The decentralisation process in Ukraine is ongoing. Somewhere the decentralisation process is carried out smoothly, and somewhere its path is complicated and winding. Supporters of the decentralisation reform argue that decentralisation has already produced results, because local budgets and hromadas opportunities have grown significantly. However, there are those who do not support the reform, probably because they are aware of its advantages. As for the central government, its position is unchanged – if the country wants to be a true European state, these changes are inevitable.

Hennadii Zubko, Vice Prime Minister - Minister of Regional Development, Construction, Housing and Communal Services and supervisor of the decentralisation reform, spoke in an interview with Ukrinform about the course of the reform.

Q: How many amalgamated hromadas (AHs) have already been established, and how do you assess their financial capacity? Are they using the funds effectively?

A: A total of 692 amalgamated hromadas have been created in Ukraine. In general, 3,247 local councils were merged - almost a third of the total number of village and town councils that functioned prior to the beginning of the process.

In January-November 2017, the general fund of local budgets received UAH 173.5 billion, or 96.7% of the annual target. The increase in revenues compared to the same period last year amounted to 31.5%, or UAH 41.6 billion.

However, I think that not all hromadas make proper use of revenues. It is fundamentally important how AHs account for land, real estate, residents, how many of them pay personal income tax and how many of them use social services, how combined are the permits issued by local governments for trade, for example, tobacco and alcohol, and the number of licensees. When comparing these figures, we see that AHs earn their own revenues at 50% of what is possible. The issue concerns inefficient or untimely registered or leased land, non-payment of property tax, etc.

At the same time, I am convinced that hromadas can be successful at the expense of the basic subsidy received. We have to work on this. However, we have another problem. The amount of funds available for use in the regions already exceeds the capacity of prepared investment projects in the regions. In the first two years, the State Fund for Regional Development and local budgets financed facilities designed or unfinished in previous years, and now this list is ending. We need to talk about a new quality of projects and territory planning... And at the moment we lack the most qualitative architectural decisions and designers.

Territory planning is an acute issue. In the absence of adopted general plans it is difficult to design a center for the provision of administrative services or a kindergarten. Amendments to the law on the regulation of urban development should simplify the list of documents required for the hromada. We come to only one document – a territorial plan of a hromada.

Q: What legislative changes does the decentralisation process require?

A: It is important to see not just the number of hromadas, but also their proportional growth in all regions. At present, we have leaders – Zhytomyr, Dnipropetrovsk, Ternopil and Khmelnytskyi Oblasts. But there are outsiders. It is important that the Verkhovna Rada adopt draft law No. 6466 introducing amendments to the law "On Voluntary Amalgamation of Communities" on the accession of territorial communities of villages and settlements to the communities of oblast significance.

Q: Why, in your opinion, was it not adopted?

A: I did not expect that they will not vote, especially on the Local Self-Governance Day. We'll talk with factions and groups about why they did not vote. This law should launch cities of regional significance into the decentralisation process. They should be given an opportunity to include communities and elect additional deputies, avoiding a general election. This will help save budget funds. Any general election means stopping the economy, both in the state and locally. And this condition of anabiosis occurs almost a year or six months before the general election...

Q: Maybe it was someone's lobby?

A: For some reason, representatives of the Association of Ukrainian Cities did not support this draft law. I was shocked by this, because, according to the draft law, the cities themselves are involved in the process of establishing hromadas. The document was sent to a repeated second reading. Therefore, we lose time, because next spring we could have held elections directly in the hromadas of cities of oblast significance. I expect parliament to return to this issue in the near future.

Q: Kyiv is a capable community, but for many years the city has not had a general plan, and any attempts to hold public hearings on this subject are being resisted. Can the state initiate instruments of influence on the community?

A: Yes, there is a real war around the general plan in Kyiv. So a tool of influence is needed. We counted on the creation of the institution of prefects to oversee compliance with the constitution and the laws of Ukraine by local self-government bodies. This was planned by the draft law on amendments to the basic law. Unfortunately, we now have a respective vacuum in the law. And local authorities often abuse this, failing to comply with the law and, therefore, their direct responsibilities.

