Lack of reform in Israeli local government and its impact on modern developments in public management

ABSTRACT

Lack of reform or the slow pace of reform in public management is an issue that plagues Israel, particularly in local government (Beeri & Razin, 2015; Levi et al., 2020; Razin & Lindsey, 2017). Based on the assumption that public reform, meaning changes to the structures and processes of public organizations designed to improve their performance (Pollitt & Bouckaert, 2017), is a feature of modern governance, studies investigating lack of reform have suggested it as evidence of non-governability, lack of management, lack of leadership and even public anarchy (e.g., Jeffery, 2008; Rahat & Hazan, 2011). However, its wide-ranging and theoretical influence has not yet been examined in depth, its connections to recent trends in public management have yet to be clarified, and its ramifications for the management of Israeli local municipalities are unclear. Thus, I explore the theoretical and practical interactions between the attributes and circumstances of the lack of reform of local government in Israel – especially in its management. I also examine how recent global trends such as the co-production of value and the coronavirus outbreak may postpone or accelerate such reform.

KEYWORDS:

• Lack of reform
• Israeli local government
• co-production of value
• coronavirus outbreak
• non-reform policy

The relationship between the central and local governments in Israel

Israel is a unitary state. Traditionally, public services have been very centralized. Local authorities do have the responsibility for providing municipal services. However, the power and strategic authority given to them are not commensurate with this level of responsibility (Beeri, Uster, and Vigoda-Gadot 2019; Ben-Elia 2006; Blank 2006; Eshel and Hananel 2019; Gal-Arieli et al. 2017; Ivanyna and Shah 2014). This very basic trend results in systemic inequalities and a widening gap between local authorities (Ben-Bassat and Dahan 2018; Lasri 2012; Levi et al. 2020; Mualam, Goldberg, and Salinger 2020; Tzfadia et al. 2020).

For example, the central government determines and approves local tax rates and discounts, municipal borders, local rules, local appointments and annual budgets, leaving little room for localism and local autonomy and democracy (Beeri and Yuval 2013). ‎In general, the fiscal dependency of Israeli local authorities makes the relationship between the central and local governments extremely politicized. In addition, each tends to blame the other for the mediocre performance of Israeli local authorities (Kimhi 2011). When local authorities have budgetary problems, they appeal to the central government for help. The central government, particularly the Ministry of Finance and the Ministry of the Interior, have traditionally taken a centralist and conservative view towards local authorities, both in routine times and during crises, sometimes even to the point of regarding the local economy as a threat to national economic stability (Beeri and Razin 2015; Blank 1994). Since the first decade of the 2000s, these ministries have become even stricter in how they deal with local financial crises (Beeri 2013; Reingewertz and Beeri 2018).

Lack of reform in the management of local government in Israel

One would expect that the ongoing situation would lead to managerial reform in Israeli local government. According to the theory of gradual institutional change (Mahoney and Thelen 2010), reforms in local authorities might be regarded as incremental changes (Gardner 2017). However, unlike recent developments typical of Western and democratic nations (e.g., Ebinger, Kuhlmann, and Bogumil 2019), and unlike reforms in other Israeli public areas (Cohen 2016), the Israeli central government has not adopted any substantial reform in local government and the management of local authorities (Beeri and Razin 2015; Ben-Bassat and Dahan 20092009; Ben-Elia 2007; Levi et al. 2020; Matzkin and Sadinsky-Levy 2012; Razin 2004; Razin and Lindsey 2017). This policy of non-reform can be defined as a political situation in which there are no significant reform initiatives (Jeffery 2008; Rahat and Hazan 2011). I maintain that in Israel the forces that have pushed for stability have been more powerful and meaningful than distributional struggles. Furthermore, stability has not led to, in Streeck and Thelen (2005) terms, displacement – the replacement of existing rules, layering – attaching new rules to existing ones, drift – shifts in external conditions, or conversion – when rules are interpreted and enacted in new ways. There are seven watershed events indicative of this policy of non-reform that represent failed opportunities to initiate local structural reform in Israeli local government. Two of them are international trends–NPM and local governance – and five of them are local political events.

