Opening Remarks by Angel Gurría
19 November 2018 - Paris, France
(As prepared for delivery)
Ladies and Gentlemen,
Welcome to the 14th Annual Meeting of the OECD’s Network on Fiscal Relations Across Levels of Government.
The Fiscal Network is an inspiring example of horizontal collaboration between the Centre for Tax Policy and Administration (CTP), the Economics Department (ECO), the Public Governance Directorate (GOV) and the Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) – as well as their respective committees (CFA, EPC, PGC and RDPC).
As the OECD’s New Approaches to Economic Challenges initiative (NAEC) has taught us, it is imperative that we break down knowledge silos and address interconnected policy areas with interconnected policy solutions. For this we need Networks like this one. I want to congratulate all of you - you are the collaborative trailblazers of fiscal federalism!
Improving fiscal relations across levels of government is critical for promoting inclusive growth; it is essential to the functioning and delivery of democracy. Across OECD countries, sub-central governments represent 32% of public spending, 15% of tax revenue and 65% of public investment. The potential of fiscal decentralisation to influence growth and the inclusiveness of an economy is significant.
The rules and practices that govern fiscal relations, such as respective responsibilities in tax, spending and debt management, help determine a country’s capacity to power social mobility. A growing body of evidence highlighted recently in the OECD study Fiscal Decentralisation and Inclusive Growth links intergovernmental fiscal arrangements with income distribution within countries.
Take education as an example. Investment in education and skills affects the performance of students and the accumulation of human capital, which are essential drivers of growth and important determinants of earnings potential. At the same time, responsibility for education and skills programmes, including design, financing and service delivery, is assigned to different levels of government. Understanding how intergovernmental fiscal relations affect performance — in these and other policy areas — can help inform policymaking in pursuit of more efficient and inclusive outcomes.
This pioneering Network is the premier international body devoted to improving fiscal relations across levels of government. The Network offers a unique venue for sharing best practices; it provides international comparisons and maintains a comprehensive decentralisation database, including indicators on revenue and spending decentralisation, intergovernmental grant compositions, tax autonomy, sub-national fiscal rules, as well as sub-national deficits and debt.
This Annual Meeting is when the activity of the Network reaches its zenith. As we look ahead to the 15th anniversary of the Network, we have an opportunity in a challenging global context to intensify our collaborative effort in key areas. I am delighted that long-standing friends of the Network, such as Teresa Ter-minassian and Chris Heady are here to provide their insights.
Over the next two days, you will be discussing the key lessons we have learned across a range of different areas: equalisation systems, sub-national tax autonomy and authority, fiscal institutions and fiscal rules, as well as conditional grants. You will be looking in detail at spending power and performance across five key sectors of subnational government service delivery, including education. You will also be examining decision-making and performance measurement across levels of government in the health sector, to give just a few examples.
And, of course, there will also be the release of a new guide, Making Decentralisation Work: a Handbook for Policy-Makers, prepared with the Regional Development Policy Committee. This guide provides a comprehensive picture of the decentralisation trends in OECD countries and beyond. It also argues that decentralisation is neither good nor bad in itself, but that outcomes depend greatly on the way decentralisation is designed and implemented. Moreover, it provides 10 guidelines for implementing decentralisation with pitfalls to avoid and recommendations for policy-makers at all levels of government.
There are so many best practices to share and so many lessons to impart on “what works and what does not”. We can all learn from each other’s experiences. We have such a precious resource of talent and ideas packed into this room, from all over the world.
The Fiscal Network has amply demonstrated its commitment to reaching beyond the OECD Membership. I am delighted that OECD Key Partners Brazil and India have joined us as Members of the Network, or as Associates – great to have them at the table. Let me extend a special welcome to Dr Pramod K. Mishra, of the Prime Minister’s Office of India and to Mr. N.K. Singh, Chairman of the Fifteenth Finance Commission of India, who will present the latest approaches to the devolution of revenues in India in the next session.
Ladies and Gentlemen,
I wish you a fruitful meeting. Above all, I urge you to be bold, ambitious and forward-thinking. We cannot afford to get fiscal relations across levels of government wrong. Finding the right balance between the global and the local is fundamental to our collective effort to leave no-one behind, to make globalisation work for all and to strengthen multilateralism.
Count on the OECD and we will count on you. Thank you.