For example, some mayors frankly refuse to deal with garbage problems, or say they are not interested in the issue of centralised heating. This is the case in cities where the authorities transferred to CHP plants to the concession of private companies. However, supplying heat resources and turning on heat for people is the responsibility of local authorities. In the current heating season we had three cases of untimely heat supply - in Shepetivka, Smila and Kotsiubynske. In each case, I advise the city authorities to learn the law. Article 13 of the law on local self-government bodies and the law on heat supply clearly state what city mayors should do. I would advise them to read also the Criminal Code, which states that the failure to fulfill or improperly fulfill duties that led to significant consequences foresees criminal liability.

The failure to implement general plans, detailed planning of territory complicates the lives of citizens who have bought housing, but have not received proper infrastructure. After all, there is often no kindergarten or school there ... So now it's impossible to start building a house without detailed planning of the territory.

The responsibility of local government agencies, which issue city-planning conditions and restrictions, is important in this regard. We have done so as to provide them with detailed planning of the territory and so that there's a duty to build social infrastructure. If this is not the case, then local officials must answer before the law.

Q: How can we get them to be held accountable? Who should do it?

A: Here is the question: who should apply to court? Remember the discussion on the development of the Sinnyi Market. At that time the investor fulfilled all the conditions, in line with the law - on urban planning conditions and restrictions, permits, a land plot, etc... But then the question arises about the number of floors, city-planning conditions and restrictions... Permits were issued by local government bodies. This is what outraged the Kyiv community. But will the local authorities file a lawsuit against themselves? In this case, it is possible to find citizens whose rights have been violated, because the state cannot file a lawsuit in this regard.

By the way, we envisaged in the law on state control the provisions on compliance with legislation by local self-government bodies. We determined that a regional administration is entrusted with the function of control. And it has the right to go to court if the rights and freedoms of Ukrainians are violated.

With regard to building cities we have only red lines, and in any European state there are also green and blue lines. This means that the documents clearly outline the green areas, where you can never build anything - even a bench cannot be installed. The blue line limits the number of floors in a particular sector of a city or settlement.

The state should move in two directions. On the one hand, it should delegate resources, powers and opportunities to the regions, and, on the other hand, it should strengthen state control. If we passed the powers, we will now see how to make UTCs adopt general plans and conduct detailed planning of the territory... Without this, predatory developers will prevail in populated localities, and hromadas cannot become their hostages.

Let us recall the issue of cancellation of share participation [this refers to share participation in the development of the infrastructure of settlements in accordance with the law of Ukraine "On Regulation of Urban Development" – Author’s note]. This means reducing the number of barriers to construction. We proposed cancelling share participation, but local government bodies were not ready. At the same time, we analysed at the MinRegion how many objects were built at the expense of share participation. How many, in your opinion? Zero!

Q: Local government agencies often ignore ecology. For example, in Korosten, Zhytomyr Oblast, there was a scandal around a new plant, due to which a forest is cut down and a river is contaminated. What to do with it?

A: Yes, there are certain points of decentralisation that need to be corrected. The Environmental Inspectorate, which is a territorial body of the Environmental Protection Ministry, has virtually no influence on enterprises that do harm to the environment. In this area, it is necessary to increase control functions.

At the same time, in Zhytomyr region that you mentioned, there is another serious problem - uncontrolled extraction of amber in northern regions, which may affect the fate of several generations in the future. The diggers affect water-bearing layers, and later water supply in these areas will disappear for many years. The Environmental Inspectorate should intervene here.

We are counting on the adoption of a law on de-concentration of powers in the field of land relations. If an amalgamated hromada manages all the land belonging to its territory, it will have the opportunity to better bring order there.

Q: Do you really believe that the efficiency of land use will grow by three times if land is transferred to AHs?

A: The hromada has agricultural land, but practically it does not see it. This land is registered at the level of a rayon, oblast or state. People know that the land exists, but they do not realise how much money it can bring the budget of the hromada... Land tax is paid to the local budget's account from the moment the land plot is registered. This means that the owner in his territory does not understand how much income he can generate.

In addition, there is a huge amount of unregistered agricultural land. According to the concerned committee of the Verkhovna Rada, taxes are paid only for 21 million out of 32 million hectares of agricultural land. We expect that, having the opportunity to dispose of land resources, local hromadas will calculate how much land they have in general, how much of it is free, and how much of unregistered land, for which nobody pays, is used. Then, we give the right to normative-monetary valuation of land. In my opinion, local government bodies will gradually bring order, and proceeds from this revenue article will grow.

