Inter-government Relations Bill: A Mixed Bag Of Optimism For Subnational Governments

Compared to most other federal laws that have passed since 2015, the Legislation Management Committee of the NA embarked on a relatively consultative process; and that matters.

July 17, 2020, 10:33 a.m. Published in Magazine Issue: VOL. 14 No. 02, August 07, 2020 ( Shrawan 23, 2077) Publisher: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

This month, at the height of the Covid-19 pandemic in Nepal, both the Houses of Nepal’s parliament passed one of the single most crucial Bills to Nepal’s federal state and implementation of its constitution (2015). The Inter-governmental Relations Bill, as it is referred, outline how the state will manage the coordination and relations between the three spheres of governments. Constitution experts and lawmakers alike reflect this Bill “is the most important piece of law after the constitution” (Ramesh Lekhak, a leader of Nepali Congress party and member of Constituent Assembly). While creating three spheres of government - the federal, 7 province and 753 local governments (LGs) – Nepal’s constitution shares executive, legislative and judicial powers and functions across the levels government. However, this sharing of powers also created overlapping functions and responsibilities which were expected to clarify through subsequent legislative and consultative processes amongst the three spheres of government. The cornerstone of that clarifying process is this Bill; and it still leaves us with many uncertainties on whether Nepal’s federal system can deliver on its constitutional guiding principle of “coordination, coexistence and cooperation” as a means to delivering government services to its people.

Where are we now: Process matters

In the nearly five years since the promulgation of Nepal’s constitution that made it a federal governing system, much has transpired in absence of a federal law on coordination and management of inter-government relations (IGR). Each levels of government had started to discharge their legislative, executive and judicial functions without necessary coordination and consultations with each other since their formation following the 2017 elections. This has created jurisdictional, policy and programmatic overlaps and contradictions on multiple fronts creating a situation of legal anarchy, arbitrary policies and dis-jointed programs across all three levels. The impact of this is sizable.

For instance, the federal parliament passed over three dozen new laws and amended more than 160 under its exclusive and concurrent powers, provinces an average of 30 plus new laws, and 753 local governments at least two dozen each. A review conducted by the National Association of Rural Municipalities in Nepal (NARMIN) in 2019 shows that the federal and provincial laws either have massive contradictions and overlaps with each other or have provisions that clearly constrained the exclusive rights and functions of the LGs. In response, more than 255 cases have been registered at the Constitutional Bench of the Supreme Court including cases related to jurisdictional disputes between spheres of governments. (Annual Report of the Supreme Court 2019). Though “use of forests and water, and management of environment within the province” is listed as exclusive competency of province by the constitution, the federal government had made an executive decision to retain the ownership of the Sagarnath Forest in Province-2. In response the Province has filled a case in August 2019, challenging the decision and the Constitutional Bench has issued a stay order to the federal government.

Similarly, since the 2017 elections, the spheres of governments have completed 3 budget cycles. Compare to pre-federal context, the federal government has increasingly transferred significant proportion of national budget, from 30.27 percent to province and LGs in FY 2019/20 to 32.91 in FY 2020/21 to local and province governments respectively. Under the pre-federal set up LGs used to get as little as about 9 percent of national budget from the central government and rest used to be spent through the central agencies or their delegated authorities.

While this is considered by many an encouraging trend, these transfers are inadequate to fund the functions now devolved to the province and LGs. Similarly, the federal and provinces have continued to identify and fund small projects and programs for implementation through their own line agencies. This has resulted in huge overlap of projects and programs across the country and wastage of scare resource, often all three levels of governments investing on the same local projects without any knowledge of each other. Member of Parliament’s (MPs) constituency development small infrastructure program funded by the federal government is a classic example of layering petty programs and budget overlaps which is now replicated even by the provinces. This raises questions of has more harm been done than good.

Given the urgency and importance of a need for coordination amongst the governments, the National Assembly (NA), upper house of the parliament had introduced this Bill for parliamentary deliberations on April 17, 2019, after three and half years of adoption of the constitution in 2015.

