Local Government in Asia and the Pacific: A comparative analysis of fifteen countries

Acknowledgements

Foreword

Introduction

I. Backgrounds of local government

II. Issues for local self-government

Structural and institutional arrangements

Local governance

III. Local capacity

Human resources

Revenue sources

Community capacity

IV. Agenda for action

Issues for action and examination

References

Annex: Towards a World Charter for Local Self-Government

Acknowledgements

This publication was prepared in partnership with the Asia-Pacific Section of the International Union of Local Authorities (IULA-ASPAC) and the Korea Local Authorities Foundation for International Relations (KLAFIR).

Funding for the research and publication were provided by ESCAP, the United Nations Development Programme (UNDP), the All India Institute of Local Self Government (AIILSG) and by KLAFIR.

This publication was prepared for the Secretariat by Professor Kevin Sproats, Western Sydney Research Institute, University of Western Sydney.

Foreword

Most countries of the region are undertaking reforms aimed at decentralizing and devolving government functions to the local level. To assist policy makers and researchers in undertaking this task, ESCAP, in partnership with the Asian and Pacific Section of the International Union of Local Authorities (IULA-ASPAC), the Korea Local Authorities Foundation for International Relations (KLAFIR) and the All India Institute of Local Self Government (AIILSG) initiated a study of local government systems. Country reporters carried out the study in 15 countries of the region, namely: Australia, Bangladesh, China, Fiji, India, Indonesia, Japan, Kyrgyzstan, Malaysia, New Zealand, Pakistan, Philippines, Sri Lanka, Republic of Korea and Thailand.

The individual country reports have been published electronically and can be found as searchable files on the ESCAP Web site at URL <www.unescap.org/huset/lgstudy> To appreciate the functioning of local government in any one country or the region as a whole the reader is referred to the reports. Individually and collectively they provide a unique and valuable snapshot of local government in 15 countries in which nearly half the world’s population live. The country papers went through two rounds of peer review before final editing and publication. Their publication in print was considered unadvisable as the final output would have been costly, user-unfriendly and would have limited circulation.

It was felt, however, that a comparative analysis that discussed local government issues outlined in the reports needed to be published separately in print. The intention of this analysis is to draw issues in local self-government from the country reports. For the most part this analysis rests in the country reports as the country authors have presented them. Extracts from the country reports included in this chapter are shown between quotation marks. Where it is not obvious the country is cited in parenthesis. Every attempt has been made to retain the fidelity of the individual styles and perspectives. With few exceptions, theoretical perspectives or other views from the academic literature have not been introduced.

Introduction

In the past 30 years the urban population in the Asian and Pacific region has increased by 560 million people (or 260 per cent) and in the next 30 years it is expected to increase by about 1,450 million people (or 250 per cent). This unprecedented urbanization process will make it increasingly difficult for limited natural and human resources to cope with the pressures of modern society.

Midway through the 1990s the Asian and Pacific region is experiencing rapid economic growth and even more rapid industrialization and urbanization. Clearly the major influences on the future of the region are the changes in and growth of the urban areas. Several more mega-cities and large cities, with populations of over a million have emerged. Cities in Asia and the Pacific are centres of both hope and despair: while being engines of economic and social development they are also congested centres of poverty and environmental deterioration.

If present global trends continue, the twenty-first century will be an Asian century, with Asia poised to become the world's dominant economic powerhouse. By the year 2025, most Asians will be urban dwellers. With most of its value added economic activities and populations located in urban areas, how well cities function as a system will determine the future of Asia.

While Asian and Pacific economies and societies are undergoing rapid transformation, government structures and systems in most countries of the region have been slow to change and respond to the new challenges. To meet the challenges of the twenty-first century new paradigms based on partnership between local governments and the civil society, including the private sector, are required. This requires a fundamental re-evaluation of the form and nature of local governance in Asia and the Pacific.