There's one more example. This year's state budget provides for 5% of rent for gas and oil extraction. It's about five areas, but we're thinking of introducing this to other territories. If we gave the hromadas the opportunity to receive rent from sand, then we would have immediately brought order to sand quarries. The AH head would understand that those who received the license pay to the budget, unlike all other users. And he would have to bring order in this issue.

The same applies to amber – it can be extracted, but of part of the income comes to the local budget. We have examples when there are three huge quarries in the territory of the amalgamated hromada, from where offshore companies export granite. These quarries are destroying local infrastructure, as trucks weighing 60 tons destroy roads. How much do they pay to the local budget?

Q: About 200 hryvnias per month?

A: Per year. And this is also a problem. So hromadas must learn to understand their possibilities and use them effectively.

Q: What if local authorities do not act in the interests of the hromada in matters of land management? Will you be able to influence this situation?

A: We separate two functions, which are currently under the control of one state body - the State Service for Geodesy, Cartography and Cadaster. It can dispose of land and control its circulation. Such a combination is a source of corruption risks. After all, this body is practically the owner of the state land and at the same time gives permission for land auctions, rent and privatisation. It will be better if the control exercised at the level of a regional administration, rather than a central body.

On the other hand, the responsibility of local self-government bodies for land management will be strengthened. Such decisions will be made at sessions. This is a matter for hromada, people.

The government tabled in the Verkhovna Rada a bill on the statute of a hromada. It is intended to regulate the consideration and discussion of issues at council sessions where decisions are made and at hromada meetings. We give each hromada the opportunity to prescribe a statute and issues that can be submitted to general meetings, issues that may be raised at a gathering and considered at a session of a local government body. That is, we launch another control process.

We already have 692 AHs. In order to protect their interests, they have to form teams of strong managers.

Q: There is a topical issue of education and experience of the heads of AHs. How to teach them to manage effectively?

A: We are working on it. I intend to hold a number of meetings with representatives of the U-LEAD with Europe Programme. I discussed this issue with EU Commissioner for European Neighborhood Policy and Enlargement Negotiations Johannes Hahn and with other European partners. It is important to us that the U-LEAD with Europe Programme, which supports the reform of local self-government, could introduce a modular teaching system. This will help understand how and where to move. AH representatives must attend courses on law, strategic planning, project management, finance, education, health, and territory planning.

Local government development centres in the regions will help them create strategies for hromada development, territory planning, and outline priorities. After all, the priorities are determined not only in terms of kindergartens, schools, but also in terms of the presence and quality of labor resources and investment projects that can be implemented.

Eventually, we will come to the appointment of professional city managers who are not politicians. Thus, during the change of power or the coming of another political group to power, he or she will remain in office, since he or she will have knowledge, competence and ability to manage.

Q: There's one more aspect that local hromadas will unlikely be able to ensure on their own – the humanitarian aspect. When the hromada lacks money, libraries and theaters are most affected. Can the state influence this?

A: The state should support priority directions for people. Over time, when local authorities become more experienced, the situation will change for the better. At the moment, we support humanitarian aspects through the State Fund for Regional Development projects, as well as subventions for culture and sports.

I have recently had an interesting working trip to the cultural objects of the Zhytomyr Oblast. We plan to create a model of a single cultural space in the hromadas there, and, importantly, to set certain standards. Now, when people come, for example, to the Ukrainian House in Kyiv, they see embroidered towels, trousers, rag dolls... But this is just a part of Ukrainian ethnography. We are interested in showing a complete list of cultural values that hromadas have.

For example, at the museum in the village of Kmytiv, one of the largest rural museums in Ukraine, there are pictures of many talented artists such as Hrytsiuk, Hlushchenko, Hryshchenko, Yablonsky - it's incredible! This AH has a museum on its territory, which was earlier visited by 40,000 people every year. A ticket there costs only five hryvnias. This is despite the fact that there is an extraordinary exposition there - almost 3,000 works. After our communication, the head of the community realized that this museum is a pearl for the hromada, tourists from all over the country can be attracted to Kmytiv, and the village will get development. And these are revenues for local businesses. First, we want to work out such a model at the level of the Zhytomyr Oblast, and then offer it to other hromadas.

Thus, many cultural projects can be introduced through a common model if certain standards are defined. And they will be able to keep people in their territory, motivating them to seek happiness at home, rather than go to Kyiv or abroad.

