees of qualified and impartial decisions;
• It is essential to define the competences and powers of the individual types of bodies to achieve an effective division of labour and responsibility; preference should be given to solutions enabling the application of public control in which elected bodies of territorial self-government assume a key role;
• According to European standards public administration as a whole is based on the principles of openness, participation and public control. The elimination of elected representation from this patterns is impermissible. On the contrary, a symmetrical model of territorial organization of state administration and self-government (whether organizationally separated or combined) is justified - apart from its transparency for the population - by the very possibility of closer cooperation, adjustment of the exercise of administration to local conditions, mutual exchange of experience, prevention of conflicts, etc.

At the same time it is necessary to strengthen state supervision of the exercise of self-government consistently pursuing the criterion of legality (the criterion of purposiveness being permitted in principle only in the case of transferred state administration). The legality of resolutions and measures adopted in the framework of autonomous self-government competence, like the competence conflicts between particular self-government authorities and between them and state authorities, should be decided in the future exclusively by the courts (unless a remedy has been adopted following a notification by a supervisory authority or the conflict has been settled by negotiation).

The power of review exercised by administrative courts will have to cover also normative acts of self-government authorities. The state authorities, possibly also natural persons and legal entities, should be granted the possibility of filing an action in the matters of public interest. Conversely, the proposals to vest the regional self-government authorities with supervisory power over communal authorities deviate from European concepts: the competence of both levels (intentionally the term "tier" is not used here not to give the impression of hierarchical subordination) should be comprehensive and exclusive, thus not allowing for any subordination or supervision.

The management of communal property and finances, both their own or provided by subsidies, is a neuralgic point of communal administration at the present time. It will be necessary to formulate the rules for the management of communal property and finances by communal authorities and officials in more accurate and stricter terms (see also para. 5.4). In the first place it will be necessary to adopt the acts on the property of communes and regions and the management thereof.

For the reform of public administration finances in connection with decentralization and territorial administration reform see para. 6.2.

4.6 Professional Self-governance

The restoration of professional self-governance in the form of professional chambers, self-governance of higher-education institutions, etc. represents one of the forms of state power decentralization consistent with our tradition and present European practice. The errors accompanying the "settling down" of the new institutions in the period of transition must not be overrated. The significance of professional self-governance as a warrantor of professional standards and ethics has been growing in the current period, when not only this country, but the world in general, is becoming increasingly aware of the need to enhance professional ethics and responsibility of the providers of professional services and to combat corruption and other evils. The scope of professional self-governance will continue to extend, as demonstrated by the present debate concerning the transfer of a number of functions in court administration from the state to judicial self-governance.

In the framework of the public administration reform it will be necessary to seek the possibilities of widening the competences of professional organizations, aiming to transfer further functions to self-governing institutions, which in EU member states act as warrantors of the professional service standards.