Home' Policy Magazine : Policy Vol 33 - No 4 Contents 10 POLICY • Vol. 33 No. 4 • Summer 2017-2018
SECRETS OF SWISS SUCCESS: LESSONS FOR NEW ZEALAND
institution, parliament can attract high-calibre
candidates, introducing considerable professional
expertise into the legislative process. This
engagement in public affairs is in no way resented—
even though it requires flexibility of employers for
dealing with employees elected to public office.
Moreover, the level of civic engagement in politics
is much higher than in New Zealand. Public office
and public administration are held in high regard.
Federalism and localism
Direct democracy, with its constant referenda and
public assemblies, may be the most eye-catching
element of Switzerland’s system of government.
Equally, if not more important for the functioning
of Swiss government is its highly-devolved
nature. Coming from New Zealand, it is hard
to comprehend just how decentralised Switzerland
is. A few comparisons may help to understand
With a population of 4.8 million and a landmass
spanning 268,021 km2
, New Zealand has 78
sub-central units of government. These include
territorial authorities, regional and unitary councils.
Switzerland, meanwhile, has more inhabitants: 8.4
million. But its area is much smaller at only 41,285
km2 (roughly the size of Canterbury) and within
this small country, there are 26 cantons (regions)
and 2,294 communes. In other words, where New
Zealand has an average of 61,500 people per sub-
central unit of government, the corresponding value
for Switzerland is only 3,620 people. And where the
average New Zealand sub-central unit covers 3,400
, in Switzerland that area is just 18 km2
The small size of Swiss political units is already
astonishing. But these political units are not only
small but also powerful. In fact, communes and
cantons are the most important part of Swiss
political life. Symbolically, this is visible in the
fact that Switzerland does not even have an official
capital. Bern is the seat of the federal government
and parliament but it is only the de facto capital.
Practically, the importance of the two lower tiers of
government is reflected in their tax revenues. The
Swiss Confederation receives taxes equivalent to
9.5% of Swiss GDP. Cantons and communes
combined receive more than that—10.5%.
Based on these figures, Switzerland appears to be
one of the most decentralised countries on earth.
However, the term ‘decentralised’ is misleading.
That is because Switzerland was never centralised
to start with and so it did not have to decentralise.
It would thus be more appropriate to speak of
Switzerland as a non-central country. This is one of
the country’s great strengths.
From a New Zealand perspective, this may
sound odd. We have been taught to believe that
bigger usually means better. After all, this was the
main argument behind the Auckland super-city
merger and the government’s drive to amalgamate
further parts of the country.
Many New Zealanders believe that local
government is the more incompetent and wasteful
part of government. Giving local government more
power and money thus seems counterintuitive.
Given this widespread perception of local
government, New Zealanders would not easily
understand why Switzerland’s super-devolved
system has a competitive advantage. However, the
Swiss experience demonstrates that a different way
of running local and regional government affairs is
not only possible. It may be beneficial.
The key to understanding Swiss local and regional
government lies in one word: incentives. Because
there are local, cantonal and federal taxes for both
personal and company incomes in Switzerland,
each tier of government participates in increasing
its tax revenue. And because the structures of local
government are so small, there is competition
between neighbouring councils. They not only
compete in the delivery of public services, but
also on tax—each council is able to set their own
individual tax rate. It is the government equivalent
of competition in the marketplace.
Such competition has a disciplining effect on
councils and cantons. When they pursue wrong and
wasteful policies or introduce overly burdensome
regulations, there is an exit option for residents.
They could just move a few kilometres down the
road to find themselves in another jurisdiction. Of
The Swiss experience demonstrates that
a different way of running local and regional
government affairs is not only possible.
It may be beneficial.
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