The first of these international trends is New Public Management. During the 1980s and 1990s, various reforms took place in public management worldwide that fall into the category of New Public Management reforms. In Israel, in contrast, despite the recommendations of the Kovarsky Committee in 1989 (Kovarsky 1989), no comprehensive reforms that resembled these in nature, scope or consensus were ever formally adopted, either for general public management or in the context of local government (Drew, Razin, and Andrews 2019; Vigoda-Gadot and Mizrahi 2008). Instead, the work methods, routines, values and practices typical of New Public Management permeated pubic management sporadically, on a voluntary basis, and with a great deal of variance. This slow infiltration widened the existing gaps between local authorities. If in the past these gaps derived mainly from structural conditions such as land, location, size, and resources, today these gaps are widening due to other factors including the managerial culture. While some local authorities are able to recruit leading professionals who utilize advanced management methods, other authorities lag behind, continuing to use political appointees instead of professionals (Cohen 2016; Galnoor, Rosenbloom, and Yaroni 1998; Lasri 2012).

The second of these international trends is the shift from local government to local governance that has dominated Western nations since the early 2000s. These reforms were designed to support local autonomy and democracy, promote localism and encourage local collaborations and co-processes, leading to the co-designing, co-production, co-developing and co-implementing of local policies and local services (Osborne and Strokosch 2013). In Israel, unfortunately, no such public discussions, professional development or equivalent reforms took place. Instead, some local authorities, especially those populated by ethnic minorities (e.g., Muslims, Druze, Christians and Bedouin), created a form that has been described as grey local governance (Tzfadia et al. 2020). In this form of governance, the boundaries between formal and informal governing are blurred. Furthermore, the fact that a small number of sound local authorities (defined as those that did not require a grant from the central government to balance their budgets and had no current debt) independently chose to adopt modern local governance practices has exacerbated the gaps between various local authorities (Beeri and Razin 2015).

In addition to these global trends, five local political events indicate the missed opportunity to initiate local structural reform. The first political event is that since Israel was founded, several committees have been charged with examining amalgamation reforms for local authorities. Israel has a relatively large number of local authorities – 257 – that are populated by an average of 35,000 people. In 1998, the Shachar Committee recommended 100 mergers of these local authorities, but by 2003 only 12 had actually been implemented. Furthermore, four of these mergers were eventually dissolved. The resulting lack of trust in the local governments prompted senior government officials to abandon any hope of implementing this policy (Drew, Razin, and Andrews 2019; Reingewertz and Beeri 2018).

The second of these five local events was the attempt made in 2007 to replace the Mandate Municipalities Law – which was inherited from the British Mandate and expired in 1948 – with the Municipalities' proposal (Bill) (2007). This bill was supposed to regulate the status and legitimacy of local governments, including debts, the scope of their authority, budgetary sources and relations with the central government. However, the bill was written in the spirit of neoliberalism, and treated local authorities as a business entity rather than a political entity embodying democratic values (Ben-Elia 2009; Blank and Rosen-Zvi 2009). There was no support for the bill. Hence, from a legal perspective the status of the local government remained unclear (Rosen-Zvi 2017).

The third event, in 2014, was another attempt to clarify this status and narrow the gaps between the local authorities. It took the form of an amendment to the Mandate Municipalities Law that differentiated between sound local authorities and all other local authorities. Sound authorities were given more latitude in their local budgets and the ability to make legislative and organizational changes as well as to real estate transactions. However, to date, only 29 (11.2%) local authorities have met the criteria for soundness (Beeri and Razin 2015) and their soundness has not affected neighbouring municipalities (Beeri and Yuval 2013).

