Cities and the Deconstruction of the
Welfare State
Looking at Canada, Sweden and
Denmark
By Emmanuel Brunet-Jailly
ebrunetj@uvic.ca
Cities and the Deconstruction of the Welfare State
(this work is in progress)
As economic integration in North America, and economic and political
integration in Europe, impact government activities, it has become clear to
scholars - yet remains understudied - that local government, and particularly
municipalities, should be concerned about reforms.
In particularly, is the so-called “Swedish model” of the welfare state being
challenged by reforms? Is the general model of redistribution founded on the
principle of equity and uniformity, and its important reliance on local authorities
also challenged? This model influenced both the Danish welfare state system and
the Canadian Liberals and New Democrats for the creation of national health and
pension policies in the 1970s.
In this paper, I argue that local government reforms have participated in the neoliberal transformation of the welfare state; through attempts to rely on policy
asymmetries to balance budgets, and gain policy efficiencies; those changes
challenge both the equity and uniformity foundations of the “Swedish model”
welfare state.
Six parts:
Review of the literature: Market, territory, and government
jurisdiction, structures (institutions) and functions and hypothesis
Economic and political motivations: Adjusting to free trade
Comparing constitutional and framework laws
Institutional changes: Size, efficiency and democracy
Functional changes
Further research / Conclusion
1. Market Forces, Territory and Government Jurisdiction,
Structure and Function:
•
For the last 20 years scholars have noted this transformation
of the relationship between market forces and territories.
•
New technologies of information and communication change
the global economy, and economic integration in Europe and
North America change the politics of state relations in
intergovernmental and international arenas:
•
Free trade regime pressure governments to ease regulations,
and to open new markets (Keohane and Milner 1996)
•
Free trade enhance sub-national entities as economic players
(Ohmae, 1991)
• Traditional analysis of the relationship between market forces
and territories focuses on competitive advantages and
infrastructures gives way to new ideas that emphasize the social
construction of a territorial economy
• Today, the literature underlines this idea of social construction
of a territorial economy (See for instance: Capitalism Against
Capitalism (Albert 1991) Regional economies / “Industrial
Districts” (Piore, Sable, 1984)
• Social construction of a territorial economy suggest that modes
of productions are culturally embedded and take different forms
in different times and places, which also suggest that culture,
structures (institutions) and individual choice make a difference
in the global market place.
How are these changes impacting local governments?
• Federal and unitary states adapt to global economic and political
changes differently because their constitutional and statutory
prerogatives, institutions and allocations of functions vary
accordingly (Keating, 2001).
•Federal systems provide mechanisms of power sharing among
levels of governments that are not found in centralized states. (ibid)
• Complexity and Asymmetry better describe territorial politics of
federal states (ibid).
• Federal systems tend to shelter less and less equally local
governments from market and international pressures because
functional and institutional flexibility becomes an asset for
provincial and local policy effectiveness.
• Robert Young (1999), notes for instance that increasingly
market competition, capital mobility, and inter-governmental
competition, as well as new political views about the role of
governments seem to undermine the rationale and capacity higher
levels of government have to shelter lower level governments.
• Saskia Sassen (1996) argues that new legal regimes
denationalize territories which also reconfigures the linkage
between rights and territories and has important repercussions
for distributive justice and equity.
•Michael Keating (1991) also suggests that multi-national states
when addressing their constitutional reforms confirm those legal
asymmetries that differentiate between local and regional
jurisdictions in a process that leads federal and national states to
resemble each others.
• This paper analyzes the evolution of legal frameworks, local government
institutions and their functions, (local fiscal policy and intergovernmental
relations) of a few states: Canada, Denmark and Sweden.
•The hypothesis is that Saskia Sassen’s theoretical intuition would be verified, if,
despite their social democratic traditions, those states had reformed their local
government systems in the 1990s so as to increase asymmetries, the institutional
fragmentation and increased the responsibilities and functions of their local
governments, particularly cities.
• For instance, the Canadian constitution places local governments under the
authority of the province. This, shelters lower level governments from international
and market forces, but then when provinces choose to increase local autonomy and
decrease their own spheres of influence, they also implicitly increase national,
international economic and political pressures on local communities; the smaller
the greater the vulnerability of those communities.
