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Good morning. I welcome members and the public to the 22nd meeting in 2015 of the Devolution (Further Powers) Committee. It is normal at this point to remind members to switch off their phones and electronic equipment, as they can interfere with the broadcasting system.
Agenda item 1 is parliamentary oversight of intergovernmental relations. I am delighted that we have a panel of academic witnesses with us: Professor Nathalie Behnke, University of Konstanz, Germany; Professor Bart Maddens, University of Leuven, Belgium; Dr Sean Mueller, University of Berne, Switzerland; and Professor Julie Simmons, University of Guelph, Canada. Welcome to you all. We have not asked for any opening statements and, as we have a precious hour with you, we will go directly to questions.
You are all here because you are experts in intergovernmental relations in different jurisdictions. To what extent in the countries that you come from are the legislators effective in scrutinising intergovernmental relations? That is my starter for one. Who would like to take that on?
In Canada, we have Westminster-style parliamentary decision-making at the central level, which we call the federal level, and at the provincial level, which is the level of the subunits in the federation. The discussions between the central Government and the provincial Governments, to the extent to which they take place, are in extra-parliamentary forums, outside the legislatures at the central and the provincial levels, and they exclusively involve the executive branch of government. For example, the Premiers of provinces would get together to have a meetings if they were invited by the Prime Minister to do so. However, they have not had such a meeting since 2008. The decision making that takes place is usually at the sectoral level. For example, all ministers of social services from the provinces would get together with their federal counterpart. They are present at the meeting by virtue of the fact that they are the minister for that policy area and are a member of the executive in their respective legislatures.
I will continue by giving evidence on Germany. The Länder traditionally have a very strong influence in federal decision making, and we have a fully fledged Parliament in all 16 Länder. However, I am not aware of any formal mechanism of parliamentary scrutiny on intergovernmental relations. Intergovernmental meetings are generally regarded as exclusively a matter for the executives. We have 18 ministerial councils in more or less every policy field, in which the Länder ministers meet regularly—between two and four times a year. The federal ministers are involved in most of those conferences.
However, let me say two things. First, I think that our Länder Parliaments in a way misperceive their own role, because they try to do the same politics that the federal Parliament is doing but, because of the typical distribution of functions between the federal and the Länder level, the Länder need to care more about implementing laws. Parliamentarians tend to neglect the administrative aspect of implementing laws, so they do not take enough interest in those intergovernmental agreements.
The second point is that in the parliamentary system, a lot of information goes through the party committees. Of course, those parties in the Government would inform their party members in the Parliament, but that is insufficient. It is necessary to have in place a rule so that the results of intergovernmental meetings and ministerial conferences are at least made public regularly. Parliament could profit if there were a regulation to say that they directly receive the results. That could be in the form of a protocol, for example, which enabled them to be informed about what was decided on. It would be even better if there were a regulation to say that the results of ministerial conferences were made public, for example on the conference websites, so that the wider public and the media could access them. Consequently, there would be public debate, as well as better transparency and accountability of executive decision making.
However, a great advantage of the interministerial councils is that they are highly informal and are not open to the public. It is a necessary precondition for Länder Governments that they can informally, for example, change their position in negotiations without being held accountable to their Parliaments. I would not touch the vital advantage that the informal networks and negotiations have by requiring the meetings to be made public, for example. They are always closed to the public, and I think that that is very important for making them work.
First of all, it is a pleasure to be here—thank you for the opportunity. The Swiss cantonal, or regional, Parliaments are not at all effective in overseeing intergovernmental relations, because that is considered to be the Government’s prerogative. It is considered that such relations fall under foreign affairs, even if they are with other cantons within Switzerland—another canton is like a different country in that sense.
The lack of efficiency is because Swiss parliamentarians are not full-time but part-time politicians. They lack resources and the time even to deal fully with their own home rule legislation, let alone to deal with complex matters of intergovernmental relations. Therefore, they are quite happy that the Government does the job.
Secondly, the Parliaments are not really important. Every important decision and act of Parliament or Government is subject to challenge through direct democracy. Anything contentious will be voted on and the people will decide, so the Parliaments do not matter.
There is one exception to that. The six French-speaking cantons have signed a special interparliamentary convention that institutes a permanent interparliamentary body with six delegates from each of the six Parliaments. They meet three times a year to discuss issues. The body monitors all the intergovernmental treaties and agreements that are being concluded by any of the six cantons.
First of all, I would like to emphasise that I am honoured to be invited by this prestigious Parliament to give evidence. In Belgium, intergovernmental relations are largely based on co-operation agreements between the various authorities. Some of the agreements are executive; others are legislative and have to be agreed by Parliament. About half of the co-operation agreements, because they have implications that are legislative or budgetary or they generate rights or obligations for the citizens, have to be put before Parliament.