The fourth local attempt at reform occurred in 2016, when Shlomo Bohbot, the mayor of the northern border town of Ma’alot-Tarshiha, launched a bottom-up initiative by creating inter-municipal regional clusters. In response, the Interior and Treasury Ministries gave mayors the legal right to collaborate voluntarily in the form of regional clusters. To date, around half of the 257 local authorities in Israel have joined together to form 10 regional clusters. Despite this relative breakthrough, the regional clusters have several structural disadvantages. Only around one-fifth of the population, mainly those residing in peripheral areas of the country, lives in these clusters. Second, the clusters deal primarily with administrative efficiency and technical tasks. Only recently have the older and more established clusters begun promoting communal, economic and environmental development (Abada, Shmueli, and Cliot 2018; Lerer 2019). Third, the clusters are not democratically elected by the public, and they have no legal status as a regional governing body for planning the regional space. Thus, local leaders still worry about the irreversible loss of their authority and resources to the cluster and fear that these clusters will one day serve as a platform for amalgamations.

Finally, the fifth event, occurring in 2020, was the initiative of the Regional Governance Reform. It represents the broadest attempt to promote reform in the management of local and regional space through a fundamental change in the governmental structure in Israel. However, currently this reform is still in its infancy, with only a limited number of supporters. The initiative for this reform is in the hands of Mordechai Cohen, the Executive Director of the Interior Ministry, who recruited support from a professional advisory team for promoting regionalism in Israel,¹ the Interior Minister, the powerful Treasury Ministry, and the Joint Distribution Committee (JDC), a leading NGO. The report to be issued by this team will adopt an overall systemic perspective that for the first time recognizes: a) the structural failures of local government, including administrative, economic and social failures (Beeri 2009; Reingewertz and Beeri 2018; Rosen-Zvi 2017); b) the over-centralization of the central government in comparison to other OECD countries (Beeri and Razin 2015; Dery 2002; Ivanyna and Shah 2014); and c) the serious and ongoing negative consequences of the existing social and economic structure for the quality of services and the environment, spatial inequalities and local democracy (Aharon-Gutman, Schaap, and Lederman 2018; Frenkel and Israel 2018; Yacobi and Tzfadia 2019; Yiftachel 2019). Hence, the committee’s main recommendation for promoting regionalism is to create structural reforms in managing the local space that include a phased, cooperative and differentiated transition to a multi-layered governmental structure comprising central, regional and local governments. To do so, there must be top-down decentralization and a re-division of the responsibilities, authorities and resources of the government. In addition, the central government should adopt a vision of new regionalism, establish clusters and metropolises with governmental status, synchronize regional interfaces, and examine political representation on the regional level (Arlosoroff 2019). Nevertheless, the intention to implement this reform in regional government has already met with strong opposition from the heads of local authority associations (Federation of Local Authorities in Israel 2020).

Reasons for non-reform in managing the local space

There are various reasons for the lack of local government reform in Israel (Beeri and Razin 2015; Ben-Elia 2007; Razin 2017; Rosen-Zvi 2017). Indeed, in the case of the management of local space, the reasons are tied to international, structural, political, ideological, economic and social factors on several levels: Israel as a nation, Israel as a state and Israel as home to local authorities and communities.

First, Israel’s status as a nation is shaped by the ongoing instability of its borders and its very existence that have plagued it since the UN Declaration in 1948 that established it. Moreover, some international, political and ideological forces are questioning the legitimacy of Israel, primarily in the context of its settlement policy. Consequently, unlike many Western nations, Israel has never reached the point where it can devote all of its energies and resources to the well-being of its citizens. Indeed, a major portion of its budget, which comes from taxpayers, as well as its human resources are allocated to defence (Beeri, Uster, and Vigoda-Gadot 2019; Ivanyna and Shah 2014). Faced with these burdens, local taxpayers have less money and energy to invest in efforts to modernize and reform the management of local government. As a result, efforts to promote local democracy lag behind what is common in Western nations (Ben-Elia 2006). Local authorities do exist, have responsibilities for municipal services, operate with varying levels of competence and respond to growing expectations. Nevertheless, local government – as a concept, ideal and sub-national political entity – lacks the necessary power, authority, legitimacy and resources that are required for meeting these responsibilities (Beeri and Razin 2015; Blank 2006; Eshel and Hananel 2019; Gal-Arieli et al. 2017).

