Reforming the Latvian policy management system

The initiative

Veismane asked Una Klapkalne, an experienced government official, to design and implement a new policymaking system, which resulted in her leadership of the newly-created Policy Coordination Department (PCD) at the State Chancellery. The unit consulted with experts in the field and also held meeting with ministers and government employees to understand the challenges faced by the government. Based on this process, the PCD set up pilot programmes to check the feasibility of the models it developed.

The policymaking model that evolved from this experience had three parts:

• Rules and procedures for policymaking.
• A mechanism for coordinating activities across different ministries.
• A mechanism to link policy planning to the budget process.

In late 2008, however, these reforms were put on hold. The fallout from the global financial crisis of 2007-08 meant that the Latvian government experienced a sharp drop in revenue and a 25 percent contraction in GDP. The crisis “brought the whole system to nothing,” according to Mārtiņš Krieviņš. “The whole system started to work a little bit, and then it was dropped completely.”

Valdis Dombrovskis succeeded Ivars Godmanis as prime minister in March 2009 at the height of the crisis in Latvia. He decided to shut down the PCD by 2010.

The challenge

From Latvia’s independence from the Soviet Union in 1991 until the end of the century, the Latvian government had functioned without a clearly organised policy planning process. “Ministries produced policy papers that lacked input from stakeholders or essential information about costs and objectives, leaving decision-makers in the dark when trying to set a course for Latvia’s future.” [1]  In 2000, when she took over as Latvia’s state chancellor, Gunta Veismane was given a difficult job by the prime minister – ensuring that top officials had the information and analysis they needed in order to make informed policy decisions. She had to do this against a background of instability, with frequent changes of government and prime minister.

The public impact

In 2006, the World Bank conducted a comparative study of administrative reforms in Latvia and the seven other central and eastern European countries that had joined the European Union in 2004. It ranked Latvia at, or near the top, of the group in terms of the quality of policy analysis and coordination.

There had been a number of successes for the PCD between 2000 and 2010:

• The ministries that had piloted the PCD's strategic planning projects endorsed the exercise, and the Cabinet made strategic planning compulsory in all ministries from 2006 onwards.
• The new consultation procedures brought a level of transparency to policy planning that was unprecedented in Latvia and the region.
• The Cabinet meetings were shorter and more focused - the Cabinet discussed 2,796 items during 2005, up from 2,443 in 2001.

Stakeholder engagement

The PCD was supported by the then prime minister and the cabinet, as well as the ministries that trialled its strategic planning initiatives. The unit worked closely with other ministries. For example, it collaborated with the Ministries of Finance, Welfare, Social Impact, the Environment, and Justice in implementing its policy of annotating planned legislation, principally to assess its financial impact.

Having gained the endorsement of the prime minister, Andris Bērziņš, Veismane needed to present her proposal for the PCD to the Cabinet and persuade ministers to support the efforts. They gave their approval, because the PCD's approach was cooperative rather than confrontational and stressed the need to tackle the challenges collaboratively. Also, the PCD recommended that more detailed considerations should be assessed by civil servants rather than politicians, something that the ministers were positive about.

However, there is no indication of the level of involvement of civil society, and the level of engagement was heavily dependent on the availability of funding.

Political commitment

The PCD was instituted by the prime minister and received support from successive prime ministers and their cabinets for the first years of its life. However, that it was heavily dependent on this commitment for its continued existence is evident from its being scrapped in 2010.

Public confidence

Latvia has a very unstable political climate, with 12 prime ministers in the past 20 years. Therefore, it was not possible to judge public confidence in the government or the PCD.

Clarity of objectives

The objectives of the PCD remained consistent over its lifetime: to give policymakers the necessary information and strategic plans to make informed decisions. These objectives led the policy-framing process to be more streamlined.

Strength of evidence

While drafting the proposal for the PCD, Veismane and Klapkalne asked the embassies of the UK, the US and Canada for samples of equivalent policies to analyse, and looked to the UN Development Programme and the World Bank for advice in creating the unit. Department members met with the Canadian consultant Gordon Evans, who worked primarily with the Lithuanian government, which was developing its own planning system, and consulted New Zealand's former Treasury secretary, Graham Scott, on matters of linking policy planning and budget processes.

The PCD used this information-gathering exercise to:

• Create specific procedures and formats for introducing and coordinating policy documents.
• Pilot a planning system that linked policies to budgets in selected ministries.
• Monitor the new rules through reviewing all policy proposals to ensure they complied with standards.

The pilot exercises fed into the organisation and structure of the PCD.

Feasibility

During the planning phase, Veismane and Klapkalne checked the human resources and financial feasibility of the PCD. Although the reform effort had political backing from the prime minister and the cabinet, the creators of the PCD decided to find funds from within the State Chancellery to finance it.

As part of the reform efforts, the department conducted a functional audit of the State Chancellery in the summer of 2000 and spoke with every employee about their role to uncover duplicative and unnecessary functions.

Management

The PCD was initiated by experienced administrators. Veismane, an economist by training, had served as the first director of Latvia’s School of Public Administration, the government’s training programme for civil servants. Klapkalne was an experienced government official who had first-hand experience of legislative change in Latvia. At the start, though, there were only six staff in the unit.

Measurement

The effects of the reform were measured by tracking the clarity of policy documents and the level of transparency in the process of policy development. These included the duration of cabinet meetings (based on the start and end times recorded in the minutes), the clarity of policy documents, and the number of issues that were discussed during policy planning due to lack of clarity. However, such metrics were not tracked over time.

Alignment

The PCD received support from other ministries in a number of reforms:

• The introduction in late 2001 of the document-category system.
• The introduction of new rules in Cabinet procedures in March 2002.

Bibliography

Jonathan Friedman, 2012, MOVING BEYOND CENTRAL PLANNING: CRAFTING A MODERN POLICY MANAGEMENT SYSTEM, LATVIA, 2000 - 2006, Innovation for Successful Societies, Princeton University, http://successfulsocieties.princeton.edu/

Experience of Public Administration Reform in Latvia: Lessons from the past and challenges ahead, Gunta Veismane, 2004, Forum organised by the Government of the Republic of Croatia, The World Bank, The Delegation of the European Commission, DFID, and SIGMA/OECD, Zagreb, 7 June 2004

9 February 2012, Interview with Una Klapkalne, Innovations for Successful Societies, Princeton University, http://successfulsocieties.princeton.edu/