Living in Asian Cities (ESCAP 1996) and the World Charter of Local Self Government (Annex I) propose the principles of subsidiarity and proximity in reforming governance structures to meet the challenges of the twenty-first century. In other words, decisions should be taken at level closest to citizens and only tasks which cannot be carried out effectively at the local level alone should be referred to higher levels.

Institutional and governance reform must be accompanied with reform of the civil service and by extensive development and astute management of human resources. The Malaysian country report quotes Dr. Mahathir Mohammad, the Prime Minister of Malaysia, as saying,

"Given these rapid changes in the world economy, the public service must be prepared to confront new sets of challenges in the Twenty-first century... Continuous efforts must therefore be made to review the public service so as to be in line with the current needs and times. We need to look into new ways and means to improve and enhance the capability of our public service" (Mahathir 1995).

These are the themes that have shaped the comparative analysis. If we are to move from old to new paradigms what are the issues that need to be addressed? What are the problems to be overcome? What good practice should be carried forward? A brief background to the countries is provided before moving into the crux of the chapter. Following that examination of issues an Agenda for Action has been drawn from the discussion.

I. Backgrounds of Local Government

All countries have long indigenous histories of local governance, although not necessarily institutional forms of local government. In the Republic of Korea the long history has its foundations in "informal, voluntary institutions for the purpose of increasing mutual help among people and the formation of community ethics and mutual help system". Although some suggest it may not have been strong, there have been basic forms of local self-government in Kyrgyzstan for a very long time. Current initiatives for local democracy can be seen as a return to those historical roots. Over many centuries, local government in Sri Lanka "included judicial functions such as dealing with petty offences and reconciling disputes". Today, as is common, judicial functions have been transferred to higher levels of government. Mutual help, ethical foundations, justice and reconciliation are all features of community governance.

Occupation by colonial powers in Asia and the Pacific left legacies of centralized administrative rule more suited to command, maintenance of law and order and revenue extraction rather than governance and participation at the local level. Inherently, colonial models of administration were imposed on local communities mostly with disregard for their historical systems of governance. As the Bangladesh report points out, "the major objectives of the British in India were twofold: (a) maximization of land revenue collection and (b) maintenance of law and order. Naturally the British as an imperial power, had little understanding of and interest in indigenous local self-governing institutions". A highly centralized form of local government developed in the Philippines under three centuries of "tutelage and colonial administration" of Spanish colonial rule. This century under U.S. local government administration in the Philippines was "Filipinized". Even in those not colonized present local systems have been either influenced by the colonial powers in the region or, as in the case of Fiji, authority was ceded to the colonial power. Local government in Thailand, for example, was based on models derived from Germany, the United Kingdom of Great Britain and Northern Ireland, France and at a later date from the United States of America.

This centralization of administrative authority was not necessarily detrimental. After independence, most countries strove towards nation building and rapid industrialization that needed centralization. Without exception, all 15 countries represented here have initiated local government reform. Issues driving the reform include public sector efficiency, democratization and changing political-economic regimes to mixed (China) and market (Kyrgyzstan) economies. The ground is fertile for new paradigms of local self-government to grow. In many ways these trends are not new ones, but represent a return to roots of local governance that for the most part are centuries old.

One of the characteristics of local government this century has been the renationalizing of local government following independence. Local government has been reshaped by respective national identities.

II. Issues for Local Self-Government

This section discusses issues in moving to increased local self-government. They have been grouped under three general headings: structural (or institutional) arrangements; local governance; and local capacity. For clarity these have been further subdivided. The general pattern of the sections is to raise issues from the country reports, discussing points as they arise.

Structural and institutional arrangements

Issues of finance, administration, legislation and central-local relations provide the structural and institutional frameworks within which local self-government is played out. These can either facilitate its operations or impede it. Here we address each of those issues in turn.