Second, the local government map in Israel is unique in terms of its demographics, which also affects the lack of local reform. Although Israeli Arab minorities – Muslims, Druze, Christians and Bedouin – constitute about one-fifth of the population (21%), they are a decisive majority in one-third (32%) of the local authorities, primarily those located in peripheral areas of the country that often have fiscal problems (Israeli Central Bureau of Statistics (ICBS) 2019). Arab local authorities are populated by an ethnic majority identified with the Palestinian nation, which has been engaged in a struggle with the Jewish majority for over 150 years (Ghanem 2001; Lewin-Epstein and Semyonov 2019; Rouhana and Ghanem 1998; Smooha 1990). In the general elections, traditionally, most of the Arab population votes for the left-wing Arab parties (72% in 2019) that are not part of the ruling coalition (Rodnitzki 2019). In many cases, the central government’s lack of trust in the Arab politicians results in the exclusion of their mayors, council members and local civil servants from local and regional planning and policy making (Ghanem 1998; Ghanem and Mustafa 2009). Hence, the segregation in the local space has enabled the national struggle between Jews and Palestinians to affect the relationship between the central and local governments (Beeri and Zaidan 2020). One of the factors affecting the allocation of more authority into the hands of local government is that doing so would also entail transferring responsibilities, powers and resources to Arab leaders and communities (Beeri, Aharon-Gutman, and Luzer 2020; Brender 2005). A second factor is that local Arab leaderships have not fully adopted the basic principles of local democracy or good governance practices. In their communities, power is in the hands of traditional clan-affiliated forces, limiting the impact of any attempts at community involvement in local planning and decision-making (Ghanem and Mustafa 2009). While Arab communities are not alone in the poor performance of their local governments (Dery 2002; Razin 2004), they do tend to perform less well than their Jewish counterparts (Beeri and Yuval 2012). Nevertheless, despite spatial inequality, concerns about the possible outcomes of decentralization and the delegation of authority have blocked structural reforms in the local space and preserved a very consolidated central government.

Third, the Israeli political system is politicized to a large extent and many of its characteristics have made attempts at local reform more difficult. The central government has adopted a neoliberal policy that by its very nature weakens the political institutions below it and does not support competitive forces liable to threaten its hegemony (Yacobi and Tzfadia 2019). Furthermore, the Israeli civil service has little coherence, institutional autonomy, or public support. The national labour union, the Histadrut, has weakened considerably. Hence, the civil service has been unable to function as a change agent for many years (Cohen 2016; Galnoor, Rosenbloom, and Yaroni 1998). Researchers have pointed to the replacement of experts and academics with political appointees as a factor explaining the lack of long-term planning and stagnation in Israeli political and administrative systems (Yacobi and Tzfadia 2019). Together, these politicized conditions have reinforced a tradition of legal and procedural status quo that is based on consensual majorities. The absence of fundamental political and social structures also means that there are few windows of opportunity to exert pressure for reform. Given that veto players in the central government resist reform and the repeated disagreements over the content of such reform, maintaining the status quo and the ruling coalitions is the rational choice and in the interests of the large parties (Rahat and Hazan 2011).

Another tactic the central government has used in dealing with local municipalities is the funding of government ministers’ pet projects. Thus, these short-term benefits to the local authority have persuaded local leaders to prefer to remain separate rather than joining forces. This situation makes it difficult for the local authorities to unite into one entity that can stand up to the central government and improve their status, demand local reform or co-design local reform (Beeri 2009; Beeri and Navot 2013; Dery 2002).

Towards glocalization? The co-production of value and the coronavirus outbreak

There are two global trends related to local management that might affect the likelihood of reform in Israeli local government. However, they may have contradictory effects. The first trend is the co-production of value, which I maintain may postpone local reform. The second trend is the coronavirus outbreak, which may accelerate it.