To understand this reconfiguration of legal regime this paper documents three
domains where such changes may have taken place: The constitutional prerogatives
of local governments, the institutional structures of local governments, the
allocation of functions to local governments (fiscal and intergovernmental policies)
2. Economic and Political Motivations: Adjusting to Free Trade
And to Economic and Political (European Union) integration:
Canada:
• Signature of Free Trade Agreement 1988, North American Free
Trade Agreement 1994 - Secure Canada’s trading relationship with
USA and Mexico – Secure competitive advantages: Larger markets
and labor costs (Mexico), and natural resources (Canada)
Today the Canadian economy is integrated in North America
• Trade increased by over 1460% since the late 1970s
• 85% of all Canadian Exports go to the USA
• Frankel test Canada scores 2.(J.Frankel, 2000) Alberta 0.9 and
Ontario score 1.3, British Columbia scores 3.
Economic and Political Motivations: Adjusting to Free Trade
And to Economic and Political (European Union) integration:
Denmark and Sweden:
• Denmark joined the EU in 1973
• Sweden joined the EU in 1995
• Trade increased: Denmark trades over
• 60% of all Swedish exports go to EU member states
• 65% of all Danish exports go EU member states
• Frankel test both Denmark and Sweden between 3.5 and 5
(J.Frankel)
Economic and Political Motivations: Adjusting to Free Trade
And to Economic and Political (European Union) integration:
Lessons Learned About Free Trade Adjustments:
• In Canada, all provincial governments link (1) fiscal
responsibility to budget and staff cuts, and (2) to local government
reforms, because greater autonomy, responsibility and
accountability is assumed to lead to greater efficiency.
• In Denmark, during the early 1970s and again since July 2004,
Liberal MPs assume that local government reforms should lead to
larger and more efficient local governments
• In Sweden, during the early 1990s and again since August 2004,
general concerns about the sustainability of the national health
system lead to questions regarding the efficiency of the local
government systems and the allocation of functions within the
intergovernmental network.
Constitutional and Statutory Changes, Institutional Reforms, and
Functional re-allocations in Canada (Alberta, Ontario, and British
Columbia), and in Denmark and Sweden.
In Canada:
• All reforms arbitrate between various legal terminologies that
modulate the amount of respect and powers given to municipalities
• Provinces increase local government powers
• Provinces shift from express powers to permissive powers
• Alberta and Ontario gave “natural person powers” – natural person
power do not increase jurisdiction but increase freedom to act within
an area of jurisdiction. Organizations that possess natural person
powers “can enter into contracts, purchase or sell goods and services,
borrow money, provide loans and guarantees, make investments, set
up company, hire employees, construct or lease buildings, set up nonprofit organizations, purchase shares, enter into partnership…”
In Denmark and Sweden:
• Denmark: Article 82 of the constitution “provides that the right of the
municipalities to manage their own affairs independently under the supervision
of the state shall be laid by law”
• The current Danish local governments law of 1968 was reviewed up until
1996; It sets the size and functions of municipalities and counties and
differentiates between large and smaller municipalities
• Sweden: The 1974 Instrument of Government Act, article one, protects local
and regional authorities; local and county governments are protected by the
constitution. They are elected and can collect taxes.
• The local government act of 1991 defines municipalities, counties, sets their
jurisdictions, powers, organizations, electoral systems, financial organization
and auditing procedures. Also, differentiates between rich (Skane, Stockholm)
and poorer regions (Kolmar, Malland)
• Current reforms do not challenge the existence of local governments but are
attempting to review their size and functions; in Denmark the focus is primarily
on size, in Sweden, the focus is primarily on function, and also size of the
county/regional level. Current reforms increase the diversity of rights of each
jurisdictions; they temper with the principle of uniformity.
Keating is correct when he argues that complexity and asymmetry better
describe territorial politics of federal states: New municipal acts increase
asymmetry:
•In Canada, for instance, the new Community Charter would increase
asymmetry across British Columbia by increasing local decision-making
capacity, but reducing provincial regulation and increasing market regulation
of local government activities.
• In Denmark and in Sweden the new local government acts are attempts to
either modify the size of local governments or their functions. All increase
asymmetries.
