The Federal State must change roles - IDESA

Report Nº: 76517/07/2018

The Federal State must change roles

Reality imposes a reordering of the federal public sector. As important as to tend to financial sustainability is to improve the quality of the interventions. A key step is to critically review the national programs that overlap with services in charge of the provinces and municipalities. Given the persistence of the financial turbulence, the urgency […]

Given the persistence of the financial turbulence, the urgency to balance public finances increases. One of the fiscal components that is expected to be addressed is discretionary federal transfers to the provinces. These are national programs through which funds are sent or purchases are financed with the aim of collaborating in the management of services that are under local governments responsibilities. The most important, but not the only ones, are those related to educational and public health services.

This type of intervention collides with the federal regime that establishes that the provinces are responsible for managing the social services. However, they have been justified as tools tending to promote social development and correct regional gaps. Underlying is the assumption that federal officials are more skillful than their local counterparts in administering public funds.

What is the volume of resources administered by federal ministries to carry out functions specific to provincial governments? Although it is very difficult to give an exact number, with information from the 2018 Budget it can be estimated that:

  • The National Ministry of Education allocates US$ 1.5 billion for repair, supplies and training of provincial schools.
  • The National Ministry of Health allocates US$ 1.2 billion for repair, supplies and training of provincial health centers.
  • The National Ministry of Social Development allocates an additional US$ 100 million in the construction and equipping of child development centers.

These data show that the federal government would be spending no less than US$ 2.8 billion in supplies for provincial schools and health centers. Given that it is equivalent to one fifth of the primary fiscal deficit, it is a volume whose revision could make an important contribution to reducing the fiscal deficit. The question that arises is the incidence that this could have on the quality of education and public health.

International studies relativize the impact of this type of expenditure on the quality of education and health services. For example, a publication in the Science “The challenges of education and learning in emerging countries” reveals the impact measurements of more than 30 studies in Latin America, Asia and Africa and concludes that there are no positive impacts on education in the expenses of supplies (books, class material, computers, repairs, etc.). On the contrary, they find that the incentives and monitoring of teachers are decisive for student learning. In a similar study, “The quality of primary care in low-income countries: facts and economics” shows that the quality of health actions is much more sensitive to incentives and monitoring of physicians than to the supply of inputs.

These international evidences help to understand the low quality of education and health services in Argentina. Although national programs in education and health are loaded with good intentions, in practice, they worsen the waste of resources. On the one hand, because there is no possibility to manage efficiently the purchase of books, computers, medicines, medical equipment or the construction and repair of schools or hospitals throughout the national territory with centralized methods at the federal level. But the most negative aspect of these interventions is that they induce the provinces to ignore the most important issue, which is, the monitoring and incentives to work of teachers and doctors in the social services of the public system.

To stop the national ministries in co-managing services in charge of the provinces and municipalities should not only be assumed as a way to regain sustainability in public finances. In addition, it is the opportunity to rethink roles and make a very relevant contribution in favor of the quality of social services. Instead of maintaining huge federal structures, superimposed on those of local governments, national ministries should be reconverted into smaller, more professional agencies focused on measuring and disseminating results and limited only to providing technical assistance to local governments, especially in the most underdeveloped regions, to modernize their management.


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