In Parliament, the co-operation agreements are dealt with at the federal and the member states level in the same way as international treaties, which implies that they cannot be amended by Parliament. Parliament either agrees or disagrees. I do not know of any instances where Parliament has ever disagreed, yet the co-operation agreements are very important, because they limit the scope of legislative work afterwards, so the legislation has to be in conformity with the agreements. In Belgium, Parliament’s involvement in bringing about and agreeing the co-operation agreements is very limited, which is generally considered to be a democratic deficit. Even if they have to be agreed by Parliament, there is very little discussion there, not least because the co-operation agreements deal with very technical matters.
In the last reform of the state, which was agreed on in 2011 and implemented in 2012-13, a new device that was introduced to solve this kind of democratic deficit was the possibility of voting on common laws in the various Parliaments. For example, the Parliament of Flanders and the Parliament of Wallonia will be able to vote on common law, which implies that the same text will be voted on in the Flemish Parliament and the Walloon Parliament and will be prepared by an interparliamentary commission. As this is a new device, we do not yet know the extent to which it will be used and whether it will help to solve this democratic deficit, but most institutionalists or constitutionalists fear that the procedure will be much too cumbersome and will come to nothing. It will be very exceptional.
09:15
We have a limited amount of time, so I am now going to open it up to questions from committee members. If we get concise questions and answers, we will make some progress.
I had two questions, but I think that the first one has been covered to some extent. By the way, I should thank you for your very interesting and informative submissions.
From your first responses, it appears that Parliaments are not coming out of this too well. I did not know this until I read the submissions, but I was struck by the fact that the Bundesrat is made up of Länder Governments, not Parliaments, and Professor Simmons has highlighted the fact that bilateral meetings between executive branches are almost the foundation of intergovernmental relations. In a way, then, that issue has already been covered, but perhaps I can roll it up into my second question and you can comment on both matters.
Lots of areas interest me, but I was struck by a reference in Professor Maddens’s submission to some research that said:
“In a normal federal system, state-wide or federal parties constitute by far the most important element of linkage between the state-wide and regional party systems”.
I think that you have said that that does not happen in Belgium; it certainly does not happen in the UK, because the Scottish National Party is just a Scottish party. However, with those two big ideas in mind, can you tell us the extent to which those party relations between different layers of government are important in your country? Moreover, do you want to say any more about the involvement of the executive? Those are, crudely speaking, the two ideas that I have in mind. In certain countries, executives come together, while in others parties facilitate those intergovernmental relations. I would be interested to hear your comments on either or both of those areas.
With regard to Belgium, it is important to make a distinction between the various levels. I have already referred to the co-operation agreements, which are like the oil that makes the mechanism function. That is the level at which very technical conflicts or disputes are settled.
Then there is the political level, where we also have various co-operation devices. The most important is the federal Consultation Committee, where the Prime Ministers of the federation and the various member states meet. Although it appears that at the administrative level—in other words, the level of the co-operation agreements—things are largely functioning, when an issue gets politicised, it gets raised to the level of political decision making. That means that it comes to the Consultation Committee, and it is then very difficult to reach a solution.
This comes back to the problem of the split political parties in Belgium and the asymmetry between the various coalitions. Right now, we have a centre-right coalition at the federal level and at the Flemish level, but we have a centre-left coalition in the Walloon region and the Francophone community. No party on the Francophone side is part of both the federal and regional coalitions. In fact, this is the first time that that has happened in the history of Belgium federalism, and it makes it very difficult to reach a solution in the Consultation Committee. If there is a politicised conflict, the Consultation Committee notices that that conflict exists and that the different member states or the different levels have different points of view.
We will come to the issue of conflict resolution later, but does anyone else wish to respond to Malcolm Chisholm’s question?
In Canada, the party system is not a federated system. For example, although there is a Conservative Party at the national level, it has no formal ties with any of the right-wing parties in any of the provinces. In fact, to make things confusing, the provinces sometimes have different names for their Conservative Party. For example, British Columbia’s Conservative Party is called the Liberal Party, which is the name for the central party at the national level; in Saskatchewan, the Conservative Party is called the Saskatchewan Party; and in Alberta, it is called the Wildrose Party.
Parties do not have those kinds of formal ties, except for the New Democratic Party, which is the most left-wing party active in the Parliaments at both the federal and provincial levels. That party does have a federated system, but because it has not yet formed a Government at national level—
Not yet.