•Saskia Sassen is correct when she argues that new legal regimes reconfigure
linkages between rights and territories; all reforms have clear implications for
re-distributive justice and equity; there is no legal uniformity.
Institutional Changes: Size, Efficiency and Democracy
Political Spaces: the forms and functions of cities and urban regions
• Since the 1900s, but particularly since the 1950s, metropolitan governance is
more complex; urban regions are highly fragmented.
• Cities seem to evolve from a multitude of points of convergence of large
economic and social networks. And, cities make the wealth of nations (Jane
Jacobs)
• Yet, governmental structures and functions of cities - do not - overlap with the
needs of their regional economies. There are very few cases of clear institutional
frameworks governing large metropolitan regions et their regional economies
(Sancton, 1997)
• The literature on amalgamation and fusion shows that cities are always in the
process of attempting to reforms their statutes, institutions and functional to catch
up with the functional needs of regional economic growth (Sancton, 1997)
• One argument in the literature is that amalgamations or multitiered systems of local government allow economies of scales,
better planning and economic development, and efficient redistribution. These mechanisms justify multi-tiered governments
and strengthen the functional authority of local governments.
• Their critics argue, on the contrary, that these larger governments
are less democratic and responsive or accountable. Furthermore,
their contention is that the functional focus or economies of scales is
a matter of debate.
• This scholarly controversy over forms and functions of local
governments, however, neglects the debate over the issue of
“community.”
How to define a Community?
• Deutch’s “Gemeinschaft” – Attachment to a place
• Tiebout’s Protecting private spaces – Includes and excludes
• Malibeau’s (held in this paper) Urban regions emerge out of
cultural, historical construct of social interactions and of politically
set territorial boundaries
De facto – these definition correspond to a continuum of
institutions – Institutional arrangements give priority to:
• Fundamental requirements of local democracy and accountability:
Democracy, responsiveness and accountability? and/or
• Fundamental requirements of efficiency and functional delivery of
services?
Hence there is a taxonomy of local institutions: Single tier, Lower
tier, Upper tier, Special Purpose body.
•Taxonomie:
(Sancton, 2001)
• Single tier government: is elected and multi-functional (manages a
large number of functions) Ex: A French commune, a municipality
• Lower tier government: is –also- elected and multi-functional, but it
also works/cooperates with an upper tier government. Ex: a Municipality, A District
in BC
• Upper tier government: is uni- or multi-functional, elected or not, and span over
a number of lower tier municipalities encompassing all the constituent lower tier
municipalities.
Ex: a District, a County (US, Canada)
• Special purpose authority: is (in most cases) a uni-functional special
purpose body, which serve the needs of a community, disregarding
municipal boundaries. Its non-territorial logic emerges out of the level of
satisfaction of the functional community it serves. Accountability is
based on service and fee for service. Ex. A District, a Police Board
Hence, political spaces follow a variable geometry of institutional
arrangements that evolve from a tradition of multi-functional
government to uni-functional governance:
• Placing the primacy on political accountability and responsiveness
anchors local governing capacities into local politics of places.
• Placing the primacy on service delivery efficiency results in
servicing the needs of market forces.
• All local governments struggle to establish the appropriate
institutional framework to service the needs of their communities and
their economic region.
• This choice of institutions and allocation of function, however, also
points toward broad normative views that frame and inform the
policy capacity and choice of localities.
Comparing Institutional Changes in Canada (Alberta, Ontario and British
Columbia), and Denmark and Sweden:
Alberta: No more Counties. The goal is to encourage inter-municipal collective
action using the creation of Regional Service Commission (RSCs) (2001: 32/
2002/42!)
British Columbia: No amalgamations: the District System may be one of the best
institutional arrangements to be found in North American (Bish, 2002)
Ontario: Amalgamations (825 to 615)
Denmark: Amalgamates further it municipalities to reach a minimal size of
35,000 inhabitants per municipality. Currently, the smallest municipalities have
25,000 inhabitants. The current reform intend to increase their size and reduce the
number of municipalities from current 275 to about 220.
