Report on Intergovernmental Relations

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Cooperative Governance and Traditional Affairs

23 March 1999
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Meeting report

CONSTITUTIONAL AFFAIRS COMMITTEE
24 March 1999
REPORT ON INTERGOVERNMENTAL RELATIONS

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SUMMARY
Ms Verwoerd (ANC) made a few comments on the results of the municipal Y2K readiness survey conducted by the Committee. A written report will be distributed within the next few days.

Professor Chris Tapscott, Director of the School of Government at the University of the Western Cape, presented a report on intergovernmental relations. He described study trips that members of the Committee took to Spain and India in recent months, and summarised the key insights learned from those trips.

MINUTES
The Chair opened the meeting and welcomed Professor Tapscott as well as members of the National Democratic Institute (NDI) who were present. He said Professor Tapscott would make a presentation on intergovernmental relations, but first Ms Verwoerd had some brief comments to make on Y2K.

Municipal Y2K readiness survey
Ms Verwoerd said that, as the Committee is aware, Y2K could be an issue of significant concern at the end of the year. On 26 February the Minister gazetted certain municipal requirements on Y2K compliance. Municipalities were supposed to undertake a survey of the extent to which they meet or do not meet the Minister’s requirements, and then communicate and co-ordinate with the Y2K Centre. The sub-committee formed from this Committee, established to follow-up on municipal Y2K issues, found that many municipalities did not even know that this had been gazetted. From the responses that were received to the questionnaire that the sub-committee distributed, the major reasons for municipal non-compliance were lack of a plan for dealing with the issue, lack of finances and lack of expertise. The Eastern Cape and the Northern Province seem to be the areas with the most serious compliance problems. A written report, summarising what the sub-committee has learned, will be circulated over the next few days.

An MP (ANC) said that from his impression, many municipalities seem to be saying that they are not too concerned – that they think their systems will be fine.

Ms Verwoerd said that it is not enough for a municipality to say, "we think we are able to deal with this problem." There are higher legal and technical standards that they have to meet, and they must actually be certified in compliance by a certifying body. This is required to indemnify against legal action. For example, if a municipality loses electrical power on 1 January 2000, because of Y2K non-compliance, and there is a big meat processing factory in that municipality, and they cannot keep their meat frozen without electricity, the municipality could be liable for the loss incurred by the meat processing company. So municipalities must be certified that they meet certain Y2K compliance requirements, in order to limit their liability in the event of problems in the new year.

Professor Du Toit (ANC) said that if the issue of liability is to be raised, and it must be raised because it is one of the biggest factors of the whole Y2K issue, he thinks this Committee is wholly inadequate to deal with it. This matter needs to be referred to the Department, as this is a responsibility of national government, as well as of provincial and municipal governments. He recommends that the Committee ask for the Department to submit a report on the issue of liability by July.

Ms Verwoerd said she does not think anyone is saying that this is a problem for Parliament only. This Committee’s role in the process was to facilitate by delivering and collecting these questionnaires on municipal awareness and compliance.

Professor Du Toit said that what he wants the Department to answer is the following: by regulating municipal requirements for Y2K compliance, are they not now devolving powers to municipalities without providing the necessary financial assistance as required by the Constitution? In other words, if municipalities face liability claims as a result of Y2K non-compliance, but their non-compliance resulted from not having the funds to handle responsibilities imposed on them by the Department, then the national government may be liable for failing to provide the financial resources necessary to carry out the powers they devolved.

Ms Verwoerd said she cannot answer for the Department on that issue. Perhaps Professor Du Toit can draft a letter for delivery to the Department that outlines his concerns.

Intergovernmental relations
Section 41(2) of the Constitution asks Parliament to develop legislation to harmonise a system of intergovernmental relations. The Committee thanks Professor Tapscott and the NDI for the support they have provided in this process.

Professor Tapscott said that he would begin by providing some context. The School of Government at the University of the Western Cape has recently embarked on an extensive programme in intergovernmental relations to generate more academic thought and develop an applied understanding of intergovernmental relations. They want to generate more information on intergovernmental relations and make it more widely available, because the government really is working in uncharted waters on this issue. They also want to generate new debates and new ideas on intergovernmental relations.

As part of this initiative, several members of this Committee joined Professor Tapscott on study tours to Spain and India to learn from those countries’ experiences with intergovernmental relations . The trips were sponsored by NDI. Formal study papers for those trips will be produced, but his intention for the time being was to give an overview of the insight gained from those trips.

Spain was of interest for several reasons. Its latest Constitution, approved in 1978, grew out of a period of repressive rule under the dictator Francissimo Franco. This transition from a repressive to a free government is not dissimilar to South Africa’s experience in the post-apartheid transition. Also a focus was the issue of asymmetrical devolution of powers from the central government to the provinces. This asymmetrical devolution was designed to accommodate issues of unequal development and capabilities among the provincial regions. The Spanish constitution set up a fourth sphere of government, in addition to national, provincial, and local, by the establishment of "autonomous" regions. Examples are Catalonia, Navarra, or the Basque region. The concept of autonomous regions was designed to address historical claims for self-governance in certain regions. The concept of autonomous regions is similar to the South African system of co-operative governance.

In autonomous regions, the central government devolves much of the oversight of service delivery, service provision, and other administrative issues to the separate regions. The central government retains power over core functions such as banking, foreign policy development, defence, and so on.

On the issue of intergovernmental co-ordination, it is interesting to note that there exists no formal co-ordinating structure between central and regional governments. There is a senate that was designed to enable regional input into national affairs, but it is almost totally ineffective as members tend to vote entirely on party lines. There are currently demands being made for the dissolution or radical reform of the senate.