Compared to most other federal laws that have passed since 2015, the Legislation Management Committee of the NA embarked on a relatively consultative process; and that matters. The Committee had formally solicited written inputs and suggestions on the Bill from provinces and LGs. It also conducted a series of committee level discussions inviting external issue experts and external consultations reaching to approximately 700 participants representing government officials, party leaders and civil society organizations at local, provincial and federal.

This process not only provided the Committee with the needed perspectives it otherwise would not have access to, it also helped to garner agreement and ownership of subnational governments on the draft Bill before the NA forwarded it to the House of Representatives (HoR), lower house of parliament. As the standard legislative process, the HoR directed its State Management and Good Governance Committee for further deliberations, review and recommendation for any amendments.

Ironically, contrary to what the NA had agreed, the Committee proposed amendments to key provisions of this Bill to undercut the opportunity for a collective voice and representation of the LGs in IGR process. Though the Committee sat on the Bill for six months, from January to June for review and deliberations, but it avoided consultations on the proposed crucial amendments with the subnational governments and their associations. This non-consultative amendment process withdrew the agency LGs had collectively voiced, as well as their future roles in IGR. The amendments took out LG’s associational or collective representation in the proposed national and provincial coordination councils as well as downsized their memberships in these councils. These amendments must have been found as shocking not only for members of the NA but also for all involved in the initial consultative process. And, so the Bill was passed with these amendments as a new law by the HoR on June 23, 2020 and the NA on July 2, 2020.

A closer look at the bill and future of IGR

The constitution confers the federal, provincial and local governments, as three governance structures to exercise state powers as exclusive and concurrent rights and functions. Sixty-eight percent of Nepalis are unfamiliar with the changes the constitution has brought. When asked about their familiarity with the roles and functions of each of the three levels of government, the national average is an astounding 52% unfamiliar of local government public functions, and an even more astounding 79% unfamiliar with provincial government and 73% unfamiliar with the federal government functions. These figures have remained statistically consistent the past few years (Survey of the Nepali People). But we should not be surprised by this majority of confusion; it reflects the fact that numerous functions are equally the responsibility of all three levels of government.

The constitution distributes the following fundamental state responsibilities and duties which are also provisioned as sate policy to all three spheres of government: Nepal’s freedom; sovereignty; territorial integrity; independence; national interest; overall development; multi-party, competitive, democratic, republication, federal system of governance; human rights and fundamental rights; rule of law; separation of powers and check and balance; egalitarian society based on pluralism and equality, inclusive representation and identity.

Some suggest that the equal sharing of this broad range of responsibilities across all three levels of government, it indicates a desire of the framers of constitution to create a strong subnational government. In substance, however, it is a source of overlaps and confusion.

The IGR Bill’s primary point of departure is to bring greater clarity to these roles, functions, and means of engaging in dialogue and contestation. The guiding principle or fundamental basis for IGR is already defined by the constitution as “cooperation, coordination and co-existence.” One would have expected the new Bill further define or explain this constitutional principle and help bring clarity in its implementation or practice. Instead, the Bill lists a large number of un-necessary and confusing lists of functions and abstract principles as the bases for IGR.

Amongst a long list of “key bases” for IGR the followings are simple, succinct and crucial: “by remaining under the boundary of constitution, respect for functional autonomy of the spheres of government (Clause3, h) and mutual cooperation, exchange of information, coordination and consultation with each other in the implementation of law, policy, judicial or administrative decisions’ (Clause 3, j).” These would have been a sufficient but the Bill instead adds a sloppy list of additional bases for IGR that are either redundant of constitutional provisions or un-necessary. The risk of such messy list is further confusion and non-compliance. Fog and mirrors make for non-implementable policies and laws.

But there is hope. On the positive side, the law has recognized the principle of subsidiary, a key rationale of a federal structure of governance. The provisions state that the federal government can delegate administration of any activities, programs or projects under federal exclusive or residual power to province or local governments if implementation of such functions through the subnational governments could be proven as more cost effective, sustainable and result into effective service delivery. This is a principle seen in federal governing structures elsewhere in the world and aligns with the spirit of the federal structure. Whether such a subsidiary role will be exercised by the central government is a question to watch.