We will see in a couple of weeks.
However, because it has not yet formed a national Government, we have not been able to see a lot of cross-pollination as a result of, say, ministers who have held portfolios at a provincial level and who have been involved in those legislatures moving into the national forum. I think that that would be a very healthy thing, as it might encourage politicians at either level to think about the other order of government. Sometimes it is good for provincial politicians to think about things not necessarily in terms of protecting the turf of the province, but in national terms; likewise, it might be good for federal politicians to think about things from the perspective of individual provinces, nations or what have you within the broader state.
I totally agree with Mr Chisholm’s diagnosis and want to emphasise the importance of networks in German intergovernmental relations. Those networks are a mix of party-political and bureaucratic actors, and a very important informal institution in Germany is the weekly telephone conferences involving ministerial bureaucrats from the Länder ministries and state chancelleries. They are like two overlapping networks; there is the A round, which involves Länder governed mainly by the Social Democrats, and the B round, which involves Länder governed mainly by the Christian Democrats.
That very strong and powerful informal network operates not only through telephone conferences but through informal meetings in Berlin, where ministerial bureaucrats are sent from the Länder to the Länder representations. They work in Berlin and attend, for example, factional committees in the federal Parliament. With, say, a Land governed by the Christian Democrats, a ministerial bureaucrat will be sent to Berlin and will go to a meeting of a party committee dealing with his policy field in the federal Parliament. There is therefore a very close interconnection, and that is where information flows move.
You might consider it unpleasant, but Länder Parliaments play an unimportant role in those networks. Information normally goes between ministerial bureaucrats and the parties’ policy experts, and that is facilitated by our strong vertically integrated party system. In other words, we have the same parties at the Länder level and at the federal level.
In this regard, Switzerland is the exact opposite of Belgium. The five major parties in power at federal level at the moment are also in power, more or less, in each of the 26 cantons. Because there are so many parties, we have a multiparty system. Also, because there are so many channels for vetoing things, it is impossible to have a Westminster-type Government Opposition. The Opposition has so much power that it is better to include it in the Government to ensure that it does not veto anything through direct democratic challenge.
Of course, there is always an exception. The canton of Ticino, which is Switzerland’s only Italian-speaking canton, has its own regionalist party called the Lega dei Ticinesi, which in the past 20 years has taken off on an agenda of being different, although not wanting secession or independence. That is because it is very small and it could go only to Italy—and nobody wants to go to Italy. [Laughter.] In fact, it would like more federal involvement in regional affairs, which means more subsidies, more protection and being out of the European Union. However, that is the only case where there is not integration in the party system. As in Germany, party channels are very important for transmitting information in both directions.
We will need to move at a canter now.
It seems that parliamentary scrutiny of intergovernmental relations is a rare beast, but where it has been achieved, has that been made easier because of a formal institutionalised structure? I see all of you nodding.
In that case, I have a simple question for you. Having observed what has happened in other countries, I think that this sort of thing has evolved over time and has reacted to different demands at different times and the structures are very much specialised for their particular areas. We have a chance to look at the matter from an evolutionary perspective and to try to put parliamentary scrutiny into the structure at any early stage. If you had a blank slate in your various countries, what would you do differently? What should we be doing to institutionalise parliamentary scrutiny of intergovernmental relations?
I want to make two points. First, I would give a legal foundation to interministerial councils. That would oblige them to meet regularly and would not make meetings dependent on, for example, the will of the Prime Minister. In Germany, that is not necessary because we are in the habit of doing this sort of thing, but if you want to establish the habit, it would certainly be helpful to have a legal foundation.
Secondly, I would include in such a legal foundation an obligation to make the results of negotiations public. That is very important; indeed, it is something about the German system that I am really unhappy about. It is so informal that you just do not get the results. We researchers do not get them, and Parliaments do not get them either. There should at least be some provision to ensure that a protocol setting out the results of each meeting is given as information to the Parliament.
Do the other witnesses agree that such principles are important?
On the basis of the Belgian case, my impression is that, at a technical level, institutionalisation is not so important. The technicians, by whom I mean the civil servants and members of the ministerial cabinets, will find a way of solving technical matters. We have a huge number of institutional devices in Belgium for facilitating co-operation, but my impression is that they are not so important and, even if they did not exist, people would find a way of solving matters via ad hoc regulations. On the other hand, when an issue becomes politicised, it is already too late. When that happens, the institutions do not help either, and it does not make a big difference whether you have those devices or not.