Q: At whose expense will this model be funded?

A: Now we are talking about local government funds, to which we add money from the State Fund for Regional Development. But in 13 regions there are development agencies that create an investment climate, identify priorities in line with a regional development strategy, and attract investment. So, during my trip to the Zhytomyr Oblast, we discussed with Pavlo Hudimov, Mykola Kniazhytskyi, Oleksandr Roitburd, my wife, Liudmyla Zubko, and other experts the possibility of involving these development agencies in promoting cultural and museum activities. This direction contributes to domestic tourism and investment in the regions.

We are currently holding talks with the European Union on the financing of these agencies so that they provide grant assistance to interesting projects. I hope that we will entrust cultural and museum development to agencies.

Q: How much funds are envisaged in the 2018 state budget for regional development?

A: In total, UAH 18.5 billion will be directed for regional development support. The issue concerns the funds of the State Fund for Regional Development, subventions for socio-economic development and development of AHs, financing of the primary medical network in rural areas, etc. Plus, there is still UAH 200 billion in local budgets. And we really would like this money to be used effectively.

Q: Are all these funds used by the hromada?

A: We see a trend that the remainder of funds of local budgets grows every year. As of January 1, 2016, they amounted to UAH 31 billion UAH. On January 1, 2017, they reached UAH 49 billion, and on November 1 this year, they totaled UAH 79.6 billion.

Q: What happens to these funds?

A: About 15-16 billion hryvnias constantly remain on deposits. I do not understand the explanation when local executives say they fill their budgets with interest. We certainly were not going to give huge resources to finance the banking system. These funds are allocated to local hromadas for projects that improve people's lives.

I assume that the heads of local self-government bodies deliberately accumulate these funds for the pre-election period in order to do everything they promised in the last year.

Decentralisation has created conditions for hromadas to plan activities for 3-5 years ahead. They have steady income, defined taxes and have to think and act strategically. Instead, some behave like hamsters – they accumulate more, and then they do not know what to do with this money... They will not be able to spend at one time too high an amount of money for the hromada. They can spend about 20-30 million hryvnias or even 100 million hryvnias in one election year, but for UAH 79 billion there will not be enough projects, contractors, or time.

Q: Can these funds be returned to the state budget?

A: These are the funds of hromadas. For me, as a manager who conducts decentralisation reform, it's not easy to restrain the Finance Ministry from wanting to take some of these 79 billion hryvnias.

I constantly explain in the regions that one should not wait, but do something. People paid taxes and for these funds they want to get roads, kindergartens, schools, museums, theaters, and sportsgrounds.

And if it does not happen, people will leave the country, because there is a big threat of loss of human potential and people leaving abroad. This is the biggest problem for Ukraine today. We must keep compatriots from leaving the country not only by raising salaries and pensions, but also by building good infrastructure.

In Ukraine, of the 24 million able-bodied citizens, only 8 million are men, and 16 million are women, and only 8 million of them work. Others run a household. I call on hromadas to more actively build kindergartens and free women from sitting on maternity leave if they aspire to realise themselves in another direction.

Q: To do so, we need to create the right conditions for women to know where her kids stay and what they do while they are at work...

A: I agree. We are currently working on the creation of kindergartens on the first floors of high-rise buildings.

An important issue is the financing of kindergartens. In different cities from UAH 27,000 to UAH 50,000 is spent from the budget per child every year. If local authorities cannot place all children in kindergartens, then let them give parents these 35,000 hryvnias per year for the child's stay in a private kindergarten. Firstly, it will motivate the appearance of private kindergartens. And, secondly, this does not require spending UAH 60-80 million from the local budget to build a kindergarten for 200 people.

At the same time, the main condition is that children going to private and municipal kindergartens should have equal rights and opportunities. The reform is so cool that step by step we look at what else can be done for a new quality of life.

Q: What is your forecast for 2018? How will decentralisation reform be promoted, since a number of necessary laws have not been adopted yet?

A: Everything will be fine. There is a political will of the president, the government, the parliament. We have done a lot, and many things will be done next year. I think that we will make the necessary amendments to the constitution, we will pass laws, and we will fully ensure the ability to manage at all levels. And then, I'm sure, the processes will also be easier at a lower level. It just takes time for the regions to feel how much stronger they are.

 

Maryna Synhaivska, Olena Sobko, Ukrinform.