1. Legal perspective
USA: The powers not delegated to the United States by the Constitution, nor prohibited by itto the States, are reserved to the States respectively, or to the people.” (residual powers). Residual powersare with Federal level in Nepal
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2. History/evolution/culture perspective
Important to look at how federalism has evolved in the country. In the US, for example, states are very powerful as they has come together to form the federation. Based on the US SC judgement, states can even secede if allowed by other states.
There are “born federations” (states have together to form a Union), “created federations” (federalism has been adopted after wide participation of people and informed debates among them, or “imposed federations” (federalism introduced without enough preparation in terms of public debate and ownership).
3. Factors influencing inter-governmental relations include:
- Constitutional/legal arrangements
- Historical, cultural factors imp. for debate on federalism
- Fiscal aspects/sources of revenue
These relations could be vertical (center and provinces) or horizontal (between provinces or other sub-national governments)
It’s important to recognize that the relationship is influenced by three fundamental assumptions about the nature of center vs sub-national governments:
- Center-dominated/hierarchical relations
- Parallel/dual relations (center and states have clearly defined, non-hierachical powers)
- Cooperative relations (where governments at different levels are required to cooperate)
4. Others (administrative etc)
Relationship between government agencies in multi-tier government is affected by several factors. Five of them are critical in the context of Nepal:
Information gap: Information gaps between different levels of government can affect the design and implementation of public policy. Reluctance to share information proactively characterises both national and sub-national governments. For example, the national level does not share knowledge of the strategic picture. On the hand, the sub-national levels do not share their knowledge of what is happening on the ground. This tendency can affect both vertical and horizontal relationships.
Capacity gap: Different levels of government face capacity challenges in terms of human, financial, skills-based or infrastructure resources. Nepal’s history of centralised government has rendered sub-national governments weak and often unable to even exercise their legal powers. There are persistent problems at the national level with regard to the capacity to manage relationships; coordinating policy approaches; allocating responsibilities/resources to relevant actors; innovating business processes; and managing risks.
Fiscal gap: Shared understanding is often difficult to reach the sub-national government with regard to its own revenues and their expenditure responsibilities (even if the constitution defines a basic framework for this). Intergovernmental transfers (vertical or horizontal) can result in financial dependence for the sub-national level. On the other hand, the central government will have to depend on sub-national levels to deliver more and increasingly costly services so that both national and sub-national priorities could be delivered.
Administrative relationships: The functions and responsibilities of the federal, provincial, and local governments are only notionally separate from each other. Functionally, all three levels have to interact with each other and work jointly to solve common problems. This requires joint planning and decision-making among all levels of government under what is referred to as “creative federalism”. In practice, however, conflicts over jurisdictions affect relationships requiring, sometimes, legislative interventions for clarity of roles and responsibilities.
Coordination in fundamental policies: Inconsistency between national policy initiatives and sub-national policy priorities makes policy coherence a challenging task. Intergovernmental relations can be strengthened by adopting a framework for division of labour in policy-making where each level sees itself as a policy partner with other levels of government.
5. How these challenges could be addressed?
Legal arrangements: Legislation can be used to allocate competencies between levels of government. Where the constitution has already done this, legislation can be used to elaborate on constitutional provisions. Besides, resources for competencies devolved to provincial or local levels would have to be mandated through legislation. National legislation would also be required for human resources management in the public sector. For example, Spain’s Basic Statue for Public Employees requires all three levels of government to cooperate on human resources management. In Chile, the creation and elimination of civil service posts can only be done against arrangements specified in national legislation. The Netherlands Law on Mutual Agreements regulates cooperation between sub-national authorities (e.g., Municipalities, Provinces). Brazil has similar legislative arrangements in place (e.g., Law on Consortiums). Promotion of e-government across all tiers of government is mandated by national legislation in Austria, Hungary and Portugal).
Service standards: In a federal set-up, it is important to establish the same level of service quality across all levels of government. National standards are especially important for essential public services such as health, education, or water. The constitution provides for responsibilities regarding standards for important services at the federal level. But these need to be defined collaboratively between national and provincial levels. Given significant technical capacity needed for standards setting, a central body may have to be formed to promote and regulate compliance in relevant sectors. (eg. Food Safety and Standards Authority of India).
Inter-governmental contracts: The term ‘inter-governmental contract’ encompasses a large category of arrangements agreed between levels of government to achieve coordination within a federation. They may be transactional (where roles of all levels are specified in advance) or relational (where contracting parties agree to cooperate and then to design mechanisms). In many federations, the design of new government programmes requires collaboration between the federal and provincial levels. Inter-governmental subject-specific contracts are becoming increasingly popular. In the USA, for example, 46 states have signed the ‘compact for education’ to provide for a common education policy forum. In Australia, combating terrorism is covered by a ‘compact’ between the federal and state levels. In India, the use of shared water resources is often governed by interstate contracts (e.g., Upper Yamuna River Board). German governments have signed agreements to determine the number and distribution of university places for prospective students.
Coordination mechanism: Political bodies such as Chief Ministers’ Conference (Canada), Policy Commission (India), Conference of the Heads of Governments of the Federation and the States (Germany) help to promote collaboration and co-operation between levels of government. They can also be a key factor for building capacity, disseminating knowledge, and sharing good practice at the sub-national level. Besides, they can act as forums for overcoming communication/information gaps and also coordinate and monitor multi-level initiatives and projects.
Benchmarking (for performance): This is another tool used to improve the functionality of institutional arrangements at the national or sub-national level. At the outset, a limited number of sectors could be identified for measuring performance against pre-determined indicators. Examples of sectors are education, health, employment, or public security. One major advantage of performance measurement is that it enables meaningful comparisons of the performance of governments at all levels creating opportunities for mutual learning and experience sharing. This can also help to build capacity of weaker parties. However, the system involves some risks in terms of focus on quantity as opposed to the quality of services.
6. In Nepal:
The Constitution Part 20 elaborates on this:
- Federal directives to be carried out
- Provincial governments may be dissolved (federal rule)
- Horizontal cooperation between provinces
- Federal level will give instructions through provinces
- There will be a dispute resolution mechanism consisting of PM, Home Minister, FM and Chief Minister
We should also note that there are two major drivers of federalism: identity and development performance. In discussions dominated by identity considerations, development performance does not always get the right profile. On the other hand, research on federalism/decentralization shows that federalism is no guaranteed for good development results. It is an opportunity (instrument) which will have to used properly to achieve good development outcomes.
These issues need to be taken into account in shaping intergovernmental relations in a federal set up