Sweden: Is still indecisive but is seriously considering to reduction of the number
of its regions (counties) so as to amalgamate those functions, which would benefit
from clear economies of scales or greater policy/investment capacities at that level
of government. The current reform would not change the size of municipalities but
reduce the number of counties/regions from current 21 to 8.
What do we learn:
• In Alberta and B.C. - To limit size; to encourage Collective Action Functional Arrangements. Those reform assume that collective action and
functional specialization of local upper tier governments lead to greater
efficiencies, and economies of scales.
• These respect a logic of service provision that emphasizes function.
• In Ontario - Larger municipalities seem to be an “accident” (Sancton, 2000)
They are multifunctional governments – these are elected bodies. These local
governments enhance local democracy and accountability.
• In Denmark – Larger municipalities are a choice – assuming greater economies
of scales and greater efficiencies of service delivery, for those services were
economies of scales are clearly identified. These would be larger local
multifunctional governments.
• In Sweden – Smaller municipalities respect a tradition of local autonomy but
the proposal to regroup counties assumes that specific services would (like in
Denmark) also benefit from economies of scales when clearly identified. These
would be a local upper-tier multifunctional governments.
• These respect a territorial logic / emphasizes local democratic accountability.
Functional Changes
• Functional capacity is fundamental to our discussion: What local
government can do is as important as the institutional decisionmaking arrangements provided to them (empty shells?)
• There are basically three types of policies: developmental policies
that deal with the economic welfare of a local economy; policies of
redistribution that benefit lower income groups; and policies of
allocation that benefit the widest population (Lowi, Peterson)
• This literature argues that local governments should NOT be
involved in policies of redistribution and minimally in economic
policies.
Comparing Functional Changes in Canada (Alberta, Ontario and British
Columbia), and Denmark and Sweden:
•Alberta: Reform of planning, Municipal Government Boards
“Role, Responsibilities and Resources” continuously studies further
downloading. More recently, policing and other emergency services.
•Ontario: Mega-Week (housing, social services, administration of welfare and
public transit are municipal responsibilities)
•British Columbia: No down loadings? But Kimberley, and Delta-South struggle to
keep their hospitals … are counter examples …
• In all three cases the provincial governments are balancing their budgets, reduce
their deficit and debts. Fiscal responsibility, however, serves a fiscal and ideological
agenda.
• Those functional reforms make it increasingly difficult for municipalities to
arbitrate between policies of allocation, development and redistribution.
• Diversity and Complexity make redistribution an unlikely choice;
• Policies of development become a race to the bottom; policies of allocation are
debatable.
• The fiscal rhetoric increasingly influences intra and inter urban competition and
restrain choice.
Comparing Functional Changes in Canada, Denmark and Sweden:
Both in Denmark and Sweden, reforms are seeking greater economies of scales
and efficiencies: Health and Medical care and secondary schools are scrutinized)
• Denmark - Reforms of municipal and county functions: Hospital services,
mentally ill, Secondary schools, planning and economic development.
•Sweden - Reforms of the health and medical care systems to gain efficiencies:
Should specialized services be provided by a “national” health system?
Should primary care be the responsibility of municipalities?
• In both cases the Danish and Swedish states balance their budgets, reduce their
deficit and debts; fiscal responsibility serves a fiscal and ideological agenda.
• Those functional reforms make it increasingly difficult for municipalities to
arbitrate between policies of allocation, development and redistribution. Local
choice becomes central to levels of service provisions. Richer
counties/municipalities can provide higher and more comprehensive services.
Policy floors (minimal level of services) may be set by state regulations and
implemented with help of equalization payments.
Further research:
Fiscal Reforms:
• In Canada – Local governments currently lobby the federal level
• In Sweden – Since the 1991 fiscal reform, Sweden lowered its tax
rates. Local governments collect a local income tax. It averages at
31%. Income earner above SEK 185000 pay an additional 20% tax
to the state.
Block grants/per capita replaced specific grants / Balance budgets.
Richer regions (Skane, Stockholm) can raise larger resources. The
fiscal equalization system does not provide for strict uniformity.
Intergovernmental reforms
• In Canada – Local governments do not have a seat at the
intergovernmental “table” only provinces and the federal level.
• In Sweden – the central state manages 450 governmental agencies.