09:30I should add one thing. I have talked about the various layers—the more executive administrative layer of co-operative agreements, and the political layer, which is able to solve political issues in exceptional cases—but another layer in Belgium that is becoming increasingly important is the Constitutional Court. The Constitutional Court is becoming an important player in solving political disputes, if there is a dispute over who is competent for a certain matter. For instance, we had a dispute in Belgium about foreign trade, which is a matter within the competence of the regions, but there was interference from the Federal Ministry of Foreign Affairs in foreign trade policy. That political dispute was a big issue in Belgium, and it was finally settled by the Constitutional Court a couple of months ago.
The Constitutional Court’s powers have also been increased through the latest reform of the state and the Constitutional Court will now also be able to check whether the legislation conforms with the constitutional principle of federal loyalty.
The Constitutional Court has the power to abrogate laws. I raised that issue in a recent column; I said that the Constitutional Court is the most powerful Parliament in Belgium. It is not directly elected; in a way, it is indirectly elected, because the members are appointed by the Federal Parliament, but it is the final stage of the legislative process. A law is voted on in Parliament and everybody waits to see what the Constitutional Court will say in the end. Obviously before the Constitutional Court can scrutinise a law, somebody has to put it before the Constitutional Court, but that is increasingly happening, because if a law is a little bit controversial, somebody will put it before the Constitutional Court.
All of us around the table might see routine recourse to the courts in some form as a horrifying prospect. Are you recommending it?
No. The Spanish case is very interesting in that respect. The Tribunal Constitucional in Spain plays the same role as the Constitutional Court in Belgium. It also consists of politically appointed judges, but its role has become increasingly controversial. One of the reasons why the independentists in Catalonia have so much support and might even win the quasi-referendum on 27 September is that they argue that the Constitutional Court is a politicised organ composed of Spanish-minded judges who abrogate most of the laws on which the Catalonian Parliament votes. If it is obliged to become a political player, there is a risk that the Constitutional Court will become politicised. The major issue is who appoints the judges to the Constitutional Court and to what extent those appointments are transparent. The process is transparent in the United States, where there are hearings.
Professor, we take the point that if we do not co-operate and set up some trustful relationships, that is where we might end up.
I like your constitutional principle of federal loyalty; that sounds like something that we should come back to in this country.
I want to ask about the German experience of a practical issue. Obviously, your country is dealing with the refugee crisis in a very public way and you are to be applauded for that. Was the federal Government’s decision to encourage so many people from Syria to come to Germany discussed with the Länder through the mechanisms you described?
No, there was simply no time. We have had a public discussion, trying to figure out why and how Angela Merkel came to her decision. It was a typical instance of the prerogative of the Chancellor and she decided autonomously. The discussion happened afterwards, because the Länder said, “Okay, this is your decision, but we have to handle it, so we need the money and we need the facilities”. After the decision, the typical intergovernmental mechanisms started working.
That is very helpful; I understand that. I also want to ask about the Canadian experience, because, as Professor Simmons rightly said, it is much more akin to—or it is—a Westminster system. Do you have a perspective on Alex Johnstone’s question about whether intergovernmental relations should be backed by some kind of statute or by law? Would that make any difference? You described how your Prime Ministers have not met the provincial leaders, the Premiers, for—I cannot remember—12 years or so?
Yes. In Canada, since about the 1960s, the leaders of each of the provinces, the Premiers, meet annually and, from time to time during that period, they have called for regularised meetings with the Prime Minister. The latest iteration of that was in discussions in about 2003, when the Premiers were trying to create a new institution that might involve the Prime Minister. In fact, the initiative was spearheaded by Quebec, which wanted to have a regular institutionalised intergovernmental forum for leaders to meet, but ultimately the other Premiers did not want to extend the invitation to the federal Government.
Was there any parliamentary scrutiny or was there any discussion about parliamentary scrutiny of the process when those discussions took place?
There was not, although the discussions were at the executive level, so I was not privy to them.
Yes, exactly. Did the Parliaments, whether in Quebec or in British Columbia, not kick up and say, “Wait a minute. We have to have a role in that”?
No. Had it come about, that would have been a monumental change, so the prospect of bringing Parliaments into the discussion would probably have been a second monumental change.
In fairness, I was not arguing that they should be in the discussion. I was asking more about whether there was any parliamentary monitoring of what was happening, akin to the comments that you have been making.
No, there was not.
Not noticeably?
Not to my knowledge, no.
That was all interesting, and it leads on to what I wanted to bring up, which relates to last night’s round-table discussion. Professor Guy Laforest said that to make intergovernmental and parliamentary relations and inclusion in that work, you had to challenge the historic hierarchies. That was an interesting comment. We could well be in the privileged position of starting this off, rather than being where your respective legislatures are, but the British system also has historic hierarchies of all sorts.