Finance

The ability to control their finances must be a mark of local self-government. Of the countries examined here, New Zealand comes closest under the terms of its new financial management legislation. For the rest there are varying degrees of dependency on central allocation and control of financial resources.

For some countries there are simply not enough financial resources to provide their communities with anything beyond the basest essentials. The bulk of expenditure by Fijian local government, for example, is spent on maintenance with few funds available for new work or major reconstruction. Present financial resources seem to be barely keeping the system alive. While local government in Bangladesh may have power for local determination, it lacks the financial resources. Similarly, Philippine local government has considerable administrative autonomy, but central government retains control of the "purse strings". Central governments can delegate as much as they like, but it is meaningless without commensurate financial resources. Malaysian local governments, on the one hand, have considerable discretion, but on the other hand, it is little more than rhetoric as they have insufficient funds to do anything even when they have the discretion. At the local level in Indonesia the proportion of expenditure of development or capital works, as against maintenance, is increasing. But expenditure on capital works rather than maintenance can be deceiving. Too often it is classic political aggrandisement where local politicians would rather build monuments as expressions of their time in public office than undertake necessary maintenance work. The end result is that the existing infrastructure is run down at the expense of the new.

Other countries, while still not having an abundance of funds, are able to provide higher level services. Australian councils are moving from the early pioneering days of providing basic infrastructure - transport, sewerage, water and electricity - to providing higher levels of service; for example, arts and culture, recreation spaces. This ability to provide higher levels has been matched with demands for greater flexibility and discretion to choose what services to provide. In New Zealand and Australia it has also been matched by greater requirements for accountability of both revenue and expenditure. The four elements of the new regime in New Zealand provide an important model of practice: (i) accountability, (ii) operating guidelines, (iii) responsibility for outcomes and (iv) prudence. One of the important elements is that local governments must explain to the public why they are incurring the expenditure. With autonomy comes greater responsibility and accountability and some local governments do not want that responsibility and accountability, preferring to leave it to higher levels of government.

Involvement of central governments in the collection and subsequent distribution of revenue varies, as do the motives. In China the central government is expanding the financial capacity of local authorities. The country report implies that this increases central funds, presumably because the increased local funds reduces the amount of central funds needing to be allocated. Even though they have this increased capacity their budgets still need approval from higher levels of government. Indonesian experience suggests that central governments collect those taxes that are easiest, leaving local government with the most difficult.

In Japan there is an interesting inverse relationship between revenue collection and expenditure. Collection of the tax revenue is 2:1 in favour of central government but through fiscal transfers the expenditure is reverse 2:1 in favour of local government. This unique sharing of revenues comes from the strong belief that local government is the corner-stone of democracy and as the level of government closest to the people it should get a greater share of revenues to meet their needs.

Local taxes are divided into two categories: prefectural taxes, comprising prefectural inhabitants' tax and automobile tax, and municipal taxes, comprising city planning tax and municipal inhabitants tax. In addition to these taxes, collected directly by local governments, local governments in Japan are entitled to receive 32 per cent of the revenue from national income tax, corporation tax, and liquor tax, 24 per cent from the consumption tax and 25 per cent from the tobacco tax. These allocations are considered to be independent and guaranteed sources of revenue for local governments and no restrictions are placed on their use. Moreover, in case of emergencies or natural disasters the Ministry of Finance also provides subsidies through the Ministry of Home Affairs. Independent, sizable and relatively stable sources of revenues allow Japanese local governments to plan long-term projects and meet the needs of their residents.

Similarly, under the new constitution in Thailand, local governments are supposed to receive 10 per cent of Value Added Tax (VAT) collected by the central government, in addition to their existing sources of revenues. However, even with the new constitution, Thailand's governance structure remains strongly centralized, with the Central government controlling most of the taxes in the country and distributing grants to local governments at its discretion.

In what appears to be an interesting twist, the Kyrgyzstan state administrative unit prepares a budget that is referred to the local council for approval. Once approved, state administration implements the budget. This suggests a higher level of government administers a budget approved at a lower level.

