Local government financing and democracy

The reader should not wonder why in the caption of this column ‘democracy’ does not precede ‘financing.’ Obviously it should but the reader will also appreciate the procrustean attempt to fit what is at first blush a political and local governance issue into a business column. Still, it is clear that our Constitution in fact acknowledges the importance of financing to local government and specifically addresses financing in three Articles under Chapter 7 of the Constitution dealing with local democracy.

It is often said, and by no less a person than the President of the country, that Guyana has one of the best constitutions in the world. That is of course true if one is prepared to overlook the fatal flaws that permit an elected dictator who is more equal than the rest of the citizens, an emasculated Cabinet and National Assembly unable or unwilling to carry out their constitutional responsibilities and a political class that would cynically ignore those sections of the Constitution that they find inconvenient.

The constitution
– in theory

Notwithstanding these serious limitations, one area in which the Constitution is on paper very strong relates to local government. The problem is that our Parliament which comprises the National Assembly and the president has failed to carry out their constitutional duties. Article 12 states that “Local government by freely elected representatives of the people is an integral part of the democratic organisation of the State” which Article 71 (1) recognises as “a vital aspect of democracy” and requires that it “be organised so as to involve as many people as possible in the task of managing and developing the communities in which they live.”

The Constitution does not leave it there and imposes on Parliament the obligation “to provide for the institution of a country-wide system of local government through the establishment of organs of local democratic power as an integral part of the political organisation of the State.” Such local democratic organs are constitutionally autonomous and the decisions they make are binding upon the communities and citizens of their areas.

Helpfully the Constitution also provides that for the purposes of local government administration the country should be divided into regions, sub-regions and other subdivisions as Parliament deems fit. The relevant considerations in such a determination include population, the physical size, the geographical characteristics, the economic resources and the existing and planned infrastructure of each area, all with a view to ensuring that the area is or has the potential for becoming economically viable.

Article 74 (1) lays down as “the primary duty of local democratic organs” the efficient management and development of their areas and to provide leadership by example. Article 74 (3) imposes on local democratic organs the duty to maintain and protect public property, improve working and living conditions, promote the social and cultural life of the people, raise the level of civic consciousness, preserve law and order, consolidate the rule of law and safeguard the rights of citizens.”

The practice is different
Local government elections not having been held since 1994, this “integral part of the democratic organisation” has been in abeyance for nearly fifteen years, something that everyone seems to accept as the norm of this new democratic era.

The Constitution recognizes that the discharge of the obligations of the local government bodies requires financing; Article 76 empowers Parliament to permit the regional democratic councils to raise their own revenues and to use such resources for the benefit and welfare of their areas. The Constitution does not specify the bases on which these bodies may raise such funds but Article 77 A requires Parliament to make a law for the “the formulation and implementation of objective criteria for the purpose of the allocation of resources to, and the garnering of resources by local democratic organs,” being the regions, sub-regions and other sub-divisions into which Parliament divides Guyana.

There is some amount of confusion arising out of Article 77 (of the Constitution) which requires the development programme of each region to be integrated into the national development plans, and for the government to allocate funds to each region to enable it to implement its development programme. The Constitution framers might have thought that the meaning of the word ‘development’ is so self-evident that no definition is necessary, but I fail to understand how a “development programme” can mean the annual office cost in the operational budget of any region.

Parliamentary failure
What is disappointing – if not shocking – is that we have had two full-term parliaments since these changes were made to the Constitution but the parliamentarians have done nothing to give effect to those changes. Still, it does not seem particularly shocking that a National Assembly that could cynically pass laws to postpone local government elections on several occasions would have any difficulty in otherwise undermining the autonomy of local government bodies, including the means and necessity to raise money to enable those bodies to carry out their mandate. Consequently there is no effective local government and the paradox we are faced with is of a central government minister exercising operational control over regions and local democratic organs.

To realise how extreme the situation is one only has to look at the National Estimates to recognise that the country’s ten administrative regions are dependent entirely on the central government for their revenues, a situation that has few if any parallels around the world. By way of example, I refer to a review by me of the new constitution of Kenya published in the Stabroek News of November 30, 2010. Under that constitution, only the national government has the power to impose income taxes; value added taxes; excise taxes as well as customs and other duties on the import and export of goods.

No silver bullet
The governance problems in Guyana are so endemic that there is unlikely to be any silver bullet solution and while we heard first of devolution and later power-sharing, in my view the issue of local government financing has received far too little attention. This centralization of power and control of the national purse on the one hand and the restrictions on regional and local government bodies to garner their own resources are counterproductive to good governance and democracy as envisaged in Guyana’s Constitution.

The failure of the Ninth Parliament and more specifically the PPP/C and the PNCR to agree on the establishment of the Local Government Commission required under Article 78 A was a major hurdle to local government elections. There was little talk if any of the reform of local government financing. That is a pity.

And it is not as if there is any major hurdle in accessing good examples. We do not have to go as far as Kenya – just look at the Amerindian Act of 2006. Guyana has witnessed and suffered from the excesses of central controls. For all the powerful arguments for power-sharing, they will come to naught without improved local democracy and efficiencies.

Studies show that the revision of funding sources is a key part of the reform of local government and that “local government finance is the litmus test for central government’s commitment to local government.” That is not to say that there is such a thing as an optimal level for local government, and without exception, the size and structure of local government varies often in relation to the functions imposed on them. What we have in Guyana is a situation in which the functions of local government bodies are defined but the resources to carry out those functions are controlled by others.

Given the long absence of meaningful local government it might be useful to restate what are regarded as the main reasons underlying the system of local government, as a manifestation of local democracy and a provider of local services. Locally elected politicians make decisions on behalf of local communities and serve as a safeguard against central government domination, while the strengths of local government as a democratic instrument are its closeness to the population, its elected status, its accessibility and the opportunity it provides for public participation in the democratic process.

Even for those countries with an established tradition of local government there is the continuing effort to determine the right size to ensure local democracy and economic efficiency in the delivery of local public services. Various models have been developed to meet these two, often contradictory, demands but we need not worry too much about these. Here in Guyana, if we ignore for the moment the system of village councils we had up to the sixties, we really are starting from scratch and have numerous examples on which to draw.

The 2011 Manifesto of the PPP/C did not see local government financing as an issue which they thought needed addressing. Whether the other parties will share that perspective we will soon know.

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