Another participant talked about strengthening relationships among the devolved institutions. Professor Mueller, you have raised that today. What are the witnesses’ opinions on how to challenge the historic hierarchies? What will strengthen the relationships among the devolved institutions and how can that be used to challenge those hierarchies? Within the current UK settlement, there is a British-Irish Council but, beyond that, there is nothing except the informal meetings that are similar to those that Professor Behnke mentioned, around the joint ministerial committees that sometimes meet.
I will just pick up on that first, if I may. You are right—that is a feature of Swiss federalism. To begin with, the hierarchy in Switzerland is the other way around: the cantons call the shots and the national Government is weaker and has less money and less power than the bottom level.
Maybe most interesting in your case would be the insight that coalitions can be issue specific and of variable geometry. I will give you an example. In fiscal equalisation, the rich regions pay the poor regions. In Switzerland currently, there are nine rich regions and 17 poor regions. That came about because the poorer regions got together beforehand and came to an agreement about the way in which the system should work. They use a formula that means there are more winners than losers, with the result that the majority would win in a popular vote. It is interesting that the rich regions are not only the German or French-speaking regions, or the mountain or the rural areas; they are all over the place. Therefore, on the issue of fiscal equalisation, the alliance between the winners is different from the alliance on education policy or on rural or urban planning, where there are other interests.
If I can be frank, my advice would be to seek issue-specific coalitions with other players that are involved in the British system. As mentioned yesterday, why not team up with the City of London on economic development? Why not team up with local governments in other areas? You do not always have to be in bed with Wales or Northern Ireland, so to speak.
That is interesting.
A crucial characteristic of Belgian federalism is that, in principle, there is no hierarchy between the various levels. The allocation of competences is based on the principle of exclusivity. Either one level is competent or the other is, and if one level is competent, it has full legislative powers, so the federal level cannot substitute what is done at the sub-state levels.
There is one important caveat to raise here: the impact of the European Union. In Belgium, we see that in completely devolved areas, such as agriculture, the federal Government has almost no competence, but the European Union has an important competence on agriculture. Because of that, even though the federal level is formally not competent and is not hierarchically higher than the regions, it remains a crucial player because it acts as a link to the European Union level, it co-ordinates the points of view of the various regions, and it facilitates the expression of the Belgian point of view at the European Council of Ministers.
In the European Council of Ministers, Belgium has only a single unitary vote. It cannot split up its vote, so the regions have to reach an agreement about that vote. If they do not reach agreement, they have to abstain and they lose their impact on the decision making of the Council of Ministers. They always reach agreement. There is only one example of a case in which there was no agreement among the regions. As I said, this is co-ordinated by the Federal Ministry of Foreign Affairs. Something that you have to keep in mind is that, even for fully devolved matters, the federal level remains a crucial player because of Europeanisation.
09:45
Linda Fabiani has asked a tough question. In terms of hierarchy, three issues come to mind. The first is money. In Germany, the Länder are historically older than the federal level and they exist independently. However, the federal level gets the lion’s share of joint taxes, so it is always in a stronger position to influence policies.
To crack the hierarchy issue, Scotland must get an independent funding base; I was talking about that yesterday. I do not know whether it would be best to do so through tax autonomy or through a fixed share of shared taxes, but the first step must be to get some leeway in taking independent action.
The second point concerns federal architecture. As far as I can see, most negotiations take place bilaterally between Scotland and the UK level. As Sean Mueller said, one step in empowering the regional level might be to strengthen horizontal linkages, either on specific issues or at a general level, so that there would be a multilateral negotiation arena of all regionalised territories negotiating with the UK level. Of course, that would be very complicated because of the England issue and the lopsided architecture, so it is not a problem that you can solve today, but you must keep it in mind.
Thirdly, autonomy is helpful, but co-decision making is valuable too. You must be careful in deciding in which areas you claim more autonomy on decision making, and in which areas you might try to claim co-decision rights in whichever way you do. We are privileged to have the Bundesrat as a very strong institution for securing co-decision rights. You might think about establishing veto rights or committees so that, in those matters that are important to Scotland, you try to get more co-decision making.
Those are three aspects. They are all very hard to address, but they might be helpful in thinking about cracking the hierarchy.
My list is similar, so I will not go over the same issues.
In Canada, the key terrain for hierarchy is finances. My advice would be that, in the particular areas of jurisdiction for which you are responsible, you need to ensure that you have either full control of the money to fund things or shared control over the formula by which that money is shared.