Since the adoption of the constitution, the federal government enacted and amended more than 200 laws with no or inadequate consultations with sub-national governments. In March of 2019, the government passed around 160 laws in a single sitting in order to meet the constitutional deadline. Result of such legislative processes was that these laws enhanced federal control and authority at the cost of subnational governments’ constitutionally mandated autonomy. Considering this trend, the IGR law has introduced an explicit limitation on federal government with provision thatthe federal law must not abridge or interfere the exclusive competencies of sub-national governments.” This principle of non-interference is expected to limit the encroachment of exclusive competencies of other spheres of government and provide measures of restraints to the federal government.

Considering the repeated tendencies to limit or undermine the exclusive rights of the subnational governments in the recent new federal laws, this provision could be considered as a key milestone. This creates more space for subnational governments to contest federal actions including on some key subjects such as local security, law and order, utilization of natural resource etc. It would be worth watching whether these entities exercise this option in the coming years.

Furthermore, the law requires the Government of Nepal to designate an agency to assess implementation status of all the laws enacted by the three spheres of government, and to provide its report to the National Coordination Council. This exercise provides an opportunity to create a comprehensive clearinghouse of all the laws of the country, which currently is a missing process to bring consistency in the law-making processes, and coherence in their applications. However, ownership of such assessments or interpretations cannot be guaranteed unless such agency is not designed to be inclusive of subnational governments.

To bring coherence in planning and budgeting systems and their implementation, the Bill has put limitations on the nature and scope of projects and programs at each levels of government is able to undertake. It also mandates the federal government to set standards for levels of programs, projects and services, while demanding compliance of the subnational governments to national policies, priorities and standards.

Similarly, for bringing coherence and uniformity in legislative and policy making processes the law requires each spheres of governments to consult and coordinate with each other in formulation and implementation of the laws, policies, and projects of common concerns. Notably, the Bill requires the federal government to consult and coordinate with provinces while formulating laws and policies related to concurrent power and functions between province and federal level. Similarly, it also mandates consultation and coordination in the operation of mega projects of national importance or inter-provincial projects. It seeks consultations between and among provinces and local governments while formulating national policies and plans that requires sub-national governments to contribute and share revenues, introduce new policies on taxation and distribute natural resource benefits.

However, the essence of these democratic provisions appears to have been seized with a concluding clause that “such consultations may take place, if the responsible government consider these as necessary” leaving the option open Also, interesting enough, the Bill is silent on to how the sub-national governments would participate in these consultations and coordination exercises, nor there is clarity about the specific mechanism or forums for them to participate on a frequent basis.

One of the most notable strengths of this Bill is that now the subnational governments are free to enact necessary laws under the concurrent list without waiting for the federal laws. The constitution envisages that the federal laws would be enacted to bring clarity on the division of concurrent functions prior to the subnational government laws. However, the federal government has remained far behind in getting necessary federal laws in place on a number of key sectoral laws such as education, forest, agriculture, natural resources that are listed under the concurrent rights in the constitution. Likewise, non-enactment of federal framework legislations related to adjustment and management of civil services and security agencies (civil police) has jeopardized functional autonomy of sub-national governments. As a result, the subnational governments were unable to exercise their rights on these concurrent functions or were still dependent on the federal government’s directives and decisions. The new IGR Bill now mandates the subnational governments to have their own laws in these subjects. Such laws would remain valid as long as they would not contradict with the constitution and the federal laws or would such provisions in the subnational laws become null and void when such federal laws would come into existence.

The Bill establishes a National Coordination Council (NCC), chaired by the Prime Minister (PM) with followings as members- 7 Chief Ministers (CM), 4 federal ministers (Home, Finance, Federal Affairs, Law and Parliamentary Affairs) a leader of opposition party in the HoR and 7 members of which at least 3 women nominated by the PM representing 7 provinces from amongst the chiefs and deputies of 77 District Coordination Committees (DCC), and 753 LGs.

The Council has a mandate to establish coordination on a wide range of subjects and issues ranging from formulation of laws and policies on matters related to the concurrent jurisdictions, assessment of their implementations and to recommend all levels of governments.

