Saturday, 26 February 2011

Austerity Through Local Government

I noted in a previous post how the health service in Poland is being further financially squeezed due to new laws that seek to reduce local governments' budget deficit and debt. This has led to local governments cutting the amount of funds that they invest in their local health systems' property and infrastructure.

From 1st January 2011 all local governments must balance their income and current expenditures. In this way the PO central government is attempting to pass the responsibility of cutting its budget deficit and debt onto local governments. Despite the fact that the local government debt has more than doubled over the past 5 years (to ZŁ55bn) its deficit makes up about 1% out of the overall 8% of GDP.

The effects of these new restrictions on local government is endangering other public services and the country's positive economic growth. Local governments have been at the forefront of gaining access to EU funds, leading investment projects in the country's infrastructure and carrying through the preparations for the EURO 2012 football championships. These investments have been crucial for maintaining Poland's economic growth over the past few years and their winding back would seriously hamper the country's development.

Education - alongside health care - is one of the public services that will be most affected by these new regulations. Many local schools are now threatened with closure - in particular primary schools in small towns and villages. The Ministry of Education has informed that local governments are presently planning to close 335 schools. These are particularly concentrated in the poorer rural areas of the country - such as in Podkarpacka or the Bieszczady. One such case in the Bieszczady concerns a school in the town of Łodyna. This was built in the 1990s largely thanks to money raised by local residents. The local head of the Bieszczady Association for Cultural Space states that 'this is one place where the community can integrate outside of Church. It is the one place where residents can meet each other - not just the children'.

Austerity is coming through the backdoor, with the PO government hoping to remain politically unscathed as it seeks to return to office. Yet, by pushing through cuts in this way it is cynically ensuring that they will most negatively affect the poorer rural regions of the country. Residents in such places tend to rely on public services which are often the least profitable and which are funded by local governments that have the least funds.

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