You also need to ensure that the money that comes in is unconditional and there are no strings attached. In Canada’s history, the federal Government has played a very big role in areas of provincial jurisdiction by placing conditions on the grants that it gives to the provinces. Over time, those grants have become more and more unconditional. Only a very small percentage—I said in my submission that it was around 25 per cent—of the funding that provinces get from the federal Government is conditional; the rest of it is unconditional. Only about 15 per cent of the provinces’ money comes from the federal Government, as they have their own tax-raising powers. Nonetheless, even in the midst of all that, there is still a hierarchy.
We need more horizontal decision making—to which Professor Behnke referred—so that the provinces come together. The strategy has been for the provinces to emphasise their counter-legitimacy in claiming to speak on behalf of the country as a whole. The federal Government cannot claim to know exclusively what is best for the interests of Canadians, as the Premiers of the provinces can come together and say, “We have come together and reached these agreements, and we represent Canadians too.”
In the responses to Alex Johnstone and Tavish Scott, there was some discussion about the legal basis for intergovernmental relations. It struck me that we have a different situation in the UK because of the absence of a written constitution.
The supremacy of Westminster means that Westminster legislation is not able to be challenged in the way that it would be in a constitutional court scenario, for example. Does that present a difficulty for embedding intergovernmental relations in statute in the UK? How effective has the system proven to be—in terms of processes and outcomes—in those places where that element is embedded in statute?
In Canada it is not embedded in statute. Intergovernmental forums are not recognised constitutionally, and parliamentary sovereignty can always trump any intergovernmental decision, even if Premiers and the Prime Minister—or ministers for social services, in the example that I am about to give—were to get together and agree on something. In 2005, the ministers for social services agreed on childcare funding, but when Stephen Harper was voted in as the next Prime Minister, he chose unilaterally to cancel every childcare agreement with every province. I would not suggest that you emulate that route.
Similarly, as we have a system here in which no Parliament can legally bind its successor, there would be nothing to stop a similar scenario from arising with a future Westminster Government even if that aspect was placed in statute.
I do not see a real problem with not having a written constitution. In Germany, most of these aspects are not written into the constitution—they exist on a regular statutory basis, if they are statutory at all. You are right that statutes can be changed, but they also develop a certain continuity and power if they work. I would recommend putting that aspect on a statutory footing, simply because, if you want to establish new routines and empower groups that have been weak in the past, a statutory footing would help.
One analogy—although it may be misplaced—would be the gender quota in Germany. One may be against it and say, “This is against democratic principles,” but it helps in establishing certain routines. After a while, when things are working, one can move back from the statutory footing and the system still works. I would definitely recommend a statutory footing as a starting point.
In Belgium, we have a constitution, but the details of the institutional structure are written down in special laws, which form a kind of quasi-constitution. All the arrangements for co-operation are written down in those laws.
In my view, the most important implication of Belgium having a constitution and those special laws that are based on constitutional principles is, as Mark McDonald mentioned, the Constitutional Court, which checks whether the laws conform to the constitution. If you do not have a constitution, it is difficult—obviously—to see how you would have a constitutional court.
Good morning. We are thinking about financial equalisation between sub-states and the state. The new UK devolution proposals in the Scotland Bill are expected to be accompanied by a no-detriment principle. That means two things. First, neither the UK nor the Scottish Government should face a detrimental revenue or spending impact as a result of the decision to transfer new powers at the point of devolution. I think that we understand what that is about. Secondly, neither the UK nor the Scottish Government should face a detrimental revenue or spending impact as a direct result of the policy decisions of the other Government. If one Government is adversely affected financially by the policy decisions of the other, the no-detriment principle suggests that the offending Government should compensate the other financially. No one seems to understand that. In the countries that you study or are familiar with, can you point to any similar compensatory mechanism that resembles that no-detriment principle?
The most recent major reform of Swiss federalism was built on that principle. It took 25 years to implement the reform, but when it finally came into force in 2008, the principle was as follows. Divisions were reallocated between the national and regional levels, and some competences became national and some regional. There is therefore a kind of devolution, but it goes both ways. Every competence was monetarised exactly, with the cost of every policy shift indexed and the tax sharing adjusted accordingly. In the balance, the regional levels got more power and also more money to pay for those competences. I am not aware of any on-going embedding of that principle; that was just a one-off change as part of a wider reform.
In Belgium, the situation is similar. Whenever a competence is devolved, the budget is also devolved and the regions or communities obtain the means to execute that competence. However, in the latest—the sixth—reform of the state, the Government decided, as a way to economise at the federal level, to devolve only 90 per cent of the means to execute the competence. That was done as a way to force the member states themselves to economise. One of the main political issues in Belgium at present is that the federal Government, which is not hierarchically superior, cannot oblige the member states to economise. Using that trick—transferring only 90 per cent of the means—was a way to oblige the regions and communities to economise.