Based on the extensive consultations and inputs from the provincial and local governments and their associations, the NA had proposed that the PM would nominate 21 members, 3 each from 7 provinces to the NCC in consultation with LGs associations who would represent their associations. However, the HoR scraped the requirement of consultation by the PM with the LGs associations and reduced LGs representation to 7 members only. This not only undermines the values of collective representation of LGs to this Council but also creates opportunity for the PM select LG representatives arbitrarily, rendering such “representation” as meaningless and highly susceptible to political interference and incentives. Secondly, appropriateness of such selection by the PM without consultation and institutional representation is likely to undermine the legitimacy of these representatives to collectively represent the voice and interest of all the LGs. Thirdly, the LG representatives are unlikely to challenge on the province and federal issues in this forum as they would be subservient to the PM. Likewise, per this Bill, the NCC would meet at least once a year which was originally proposed for twice by the NA, with its secretariat at Office of Prime Minister and Council of Ministers (OPMCM). Finally, this indicates a recurrent tendency of the HoR to reinforce an upward accountability practices from the erstwhile unitary system and ignore the voice and interests of the subnational governments, a pattern noted in almost every single law enacted by HoR since its election in 2017.

Similarly, the provisions of different sectoral committees in the Bill under the convenorship of sectoral federal ministers with provincial ministers and representatives of LGs as members for sectoral coordination appears disjointed. There is a noticeable gap as to how these committees would interact with the NCC. The Bill could have made provisions for the major sectoral federal ministers to represent in the NCC as members, however it is left for the Chair to invite them in the NCC meetings, if necessary. Such as, education, health and agriculture are listed as concurrent function by the constitution that requires more frequent sectoral interactions and coordination efforts in a range of sectoral programs and projects. During the early phase of constitution implementation, overlaps of projects and programs were noted; this pattern is all but certain to continue. Non-representation of the sectoral ministers in the NCC may reduce it to an idle body or its exercise as irrelevant to the concerns of the sub-national governments.

The law could have made further functionality provisions of an executive or standing committee comprising representation of three spheres of government, which could meet frequently in between the Council meeting and implement the Council’s decision or any other delegated functions. In absence of such structure or intermediary body, annual NCC meeting may render it as a routine ritual without any informed deliberations and decisions.

The Provincial Coordination Councils (PCCs), one each for province were formed under the Local Government Operation Act (LGoA) 2018 to facilitate coordination between the province and local governments in matters of their joint interests and functions. The PCCs were considered to be inclusive with CM as chair and representation of all the provincial ministers, their secretaries, and chiefs and deputies of all the LGs within the provinces. Most importantly these PCCs among others have started to meet at least once a year (in March-April) to discuss provincial priorities and to bring coherence in their upcoming fiscal year budget and plans.

While these subnational level practices were evolving with appropriate institutional design, development of standard operating procedures, and establishment of its secretariat, the new Bill limits the membership of PCC to provincial finance and internal affairs minister, and the principal secretary while providing discretion to the CM to nominate only one member from each district within the province to represent the LGs. This revision has not only reduced legitimate representation of the LGs to this body but also empowered the CM to exert influence over them, creating hurdles for coordination and engagement with a collective group of LGs in the province.

The LGs associations representing the DCC have already issued a joint statement with strong disagreement to the provisions to provide discretion to the PM and Chief Minister on the selection of LGs representatives to the NCC and PCC. This does not indicate a healthy sign that the LGs are ready yet for a more constructive engagement with the federal government to bring some order of IGR based on this new Bill.

In conclusion, high handedness of the federal parliament in the passage of this Bill by enhancing control and influence of the PM and CM appears to be a continuation of centralist trend which is unlikely to change easily. Even though this is one of the most important Bills of Nepal’s governing structure, no one seems to be paying attention as it has barely hit the news let alone any serious discussions on its contents and implications. Does this indicate a sign that even the progressive parts of the law will be lost in the dungeons of Nepal’s imperfect policies of past? While the general citizen will continue to be unclear about what the constitution and their governments provide them, it remains to be a test whether the subnational governments will leverage the plus points of this law or not.

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