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Default is only way to push for municipal reforms

Nicosia municipality workers during the strike

MUNICIPAL workers held a one-hour work stoppage on Thursday to protest about the financial plight of local authorities and back the demand by the Union of Municipalities for a return of government funding to pre-crisis levels. They also demanded that the government gave town councils the sum saved from pay cuts so it could be used for other needs, which was quite a commendable proposal.

A day before the work stoppage, Chairman of the Union of Municipalities, Larnaca mayor Andreas Vyras, gave an interview to CNA, in which he said, “a default or partial default is not far from reality for some municipalities.” Some municipalities could not meet their basic obligations, he said, such as paying social insurance contributions for their staff, because of their dire financial situation.

The solution to the problem, said Vyras, was for the government to increase funding to pre-crisis levels, as this had been cut by some 40 per cent after the bailout. Interior minister Socratis Hasikos ruled this out, even though he agreed to meet the union next month to discuss the economic woes of the municipalities. In a statement issued on Thursday, Hasikos repeated what he had been saying for several years now – “the local authority model is dated and anachronistic and there is an excessively large number of municipalities with costly departments.”

This is the gist of the problem, which even Vyras accepted. “When 60 to 70 per cent of the budget goes towards personnel expenses you understand how limited the potential is for more effective expense management,” he said. Everyone knows there is an excess number of municipalities that employ far too many people, but when Hasikos tried to tackle the problem by reforming local government and reducing the number of municipalities from 30 to 22, he encountered the opposition of the political parties.

The parties not only refused to pass his reform bills, submitted two years ago after endless consultations, but also turned down his proposal for the postponement of municipal elections, held last December, so that the reforms be put in place. Now the implementation of the reforms, assuming they were approved by the parties would have to wait until the next elections, in four-and-a-half years’ time. Until then, several municipalities would default on their loan repayments (in total local authorities owe €300m) as Vyras had warned.

The government should allow this to happen, as this is the only way to force the political parties to pass the reform bills. It should on no account bail out the municipalities. The consequences of the parties’ reckless irresponsibility – they caused the problem by creating so many municipalities but refuse to vote the reforms that would fix it – must be exposed before any remedial measures are taken.

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