By Daniel Kübler, professor at the Department of Political Science and co-director of the Centre of Democracy Studies of the University of Zurich.
It was with great interest that I read the article Localism – the Swiss Way: Why New Zealand needs more, yes more, councils in the November edition of NZ Local Government Magazine, claiming that New Zealand should follow the Swiss example and create more, smaller and more autonomous local governments.
According to the OECD, the share of central government in overall public expenditures was 19.5 percent in Switzerland in 2015, compared to 88.9 percent in New Zealand. There are some 2300 local governments – called ‘communes’ – in Switzerland, and their average size is roughly 3500 inhabitants, way smaller than the average local government in New Zealand.
It is thus certainly true that Switzerland has a strongly decentralised, highly fragmented and small scale local government system.
But eulogies of the Swiss local government system, such as the one in your article, often remain silent on the serious drawbacks the Swiss way of localism entails, and thus also fail to mention the huge efforts necessary to compensate the consequences of these drawbacks – if they can be compensated at all.
More particularly, there are three difficulties the Swiss local government system struggles with and which should, I think, be made aware to anyone keen on using it as a model. These difficulties are: spatial equity, governance and democracy.
First, let’s talk about spatial equity. Decentralisation in Switzerland also means that local governments have the right to set the level of tax on income and property in their area. Unlike many other countries, local tax is quite substantial in Switzerland and represents 20 percent of overall tax revenues.
Therefore, local tax strongly influences households’ residential decisions. As wealthy taxpayers seek to move to low-tax municipalities, this drives up housing prices there and reinforces social segregation, with severe effects on local public finance.
The Swiss local government system thus entails that the rich can lock up their money in the wealthy municipalities, leaving the rest to manage as best they can with a smaller tax base and greater demands on public services.
If Switzerland has not seen US-style segregation and social decay of poor places, this is only thanks to comprehensive revenue sharing systems that cantons (the intermediate government in three-tiered Swiss federalism) have forced upon their municipalities in order to equalise fiscal resources between them. Transfer payments between rich and poor municipalities that seek to redress spatial equity are thus an important feature of local public finance in Switzerland.
Second, area-wide governance is a problem. Especially in the country’s city-regions, effective policy-making often requires a spatial scale that is larger than the small municipal territories. It is simply impossible to plan and run an effective public transport network, for instance, if municipalities are reluctant to cooperate with their neighbours.
Municipal opposition against such intergovernmental cooperation and the additional expenditures that go with it have repeatedly impeded the expansion or modernisation of bus or tram lines in Swiss city-regions. It often needed federal and cantonal interventions, investments, political pedagogy and a lot of patience, to overcome municipal blockades.
If regional public transport systems in Switzerland are nowadays among the most effective and performant in Western Europe, this is in spite of, rather than because of, the decentralised nature of the Swiss local government system.
Finally, there are questions of democracy. Due to the large number of municipalities – some of them very small – there is a huge number of local public offices to fill. Every Swiss municipality has a directly elected mayor, as well as half a dozen aldermen who are also directly elected by the citizens. The smaller the municipality, the larger the share of citizens who need to be willing to run for office.
It is no wonder, thus, that small municipalities have problems finding the necessary number of qualified candidates.
A recent survey found that in nearly 60 percent of Swiss municipalities, local elections were non-competitive, meaning that there were just as many candidates as there were elected offices to fill. While Swiss local democracy is impressive in theory, the municipal reality very often leads to holding elections without a choice.
And there were some very small municipalities in which citizens had to be forced to take over the mayor’s or aldermen’s offices because no volunteering could be found. This is when democracy turned into a punishment for citizens.
I can see that Switzerland’s local government system has many features that make it attractive to outsiders. But I would warn anyone using it as a model to advocate decentralisation reforms of local government in their country to keep in mind the need for setting up compensating mechanisms that help to avoid spatial inequities, governance inefficiencies and the death of local democracy.
This article was first published in the February 2017 issue of NZ Local Government Magazine.