The co-production of value

The concept of co-production was first introduced in the 1970s. It was designed to compensate for the weakening investment in public services by leveraging the resources and capacities of civil society (Ostrom and Ostrom 1971). In cases where market value-driven reforms were initiated – outside Israel – citizens were expected to participate in producing public services and thus to share responsibility for the quality of the public services they used. On one hand, co-production has restored accountability, transparency and responsiveness, at least to some extent, leading to the greater democratization of governance (Nabatchi 2010). Nevertheless, these achievements were attenuated by excessive fragmentation and self-interested and community focused motivations that replicated existing social inequalities (Alford 2014; Palumbo 2016; Park 2020; Van Eijk and Steen 2016).

There are several basic pre-conditions for co-production: citizens’ participation, the involvement of and financing from government agents, and new governance structures, network-based collaborations, recognition and government support (Cepiku and Giordano 2014; Nabatchi, Sancino, and Sicilia 2017). However, local democracy in Israel is far from meeting these preconditions (Beeri and Razin 2015). In other words, the implementation of co-production entails bi-directional dependency and the desire for reciprocal relations among national institutions, local institutions and local residents. This situation does not yet exist with regard to the relationship between Israel’s central and local governments (Blank and Rosen-Zvi 2009).

Recently, scholars have expanded the study of co-production to include the notions it attempts to create. Examples include ‘public value,’ ‘value-co-production’ and ‘value co-creation.’ These terms indicate that the true value of public service – how people use the offered service and how it interacts with their own life experiences – is not only contained in the quality of the service but is also defined by and co-created with consumers (Osborne 2018; Osborne and Strokosch 2013; Vargo, Maglio, and Akaka 2008; Willmott 2010). As in the case of co-production, the fact that currently Israeli local democracy does not meet the preconditions described above will make it difficult for local managers and residents to engage in the co-production of value (Beeri and Razin 2015; Blank and Rosen-Zvi 2009).

The co-paradigm requires a significant amount of interaction between public-sector employees and service users (Dudau, Glennon, and Verschuere 2019). In Israel too, Beeri and Zaidan (2020) and Rahat and Hazan (2011) found that the initiation and success of local reforms are related to and depend on public support. However, the tradition of a centralized government has led local leaders to replicate this format in their local communities and in their interactions with residents (Ghanem and Mustafa 2009). The resulting shaky local partnerships, culture of segregation and non-participation in decision-making (Razin 2004), combined with the lack of structural conditions needed for the co-production of value, have reduced the likelihood and feasibility of public and community support for local reform in Israel. The public is not involved in planning, designing and executing local services or in broader areas such as regulation and reforms (Blank and Rosen-Zvi 2009; Galnoor, Rosenbloom, and Yaroni 1998).

Nevertheless, there is evidence that sporadic attempts to employ practices of value co-production have taken place in Israel. These attempts have moved from the bottom up, initiated by researchers, experts, entrepreneurs, managers and politicians who have been inspired by other local authorities around the world (e.g., Frish Aviram, Cohen, and Beeri 2018; I-CORE 2020; ISPRA 2020; SID-Israel 2020). However, Dudau, Glennon, and Verschuere (2019) noted that co-creation cannot be a magic remedy for illnesses that plague contemporary democracies–declining trust and public sector austerity. Modern public management such as value co-production requires network democracy and a participatory approach, organizational structures, societal cultures, political and managerial rationalities and technical and economic conditions (Chaebo and Medeiros 2017; Ostrom 1996; Pestoff 2012; Ryan 2012). Given the lack of maturity and absent the regulations needed for constructive value co-production in Israel (Beeri and Razin 2015; Blank and Rosen-Zvi 2009), it is possible that these sporadic attempts to co-produce value may have negative consequences such as value co-destruction and value co-contamination (Williams, Kang, and Johnson 2016). Alternatively, in accordance with Streeck and Thelen (2005) and Mahoney and Thelen (2010), I maintain that new regulations have not replaced existing ones or been attached or shifted to existing ones or interpreted in a way that would indicate any reform in local authorities, gradual or otherwise. Supporting this contention is that fact that when Israel tried experiments such as regional clusters, they did not work well and did not inspire the trust needed to function effectively (Lerer 2019).

