Economics of devolution and new constitution

BY Jayampathy Molligoda

The interim report of the steering committee was presented to the Constitutional Assembly on September 21, 2017. One can argue that when drafting the new constitution, there is more emphasis and prominence given to the concept of ‘devolution of power’. There is hardly any focus on ‘sustainable development’ as a goal in drafting the new constitution. 

As for the constitution-making process, President Maithripala Sirisena has told the Constitutional Assembly that people were fearful of the words federal, devolution, ‘unitary’, etc. A constitution should not be a document that people should fear. 
Let us therefore discuss the meanings of key words such as federalism, devolution and unitary in detail to understand whether these concepts are relevant and important in terms of attaining economic development and maintaining ethnic and religious harmony whilst preserving territorial integrity and sovereignty of the people.

 
Are these concepts relevant and important for governance in Sri Lanka? 

By definition, federalism is a mode of political organisation that unites separate states within a political system in such a way as to allow each to maintain its own fundamental political integrity. Federal stems do this by requiring that basic policies implemented through negotiation, so that all the members can share in decision-making. Therefore, the concept of federalism is not relevant and doesn’t apply to a small country like Sri Lanka. 

Devolution on the other hand means the transfer of power from a central government to regional or local authorities. Devolution usually occurs through conventional statutes rather than through a change in a country’s constitution. Thus, some unitary systems of government that have devolved powers in this manner are still considered unitary rather than federal systems because the powers of the regional authorities can be withdrawn by the central government at any time. 

However, Sri Lanka has devolved power through the constitutional process by bringing the 13th Amendment in 1986. The said constitutional amendment and the consequent provincial council system were enforced by the Indian government as a solution to the problems faced by the country, in particular the people in the north and east due to increased terrorist activities committed by the Liberation Tigers of Tamil Eelam (LTTE). It was expected that the LTTE would enter the main stream of politics by joining the provincial councils but it never happened. The circumstances are somewhat different today.  With regard to the well-established concept of ‘unitary state’, the interim report has deliberated in the following manner. (Refer page 1 of the interim report) “Quote:
Sentence 1 - The classical definition of the English term “unitary state” has undergone change. 

Sentence 2 - In the United Kingdom, it is now possible for Northern Ireland and Scotland to move away from the union. 

Sentence 3 - Therefore, the English term “unitary state” will not be appropriate for Sri Lanka. 

Sentence 4 - The Sinhala term “aekiya raajyaya” best describes an undivided and indivisible country. The Tamil language equivalent of this is ‘orumiththa nadu’. Unquote.” 

I fail to understand any logical sequence of the above sentences (the entire para) in the interim report. 

Prof. Chandre Dharmawardana from Canada has apparently done a search and told the writer: “If you look at the Madras University Tamil Lexicon or the Cologne University Tamil English dictionary, you find that there are no entries for ‘unitary’. 

Aruna Laksiri, a human rights lawyer, has questioned as to why the constitutional experts of the government have changed the Tamil word for ‘unitary’ from ‘Octrayanchichi’ to ‘Orumiththa nadu’. The majority of the people have already noted the collapse in public confidence in the constitution-making process. 

Economic (in)efficiency of devolution

The proponents of the devolution school tend to claim that the ‘economic growth’ is always associated with the devolution and/or decentralization of authority and resources. The capacity of such devolved administrations with greater autonomous powers to implement policies is supposed to deliver greater economic efficiency. There is however little empirical evidence to substantiate these claims. 

According to the London School of Economics study undertaken in 2003, contrary to the expectations of devolutionists, the degree of devolution is in most cases irrelevant for economic growth and when it matters – as in the cases of Mexico and the US – it is linked to lower rather than greater economic efficiency. (Reference: Thesis by Andrés Rodríguez-Pose and Adala Bwire Published: August 2003 ISBN: 0 7530 1661). In their paper, they assessed the horizontal link between devolution and regional economic growth in six national contexts (Germany, India, Italy, Mexico, Spain and the US). 
Sri Lanka has adopted ‘decentralization of power’, which has resulted in devolving power to provincial councils and ‘pradesheeya sabhas’ (PSs) across the country. After nearly 30 years of (mal)functioning of these institutions at regional level, it has now become clear that there are many issues identified such as, misallocation of resources, incurring wasteful expenditure without corresponding economic or social benefits to the people, abuse of power and corrupt practices, etc. 

This is partly due to the lack of knowledge and capacity on the part of the local politicians to understand the role and functions of provincial councils and local government authorities. Most of the members of provincial councils/local government authorities have failed to exercise their legitimate authority in order to maintain law and order and provide service for the benefit of the people. 

There were many reported cases of policy incongruences at macro level as well as how powers are being misused (especially police and land powers used by the chairmen and chief ministers of provincial councils) at grass root level. It is relevant to mention here that in terms of the PS Act, the chairmen appointed for the PS become the CEOs and the section 43 of the PS Act no 15 of 1987 says the CEO has the power to cut trees within the ‘pradesheeya sabha’ area. 

As we are well aware, there is another parallel ‘public administration system’ functioning under the ‘government agents’ at district level and the top officials at Divisional Secretariat level. Unfortunately, the powerful local politicians invariably exert pressure on the honest public servants at these offices. As a result, they find it difficult to carry out duties entrusted to them under the administrative regulations (ARs, FRs) laid down. 
In addition, a lack of sufficient fund allocation from the central government to undertake development projects at grass root level would have aggravated the problem. This also leads to duplication of work and provides room for more misunderstanding and misallocation of financial and other valuable resources. 

Prof. Chandre Dharmawardana in his recent article published in local newspapers argued that a devolved system makes matters more expensive and more inefficient. And that is why countries make unions, e.g., European Union, NFTA, etc.

“Today, Sri Lanka is a global village linked with Internet, Facebook and Twitter, served by TV and radio channels, with many coming from outside,” he said.

The conclusion is that the present unit of devolution, ‘provincial councils’ are too large administrative establishments thus negating the very purpose of the principle of devolution with the objective of getting closer to the people. 

Overall trust should be economic and environment sustainability and social well-being
My own view is that administrative power could be decentralized back to 24 ‘district councils’ as stipulated in the constitution instead of having larger units of devolution, namely the provincial councils, some of which have become white elephants and/or corrupt establishments.  However, a legal provision could be made to permit any two or more district councils within the same province to amalgamate and operate as a provincial administration. This is to accommodate any request that may come from the districts in the north to manage their own affairs as the people living in the entire province are predominantly Tamil-speaking population. Therefore, any proposal to devolve power to district councils instead of provincial councils cannot be construed as a dilution of the powers vested under the 13th Amendment. 

What is therefore, required now is to devise an efficient legal and administrative system for proper decentralization of authority to be exercised at ‘grass root level’ and the power is vested in the ordinary citizens of this country to manage their own affairs. This is the spirit of effective devolution as universally accepted. There seems to be a general consensus on this matter. 

Two years ago, the 193 governments of the United Nations adopted the Paris Climate agreement on the concept of sustainability. The Constitution of the United States in the preamble itself, states the six goals, which includes social well-being of the American people. We don’t emphasize enough on social well-being nor environment sustainability in our constitution. 

Our country’s greatest challenge is sustainable development, meaning a nation that is economically prosperous, environmentally sustainable and continuously focusing on the social well-being of people of this country. Therefore, the new constitution must provide a legal and administrative framework with a view to achieving our sustainable development goals. 

(Jayampathi Molligoda is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and he holds a FMIC Masters of Business Administration from the Post Graduate Institute of Management, University of Sri Jayawardhanapura)