8th class:Self-Rule: Distribution of Powers

Thomas Fleiner

Prof. Thomas Fleiner*/ Prof. Dr. Lidija R. Basta Fleiner

Theories and Praxis on Peace, Federalism, and Human Rights

2nd Week: PART II – PRAXIS: Federal Institutional Principles and Designs.

Effects upon Peace within State

Shared Rule Self RuleC

on

stitutio

n

Basic Elements of Federalism

Problems:

Solidarity e.g. Belgium, UK, Italy

Globalization – Intergovernmental RelationshipWelfare State, New Deal USAFederal Spending power Common Law Continental LawForeign investment Competition

Human Rights – Right to be equal

Devolution without shared Rule GB

Wars; TerrorismGlobalization Localization Intergovernm

ental Relations

Coope

rativ

e Fe

dera

lism

Asymmetry Threats of Secession

Financial Discipline

Main Questions:

Purpose of Distribution

Who decides?

Concept and Technique of Distribution

Criteria

What is distributed

Distribution to - Whom? - What entities? - Border-lines?

Asymmetric Distribution

History

Who decides

Constitution maker

Federal Legislature

Both

Court (US, EU)

Common Law: Family Law, Property Law, Contract, Criminal Law, Procedure, commercial law etc.

Residual power

Governmental System

Purpose of Distributionand Criteria

LegitimacyDiversity

Efficiency

Democracy

Justice

Financial CapacityNeed for Coordination

Interest of the task limited to the region

Need for a uniform solution

Closeness to local population

Subsidiary Principle

Commerce Clause

Necessary and Proper Clause

Purpose Criteria Principles

Equality

Security

Flexibility

What is distributed

Branches ofGovernment

Constitution MakingLegislationExecutionJudiciary

FinancialCompetences

Income:Taxes, Grants,Bonds, Loans

Expenditures

FinancialEqualisation

GovernmentalTasks

Foreign PolicyIncl. Defence

PoliceEducation, Cul-tureHealth, EnvironmentEconomy andDevelopment

Mineral Resource, Water etc.Public Services

Civil Law Common Law

Individual / col-lective rights

CommonLaw, Codi-fication Spending

PowerOpting out localdeviation

Administ

rativ

e Federa

lism

Treaties Dualism

Canada

Techniques of Distribution

Exclusive

Parallel

Concurrent

General Clauses

Detailed Regulations

Concept Technique

Bottom up

Top Down

Parallel Distribution

Supremacy

Const

itutio

n – Pr

actic

e

Income and Expenditures

Income

Taxes

Services

Funds

Loan

Expenditures

Mandates

Investments

Grants

Debts

Bu

dg

et

Leg

isla

tion

Transfer

State

FiscalFederalism

Fed

State

Local

Decentralized

No autonomyIncomeExpenditures

No autonomyIncomeExpenditures

Autonomy Income

Autonomy Income

VerticalEqualization

HorizontalVerticalEqualizat.

HorizontalEqualiz.

Centralized

Decision onmost Taxes

BudgetBudget contr.

Decision onFed. Taxes

Fed. Budget

Autonomy Budget

Autonomy Budget

Fiscal Equalization

Federal

StateStateStateState

Grants

Vertic

al

Horizontal

General Issueswith regard

toFiscal Federalism

Strong decentralized states (Quasi Federal):Spain and South AfricaRich and Small versus Big an poor

Centralized decentralized federationsAsymmetric Federations

Cooperative Federalism

Local Government

Australia

Brazil

Canada

German

IndiaMalays

Nigeria

Russia

Spain

South Af

CH USA

PopMilli

20 184 32 82 1090 24 924 144 40 47 8 296

Aerea000 km2

7687 8512 9985 357 3288 330 924 17075 505 1223 41 9631

Cdpcapit

32 4 35 33 0.7 5 0.5 4 24 5 37 42

Fisc Fede dual

Coop.indep.

dualCoopInterdep.

dualDualassymetr

CoopInterdep.

dualDualassymetr

CoopInterdep.

dual dual

LocalGovt.Cst.

no yes no no yes no yes no no yes yes no

StatecontrLoc.

strong

weak

strong

strong

strong

strong

strong

strong

strong

strong

strong

varies

Range locGvt.

limited

extensiv

extensiv

limited

limited

limited

limited

limited

limited

limited

extensiv

extensiv

Equalization

strong revexpe

fair

StrongRevenDisp.reduc

Strong reve.s.exp

fair fair fair fair fair fair fairweak

FinancingFederal Mandates

Traditionally: Fiscal powers for : Peace, Order and Good GovernanceExpansion: due to war and judicial Interpretation Australia, USAThreats of Secession: Russia, India

Combating terrorism racial equality: USA, mioritiesNatural resource-management, environmental Pro-tection: Brazil Nigeria, USADebt management fiscal discipline Brazil

Common economy and welfare

In General: unfunded or underfunded mandates

TaxingPowers

Highly Centralized (75% or more): Malaysia, South Africa, Australia

Centralized (60-75%): Brazil, India Russia, USA

Highly decentralized: (only 37%): Switzerland

Decentralized: (40 to 50%): Canada, Nigeria

Taxing competence:wide powers: Switzerland, Canada, USA,

Nigeriarestrained: South Africa, Spain, Malaysia

AustraliaExpenditure competence:

high: Malaysia, Switzerland, Germany, Canada, USA

low: India, Spain ex.aut.regions

Harmonization

Tax system is harmonized in:Switzerland, Australia, CanadaGermany, Malaysia RussiaSpain

Not harmonized in: USA, Brazil, India

Borrowing: all federal States exceptNigeria, requires governmentalapproval (Germany?)

No race to the bottom, but also in some statescompetition

IntergovernmentalFiscal

TransferReduction of

Regional FiscalDisparities

Three objectives:

Bridging vertical fiscal gaps

Bridging fiscal divide between nations

securing a common economic union through establishing national minimumstandards in social and infrastructure services.

Conclusion

Clarity and Consensus for responsibilitiesFinance should follow function to strengthenResponsibilitiesTo ensure fiscal discipline all governments mustBe made to face the fiscal consequences of theirdecisions

Securing a common economic union through unimpe-ded goods and factor mobility and national minimum standards for social services and infrastructure is the best guarantee for political and economic stabilityand regional convergence in the long run.Properly designed intergovernmental transfers can strengthen results based accountability and also enhan-ce competition for the supply of public goods, fiscal harmonization, state and local government accounta-bility, and regional equity. Institutional arrangements for managing intergovern-mental conflicts play an important role in the smooth working of a federal system.