In other words, Israeli local government appears to be caught in a kind of catch-22. Residents and communities are not used to the co-creation of value in the form of local services and policies. Consequently, they do not see the value of a local managerial reform that promotes such co-production. In addition, the sporadic attempts that have occurred have had negative outcomes because the preconditions for their success were not in place. Therefore, residents, communities and local politicians have rejected such reforms as unworkable.

The implications of the coronavirus outbreak for reforms in local Israeli government

As I noted earlier, the concept of the co-production of value might have negative consequences for reform in local Israeli authorities. In contrast, the coronavirus pandemic might be just the medicine needed to push such reforms. The coronavirus outbreak occurred just as Israel was dealing with a prolonged constitutional and electoral crisis (Maor, Sulitzeanu-Kenan, and Chinitz 2020). The second wave of infections triggered a major loss of public trust in the central government’s ability to manage the health, economic and political crises. In response, Israeli mayors demanded more powers for dealing with the health and economic crisis (Kahana 2020). These demands were followed by massive protests, as unemployment soared to 22% (Hendrix 2020).

However, new national leaders and heroes are sometimes born during national crises (Boin, ‘T Hart, and McConnell 2009). In July 2020, Prof. Ronni Gamzu, the CEO of Tel Aviv’s Sourasky Medical Centre ‘Ichilov’ (the second largest hospital in Israel) and the former CEO of the Ministry of Health of Israel was appointed national commissioner for the fight against the coronavirus in Israel. In his first press conference, Gamzu announced the adoption of the ‘stoplight model’ according to which local authorities would be classified as red, yellow or green (Yasur Beit-Or 2020). The novelty of this model is that such classifications would be made jointly with mayors. Thus, Gamzu rejected the premise that the central government and national regulators know everything in favour of the approach that municipal management should be carried out together with regional and local forces, not in a top-down manner, and that one size does not fit all local authorities. In doing so, he conveyed an important and rare public message that he believes in mayors and in the managerial principle of letting them lead (Beeri 2020).

It is too early to determine whether this move will succeed and whether this approach will trickle down to other areas of local government. And one should remember that Gamzu’s goal is not reforming local government in Israel. If indeed the attempt is successful, it will demonstrate that it does not necessarily take revolutionary steps to reshape the relationship between the central and local governments. Alternatively, following Streeck and Thelen (2005) and Mahoney and Thelen (2010) theory of gradual institutional change, the coronavirus outbreak may be an example of incremental drift and the conversion of rules. In such situations dramatic shifts in external conditions such as a sudden scarcity of resources opens up space for actors to interpret and implement existing rules in new ways that redistribute power. These changes, in turn, may inspire mutual trust and change the political, organizational culture into a partnership and collaboration, which are the cornerstones of local government reform. The last time a similar paradigm shift occurred in Israel was during the aftermath of the Second Lebanon War in 2006. That situation highlighted the problems in military, political and societal management (Levy 2008) and led to the establishment of regional clusters (Lerer 2019). This time, the coronavirus crisis may lead to a new perspective and promote those seeking the reform of local government in Israel.

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No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Itai Beeri

Itai Beeri is a senior lecturer (associate professor) and the Head of the Division of Public Administration and & Policy at the School of Political Sciences, University of Haifa. With major expertise in public administration & policy, his main research focus lies in public failure & turnaround management strategies, local governance & democracy, regionalism, and local networks & entrepreneurship. He has had articles published in several leading journals, including Public Management Review, Public Administration Review, Journal of Public Administration Research and Theory, Policy Sciences, and Environment and Planning C: Politics and Space.

Notes

1. Full disclosure requires me to note that I am a member of the team promoting regionalism in Israel.