One founding principle of the German fiscal constitution is the principle of connectivity, which means that the level that is responsible for a task is also responsible for financing that task. Any time that a new task is decided on or switches levels of government, there is a negotiation on how to finance it.
We do not usually set those in statute or devolve tax autonomies—we mostly renegotiate the VAT shares. VAT revenue represents a large sum of money. The Länder come to the Bundesrat and say, “Okay—if we have to pay for whole-day childcare and it is in our competence, the connectivity principle requires that we pay for it. We do not have the power to levy new taxes, but if you give us 1 per cent more of the VAT share, we can take this money and finance whole-day childcare.” The VAT share between the federal and the Länder level represents the major negotiation pool for adjusting the finances and the tasks.
So the spillover mechanisms are worked out on the basis of agreement.
Yes, that is always negotiated.
In addition, it seems that, in the first instance, there is an agreement that the devolved subjects have particular powers.
Yes.
In Canada, we do not have anything like the principle that Rob Gibson initially described, but there are tax harmonisation agreements between the provinces and the federal Government with regard to the percentages of corporate tax and personal income tax revenue that will automatically be given to the provinces. Tax is collected by the federal Government, but those harmonisation agreements govern the percentage of the revenue that goes to the provinces.
Over time, provinces have introduced their own sales taxes—the equivalent of the value added tax in the UK—as a way of creating revenue; the federal Government also has a value added tax. By and large, over time, a greater percentage of personal income tax and corporate tax revenue has moved from the federal Government to the provinces. There is not a lot of transparency around that, although there are specific agreements in place. You would want to speak to an economist about the ins and outs of those agreements.
10:00
My first question is for Professor Behnke and goes back to her comments on the connectivity principle. If a Land has the powers and the finance to take a particular policy direction, does it have to communicate to the Bundesrat and the other Länder what it is doing and why it wants to do it?
Do you mean a situation in which a Land autonomously decides to introduce and spend money on a new policy?
Yes.
Basically, that is its right. The distribution of money between levels and among Länder is based on a logic of equalising fiscal capacity, not on specific policies. In Rheinland-Pfalz, for example, childcare places do not cost anything—in other words, parents do not have to pay to put their kids in childcare—whereas in all the other Länder parents have to pay for them. A Land can decide to do something like that completely autonomously; it has its own income and revenues and the right to fiscal equalisation based on fiscal capacity, and it has the right to decide how to spend its money. Such things are communicated in the informal circles that I have referred to; Länder simply inform each other on the basis of generating best practice, but there is no formal necessity for them to do that.
If a decision is taken at federal level to introduce a policy that affects the Länder in terms of personnel or which gives them new tasks or finances, it must be approved in the second chamber—the Bundesrat. That puts the Länder in a strong position, because once the process moves to approving these new tasks, they can negotiate on financing.
You mention in your submission the situation regarding the Bundesrat and the trading of self-rule or self-government for shared rule. Is such a trade-off necessary or can you have both shared rule and self-rule at the same time?
We have both. The tendency to trade rights of self-rule for rights of shared rule is all about achieving the greatest parity of fiscal capacity among the Länder. Personally, I do not approve of that, but I can understand why Länder that do not have a lot of their own resources, perhaps because they have a weak economy and get only a small share of income tax and corporate tax, prefer to get finance from a federal level or get co-financing for a lot of tasks. They just cannot afford to do that sort of thing on their own. Rich Länder have more fiscal resources and can afford it, so there is a conflict of interest among the Länder in that respect. One will observe a tendency over the years for the majority of Länder to prefer giving tasks back to the federal level and getting rights of co-decision making and co-financing from the federal level.
If no other member wishes to ask a question—
Can I just come in with a small supplementary, convener?
Of course you can.
I am not sure that I am clear about the no-detriment principle that is supposed to be getting introduced here and, indeed, your answers on that issue. My understanding at the moment of what is supposed to be happening here is that if one part of the UK—Scotland, for example—were to implement a policy that negatively impacted on another part, we would in effect have to compensate that part of the UK and vice versa. Does that happen anywhere else? You seem to be saying that if a Land or state had the right and the money, it could introduce a particular policy irrespective of its impact on the surrounding states, cantons or Länder. Is that correct?
