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Presentation irspm april 2010
 

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    Presentation irspm april 2010 Presentation irspm april 2010 Presentation Transcript

    • IRSPM 2010: Public Governance in Transitional and Developing Economies Presented by RFI Smith Governance Transitions in Federations Agendas for change in India and Australia   Department of Management
    • Overview
      • Key federal arrangements in India and Australia
      • Economic liberalisation and impacts on intergovernmental relations
      • Change agendas
      • Lessons?
    • Background
      • Shared strategic issues
        • Despite large differences in history, context and scale India and Australia share overlapping agendas for change in federal arrangements
      • Indian agendas
        • Contradictory influences and trends
        • Foreshadow major challenges to principles, structures and processes but change is gradual and opportunistic
      • Australian agendas
        • More effective use of available institutional frameworks through intergovernmental negotiation
        • Continued pressure from unilateral federal change initiatives
    • Shared experience— India and Australia
      • Systems of responsible cabinet government
      • Shared reference points in federal compacts
      • Explicit role of intergovernmental bargaining and preoccupation with fiscal relationships
      • Muted impacts of global financial crisis
      • Federal compacts ‘incomplete contracts’
      • Federal systems always in transition
    • Agenda drivers
      • Economic liberalisation in 1980s and 1990s
      • Managing intergovernmental relations
        • substantial, fluid and contested proposals
        • federal financial arrangements heavily favour national governments
        • negotiation with multiple institutions and interests
        • impacts of economic globalisation
      • Enhance policy and management scope at centre
      • Put pressure on scope of state governments
    • India— federal arrangements
      • Strong contradictory forces
        • began as ‘holding together’ federation
          • pronounced unitary tendencies
        • forces for decentralisation
          • internal social and economic diversity
          • coalition governments
          • rise of parties representing regional interests/underprivileged groups many of which hold office at state level
          • participation of such parties in central coalitions
          • decentralisation of powers to local government.
          • following cuts to federal economic restrictions in 1991 state governments imposed own restrictions
          • But increase in political power of state governments matched
          • by increase in fiscal dependence on centre
    • India— paths to economic liberalization
      • History of smothered initiatives
      • Transition in 1991 began at centre
        • central investment restrictions relaxed
        • growth of bipartisan support
      • Drivers
        • example of south east Asia, especially Malaysia
        • need to seek IMF assistance in 1991
        • political support for civil service proposals for liberalization
        • industry support—Confederation of Indian Industry
        • home grown
      • Contradictory patterns
        • pragmatic, gradual, incremental, interactive
        • political support did not extend to systematic implementation
        • sector gaps
        • centre could negotiate more easily with IMF than states
    • India— intergovernmental impacts
      • Competition of states with centre and each other more clear
        • existing state controls on investment more visible
        • state reregulation enhanced state roles
        • states adopted different strategies
        • international agencies began dealing direct with states
      • Obstacles to negotiating regulatory reform
        • easier where constitutional power lay with centre, eg telecommunications
        • risk that even low key negotiations undermine institutions needed to manage change
      • Contradictory patterns
        • implemented reforms rarely undone
        • emerging coalition of urban and richer rural interests
        • close ties between government and capital
        • high profile ‘reforming’ state governments defeated
        • rent seeking by regionally based parties
        • successful states resent revenue redistribution to less advanced states
    • India— agendas for change
      • Wide range of issues
        • changed role of government
        • collisions between international and domestic economic interests
        • need for market supporting institutions
        • asymmetry in capabilities of centre and states (and between states)
      • Wide range of relationships
        • burgeoning networks of consultation and negotiation
        • incremental development of arrangements to manage relationships
        • use of ‘empowered committees’ to negotiate outcomes
      • Fiscal federalism
        • shrinking fiscal space for states
        • intermixing of central and state roles
        • multiple channels for fiscal transfers to states
        • budget bailouts and fudging
        • proposed dual GST
      • Claims of minorities
        • new states
    • India— assessment
      • ‘ The most difficult reforms are yet to be achieved’ (Sharma)
        • Strategies of gradualism grapple with crosscutting trends towards centralization and decentralization
        • Most significant trend is extension of range of forums in which central and state governments can negotiate roles
    • Australia— federal arrangements
      • ‘ Coming together federation’
        • states retained own constitutions and infrastructure
        • high proportion of shared and contested functions
      • Centralizing forces
        • federal financial power
          • revenue sharing arrangements
          • special purpose payments
        • negotiated transfers of power
        • judicial interpretation of federal constitution
      • Mitigating forces
        • negotiating use of shared powers through Council of Australian Governments (COAG)
        • federal public service stronger in policy than operations
        • states increasingly frame demands in terms of national interest
        • states’ own forum—Council for the Australian Federation (CAF)
      • Federal influence substantial but not complete
    • Australia— paths to economic liberalization
      • By 1980s external economic trends forced rethinking of long running policies
        • tentative changes in 1960s and 1970s reversed
      • Drivers
        • agreement by economists on macro and micro economic reform
        • strong federal political and public service leadership
        • imaginative state initiatives
        • negotiated agreements
          • states
          • trade unions
        • bipartisan support for critical changes
      • Contradictions
        • Tension between strategies of negotiation and deployment of federal power
    • Australia— impacts on intergovernmental relations
      • Paths to federal dominance
        • federal government as principal and states as agents
        • competitive tendering between states and other providers
        • bypass states by funding end users
      • Howard government (Liberal-National 1996-2007)
        • lukewarm on COAG
        • late preference for direct federal intervention
      • Rudd government (Labor 2007-)
        • funds in return for performance
        • consolidated special purpose payments
        • national takeovers in cases of poor performance
          • hospital management
        • vigorous negotiation of intergovernmental agreements through COAG
    • Australia— agendas for change
      • Close links between:
        • multiple demands for national approach to policy
        • and
        • proposals to improve intergovernmental relations
      • Off limits
        • fiscal reform in interests of states
      • Continuing influence of states
        • political if not financial influence
        • as federal government takes interest in local matters, states take interest in national and international spheres
    • Australia— assessment
      • Continuing tensions
      • Federal king hits and takeovers
        • referendum proposals, judicial interpretation, financial power, referrals of power
      • Negotiated agreements
        • mutual adjustment by teams of ministers and public servants
        • sophisticated systems for managing intergovernmental relations
    • India and Australia— common points
      • Economic liberalization prompted by external events
      • Change processes driven by domestic forces
      • Negotiation of changes critical
      • Programs of change pragmatic
    • India and Australia— divergence
      • India
        • proliferation of intergovernmental forums yet to crystallize
        • economic liberalization allowed state governments to capture valuable regulatory space
        • large scale privatization not feasible
        • proposal for dual GST may help redress vertical fiscal imbalance
      • Australia
        • effectiveness of intergovernmental forums and agreements
        • negotiations bound states to national regulatory regimes
        • extensive privatization at both levels of government
        • GST left problems of vertical fiscal imbalance unresolved
    • Conclusion
      • India could examine Australian arrangements for intergovernmental relations
      • Australia could reflect on adverse impacts in India of period of dominance by central government
      • Both illustrate:
      • Federations as incomplete contracts
      • Challenge for parties to federal compacts to negotiate imaginative transitions
    • RFI Smith Adjunct Senior Research Fellow Department of Management Monash University Melbourne Australia Contact: [email_address]