(286 municipalities, 18 counties/2 regions)
Intergovernmental relations are “frustrating” and “fragmented.”
Overall Conclusion:
• Constitutional/legal reforms in Canada, Denmark and Sweden:
Greater territorial asymmetries of rights.
• Institutional reforms in Canada, Denmark and Sweden: Both
greater fragmentation in Western Canada, and amalgamations in
Canada, Sweden and Denmark. Amalgamations protect
local/regional equity and organize territorial asymmetries – large
and small, richer and poorer.
• Functional reforms in Canada, Denmark and Sweden: Search for
greater efficiencies – Competition and functional upper tiers in
Western Canada. Economies of scales in Sweden and Denmark.
• (Fiscal / Intergovernmental reforms)
• Conclusion: Are these states deconstructing their welfare systems?
The new local government systems of Canada, Sweden and
Denmark organize asymmetries of rights, territorial asymmetries,
functional efficiencies. It is a varied and asymmetrical local
government system
- End Thank you for your attention !
Emmanuel Brunet-Jailly
University of Victoria
British Columbia
Canada
- ebrunetj@uvic.ca-
• Similarly, for the last 20 years states have attempted to adapt to
those technological and economic changes. For the last 20 years
there are numerous examples of states decentralizing policy
making capacities, refocusing on specific policy areas: France,
Belgium, the United Kingdom
• In Canada, the economist Courchene makes the case for
national-unity-policies, similar to 19th century railroad policies,
that would emphasize a national-social-contract that would create
un-traded interdependencies and foster a competitive advantage
in a free-trade area (1991).
• The radical fiscal decentralization of the 1990s suggests a reinvention of a new social contract directly related to the
formation and protection of human capital, hence re-focusing on
education and health policies. (Courchene, 1991, 98)
3.1 From Hegemonic Relations to Local Self-Government?
• Originally, cities are managed by Justices of the Peace
• 19th century, cities acquire rights to incorporate, govern local
real estate issues
• Baldwin Act of 1849 authorize and regulate incorporations in
Ontario
• British North American Act of 1867 gives full authority to
Provinces
• Constitution 1982 does not recognize cities as a level of
government
• Provinces legislate the forms and functions of local governments
• Should municipalities be a level of government? This is an ongoing question in Canada. … in France as well.
2.2 Free Trade and Economic Dependency: Down loadings
and Balanced Budgets Policies
• Increased North South Trade
• Increased tensions on transfer payment as inter-provincial trade
weakens
2.3 Adjusting to Free Trade in Alberta
• ROC/ROW: 1.3 Trades more with the ROW
• 88.9% of exports to the US
• Frankel score: 0.9
• Ralph Klein, Conservative party leader in December 1992
• Campaigned on “Fiscal Responsibility”
• Priorities Balance Provincial Budget/Eliminate Deficit
• Passed a Deficit Elimination Act – 1993
• New Municipal Act in 1994
• Created Jobs in Health and Education since 1997
2.4 Adjusting to Free Trade in Ontario
• Ontario first trading region of Canada (55%)
• 93% of Ontario exports to US/ 76% of imports
• 45% to Michigan
• ROC/ROW ratio: 3 Trades much more with ROW
• Frankel test 1.2
•1995 Harris Elected: Common Sense Revolution
•Cut 375 government programs
•Reduce Government Spending by 2 billion
•Lay off 13,000 Provincial Civil Servants
• 1997 “Mega Week” announcements
• Reduced number of municipalities by 200 to 615, and number
of elected official
2.5 Adjusting to Free Trade in British Columbia
• 63% of British Columbia exports to US
• ROC/ROW ratio 1.2 Trades More with the ROW
• Frankel test 3.3
• NDP government until June 2001
• New Liberal Premier Campbell
• New Era Campaign: “Platform for Prosperity”
• Priorities to reduce size of government:
-25% in Budget and staff across all ministries
• New Community Charter white papers June 2002
Lessons Learned about Free Trade Adjustments:
All Provincial Governments:
Link fiscal responsibility to budget and staff cuts
Link local government reforms: greater autonomy, responsibility,
accountability
i.e.
Statutory Changes,
Structural Reforms, and
Functional re-allocations
Why?