Lacking any overarching structure for intergovernmental co-ordination, there is a high degree of contentiousness between national and regional government over areas of shared responsibility. In the twelve years from 1980 to 1992, there were over 800 court cases pursued to try to reach judgement on disputes over intergovernmental responsibility. This has been an expensive and time-consuming process, but has resulted in the development of a body of legal precedent. The existence of this precedent, combined with a growing trend towards mediation, is reducing the level of intergovernmental conflict.

The Chair asked Professor Tapscott to try to spend only ten minutes more on the Spanish example.

Mr Bhabha (ANC, NCOP Mpumalanga) asked what Professor Tapscott can tell the Committee on taxation.

Professor Tapscott said that in general, the national government raises funds and transfers them to the provinces. Two specific autonomous provinces – Navarra and the Basque region – raise their own revenues and then transfer any surplus back to the central government.

To summarise the key insights from the Spanish visit, the Constitution does not specify a structure for intergovernmental relations, and a system of effective working relationships had to be hammered out in practice.

Mr Bhabha asked what the population of Spain is.

Professor Tapscott answered that it is about 40 million – very close to the population of South Africa.

Mr Bhabha asked about the degree of autonomy that the provinces are given. Where do most powers lie?

Professor Tapscott said that any specified powers lie with the regions, and residual powers lie with the central government.

Mr Bhabha asked where the structure for this relationship is laid out.

Professor Tapscott said that each region operates under a Statute of Autonomy, which is a unique statute drawn up to delineate the powers of each region. Among the 17 autonomous regions one will find a sliding scale of devolution of powers – some regions have less, some have more.

Mr Bhabha asked if there is a scientific way of determining the amount of asymmetrical devolution, or if it is an entirely political process.

Professor Tapscott said that in theory there is consideration of such issues as capacity and ability to assume certain responsibilities. But in practice it is almost entirely political.

Mr Bhabha said that if South Africa were to draw a lesson from the Spanish experience, it would be that devolution of powers should be done as much as possible on the basis of each region’s capacity and ability to administer specific responsibilities, with as little political interference as possible.

Professor Du Toit said that he wanted to add to a point Professor Tapscott had made. While there is no formal structure for intergovernmental relations, a de facto system has come into place. It is handled through direct political negotiation. The question South Africa must answer for its own case is how much structure to have in intergovernmental relations – should there be room for political interaction between provinces and the national government, or should the process be highly regulated.

Mr Botha (NNP) said the existence or absence of strong regional parties is something that must be considered. What is the position of regional political parties in Spain?

Professor Tapscott replied that regional political parties play a very strong role in the political landscape. They are the driving force in the creation and maintenance of autonomous regions.

Mr Bhabha asked how a regional party would influence the national government on issues of foreign policy, for example in the case of the port and sherry trade dispute.

Professor Tapscott said that this is an interesting question. The central government in Spain is trying very hard to hold onto their powers of foreign policy creation and execution, but many of these types of trade decisions are increasingly being made within the context of the European Union. The Basques look to the EU as a possible venue through which to air their opinions and try to impact on national decisions.

Professor Tapscott said that he would now discuss the Indian visit. India gained its independence in 1947, and its constitution has been in effect since 1950. The scale of the country is vastly different from that of South Africa – India has a population of around one billion people.

The history of intergovernmental relations in India has been very much a history of central government interaction with the 25 states. (A state is a similar political structure to a province in the South African context.) Local governments were only officially recognised as a separate tier of power in 1993.

Even after fifty years of independence, India is only now, in the past ten years or so, beginning to develop structures for intergovernmental relations. This is because all decisions were made for so long from the national Congress. The Congress had representation from the 25 states, and was supposed to reflect regional interests, but representatives always voted according to party lines, and not necessarily in the interest of their states. In this situation, dispute resolution took place in the party caucus. The party caucus was the central venue for intergovernmental relations, and once a policy had been agreed upon it was followed. The central government would override any expression of regional interest which it did not feel was in the party’s interest. The development of challenger political parties in the past twenty years or so has led to the current existence of what is essentially a coalition government. In this context, disputes are increasingly being brokered politically, between the relevant parties.

The written report on India will contain a thorough section on fiscal issues written by Tania Ajam, of the Applied Fiscal Research Centre. Professor Tapscott thus skipped this section in the interest of time.

To summarise, there are several key lessons to be learned from the Indian example. First, South Africa should not expect to resolve all issues of intergovernmental relations in the next five or even ten years. Second, central government powers of override need to be regulated strictly to prevent abuse. Third, the advent of a coalition government has been a more effective mechanism of dispute resolution in India than the constitutional courts were in Spain.

The Chair thanked Professor Tapscott for his presentation. He asked for any questions.

Mr Bhabha said that much of what Professor Tapscott has said regarding Spain and India has to do with the nature of political parties. If South Africa is to regulate intergovernmental relations, is Professor Tapscott saying that what exists in the Constitution is not enough? And if not, what must be done?

Professor Tapscott said he thinks the Constitution provides an excellent enabling framework. But what has come out through the study visits is that intergovernmental relations is an intensely political process. His concern is that legislation may create legislative and statutory clarity without addressing practical political realities at all. South Africa must resist the temptation to over-regulate the process and plan to be creative in the use of conflict resolution mechanisms.

The Chair thanked the members of the Committee for their attendance today and for the hard work they have put in over the past five years. The meeting was adjourned.



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