Published December 21, 2010

Aiming to be the number one country with the best local administration

In August, the US weekly magazine Newsweek published a survey comparing the standard of living in one hundred different countries. The purpose was to find the country that offers the best conditions for a good life to a person born today. As we know, Finland was ranked number one as that country. If you scratch a little deeper below the surface, we see that Finland’s ranking is almost in all respects linked to the way local administration operates.

In August, the US weekly magazine Newsweek published a survey comparing the standard of living in one hundred different countries. The purpose was to find the country that offers the best conditions for a good life to a person born today. As we know, Finland was ranked number one as that country, with Switzerland and Sweden as runners-up.

The criteria used by Newsweek’s panel of experts included education and health services, economic competitiveness and political environment as well as the general quality of life. The benchmarking also took into account the PISA survey, WHO rankings, the growth in GDP and electoral participation.

If you scratch a little deeper below the surface, we see that Finland’s ranking is almost in all  respects linked to the way local administration operates, whether the question is about our comprehensive school system or the turn-out in local elections or public participation in decision-making in general. Some of the credit for the favourable development in GDP should probably also go to the Finnish municipalities. What is noteworthy in the result is that all those countries that were ranked among the best in the survey place a strong emphasis on local and regional government.

The municipality is a cornerstone of Finland’s system of government and absolutely central to the democratic system of administration and services. Finland has strong local government, protected by the Constitution. The Nordic model of local government is based on the idea that municipalities are not only communities formed by residents but also bodies that are responsible for the provision of well-being services and the creation of favourable environments for business and industry.

From the constitutional perspective, the question is not whether the state can impose new responsibilities on municipalities but whether municipalities will be able to retain sufficient autonomy to decide on the arrangements regarding the provision of statutory services.  

Only a relatively stable and strong municipality can fulfil the Nordic ideal; in other words, it naturally forms a community that genuinely shoulders the responsibility for the well-being of its residents while having the necessary potential to nurture the vitality of the community. Many small municipalities do fulfil the purpose as local communities – as localities giving identity to people – but they lack the other functions of an ideal municipality.  

If Finland wants to be at the top of Newsweek’s rankings in the coming decades, we should rapidly solve the question of how to secure the future of municipalities as the guarantors of democracy, well-being and local vitality. In the future, municipalities must be able to take care of service provision for the ageing population while keeping the tax burden at a reasonable level and compete for new workforce. These challenges will increase by the year, and Finnish municipalities are likely to undergo major changes by the middle of this decade.  

The Minister of Public Administration and Local Government Tapani Tölli appointed a working group of high-level officials to define how the Local Government Act should be amended. The outcome of the first stage of this work is expected by the end of January, after which the work will be carried on by a parliamentary committee.  

The point of departure for the Local Government Act will be to keep local government as a coherent entity. Otherwise, its structures will evolve quite randomly and become subject to conflicting demands under the national-level steering of each administrative branch.  

Developments in the municipal economy over the coming years will leave no option but for reform. In the next few years, some municipalities will inevitably face problems that no state subsidy can solve. The expectations concerning the results of the work of the Local Government Act committee are great and neither local governments nor the nation as a whole can afford to fail in that respect.

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