I think that it would depend on the area. In general, you are right. The regions in Switzerland are completely autonomous and actually the very idea of federalism is to have competition. For example, you want regions to lower their levels of education so that they can attract those people who do not need public education but can afford private education. That, by definition, has a detrimental impact on other regions. Because you want that competition, you should not provide any compensation. On the other hand, there is the idea that cantons should get together and compensate each other for any major spillover effects, but it is up to them to decide to do it.
In Belgium, we have a special mechanism called conflicts of interest. If one region’s policy has a detrimental impact at federal level or on another region, the other region can invoke a conflict of interest, and that is decided in the Consultation Committee that I referred to earlier. That is very closely related to the notion of federal loyalty, which is written down in the constitution.
We make an important distinction between conflicts of competence and conflicts of interest; after all, a region might remain formally within its competence but still harm the interests of another region. However, the tendency in Belgium is for the distinction between conflicts of interest, which are essentially political issues, and conflicts of competence, which are formal legal issues, to become blurred, and there is also a tendency for the Constitutional Court to check conflicts of interest. That relates to the extended competences of the Constitutional Court, which is applying the principle of proportionality more and more. In other words, a level should execute its own competence in such a way that it does not disproportionately limit the possibilities of the other levels to execute their own competences. That is how the distinction between conflicts of interest and conflicts of competence has become more or less blurred.
I do not know whether that is clear. It is a difficult issue in Belgian constitutional law.
It sounds it.
It might be helpful to distinguish between the logic of curing negative consequences and the logic of preventing them. As I understand it, the no-detriment clause is an ex post facto clause, which means that once an action has taken place, something must happen to compensate for it. In Germany, the logic behind co-operative federalism is to try to avoid actions that are to the detriment of others, so things are negotiated in advance and there is no formula for making compensation afterwards.
That is the case in Belgium, too. We have all kinds of preventive institutional measures to prevent conflicts of interest, and the various levels have to inform one another and have to collect advice from the other levels. However, that is largely a formality in Belgium, and it does not really play an important role. The Government makes sure that it abides by the formal requirement to inform other levels, but it really has no impact. The curative devices are much more important in Belgium than the preventive ones.
I know that I am pushing things, because we have reached the end of our time, but I want to ask one final question. Right at the beginning, you said that Parliaments around the world were generally very weak and were not involved in the scrutiny of intergovernmental relations. The members of our next panel, who are sitting behind you in the public gallery, are the two most senior civil servants responsible for intergovernmental reform. Should their review change the situation with regard to the parliamentary scrutiny of intergovernmental relations and ensure that we do not make the mistakes that others have made by having an absence of such scrutiny?
I am sorry, but what review are you talking about?
The review of the memorandum of understanding. The civil servants whom I have just mentioned are reviewing the whole process of intergovernmental relations. In the next evidence session, we will probably be asking them—and I am looking at them as I say this—about the role of Parliament and its committees in the scrutiny of intergovernmental relations. What role would Parliament play in that? You have all suggested that Parliaments, their committees and all their structures either are weak or play no role in that at all. Should the review that I have mentioned seek to make things different here with regard to our intergovernmental relations?
That is for you to decide. It is not for us to say what you should do or what kind of structures you should implement. It is an academic debate whether it is good to have parliamentary involvement in intergovernmental relations. I am not sure that having meetings in public would help in finding agreement. There is a whole literature that says that it is helpful to have meetings in secret, because people can be more open and can seek compromise. Given that this is a political question, I think that you as the politicians should answer it.
That was not as helpful as I had hoped it would be.
As a political scientist, I am quite pessimistic about this. Because of all kinds of factors, the impact of Parliament is decreasing, and it is now largely a theatre. I know that Jeremy Corbyn said yesterday that he wants to make it less so, but it is really a theatre. In Belgium, at least, Parliaments have a minimal impact on policy making.
Another aspect is Europeanisation. There was an attempt to cope with the problem at a European level through the early warning procedure in the Treaty of Lisbon, but that has had very little impact in Belgium. Parliaments try to grasp what is going on at a European level, but they just do not have the expertise or the personnel. The issue is so complex and technical that the involvement of politicians in Parliament is doomed to be marginal.
Please stop. [Laughter.]
Professor Behnke, can I tempt you into a response? I suppose that you have already commented on the matter.
Indeed. I think that I have said everything that I want to say about that.
On that pessimistic note from Professor Maddens, I thank our witnesses very much for their attendance this morning and, indeed, for their engagement at last night’s event, which those of us who were able to attend enjoyed. Many of our panellists’ colleagues joined us here in the Parliament, and that informal engagement and all the time our four witnesses have given this morning are very much appreciated.
At this point, I suspend the meeting to clear this panel of witnesses and set up our next.
10:13 Meeting suspended.Previous
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