The strategies for strengthening local financial capacity outlined by the Malaysian Minister of Housing and Local Government are interesting:

• restructuring local authority revenue sources,
• greater autonomy to revise taxes,
• deregulation and privatization,
• enhancing federal and state support,
• greater community support and participation.

Revenue sources will be addressed in more detail later in this chapter. Suffice to say here that a fundamental weakness in all these systems is that local revenue is so dependent on fiscal transfers in some form. Such dependency is subject always to the vagaries of central governments. The ability to raise local taxes will need to increase for effective local self-government, but present provisions are inadequate. One of the most common forms of revenue is local property taxes. One of the shortcomings of these is their dependence on the ability of the local property owners to pay them - and the experience of Fiji highlights that difficulty. Another shortcoming - as evidenced in Australia - is the interference of central governments by capping or pegging the annual increases in property tax that can be applied. Alternatives such as Octroi, VAT, (and GST now in Australia) can be more reliable. These will be canvassed later.

Administration

Administrative reform is widespread in the region. This seeks to improve the efficiency and effectiveness of local authorities as mechanisms of service delivery. Three types of reform emerge from the country reports: sharing of administrative responsibility; separation of powers; and integration of civil services.

The decentralization, deconcentration and co-administration reforms in Indonesia exemplify moves to share administrative responsibility. In the Indonesian context decentralization means a transfer of higher level responsibilities to a local entity or province or local government (called an autonomous entity/province/local government); deconcentration means delegation of administrative functions from a higher to lower level entity (called an administrative entity). As the term implies, co-administration means a sharing of responsibility.

Several reports discuss the separation of powers between the local council (political/legislative arm) and the local administration (executive arm). The separation can take two forms: (a) where the locally elected council is required to appoint a general manager who in turn engages an administrative staff and council is prohibited from interference (e.g. Australia) or (b) where the general manager/commissioner (or equivalent) is an officer of the central civil service with responsibilities to higher level of government (e.g. the separation of the deliberative and executive wings of the municipal corporations in India).

Some countries have vertically integrated civil services. Indonesia is an extreme case where the recruitment, appointment, dismissal, suspension, salary, pension, half-pay and other matters concerning legal status of a provincial and local public servant is done in line with the directives laid down by the Minister of Home Affairs. Vertical integration can provide stability and career paths for local government personnel but it can also lead almost axiomatically to central control. There are instances, such as in India's corporation cities, where the commissioner has stronger allegiances to higher government than to local legislative arm of council. In contrast Australia has deregulated its public sector labour markets, especially in local government, to allow greater movement of staff in and out of the public and private sectors and within different levels of the public sector.

None of these reforms seems to reflect the autonomous right of a local community to determine its own destiny. It is a transfer of administrative responsibility, which can always be retracted, rather than moves towards greater local governance. Bangladesh provides an interesting perspective on place management. While the unitary system of administration has functional departments, the Divisional Commissioners act as place managers (that is, they supervise and coordinate the work of the divisional and district administrations) and yet citizens are faced with serious lack of coordination. The Bangladesh Government’s response to a proposal for a metropolitan government for Dhaka illustrates central government response to pressure for local autonomy: establish a committee; "control by committee". Central governments are not evidencing widespread commitment to reform if it moves beyond administrative improvement.

A key manifestation of this lack of commitment to reform local government is the plethora of organizations and agencies, either central or sub-national, often with overlapping or conflicting mandates, that have been created to manage large cities. In Bangkok, for example, there are 17 different agencies that address different issues within the city and often do so without coordination. In India, a city may have a municipal corporation (elected local government), a development authority (responsible to the state government), a cantonment board (answerable to the Ministry of Defence), a water and sewerage authority (responsible to the state government), in addition to state line agencies and federal government departments each with its own programmes and plans. Because they are governed by different laws, at the state and federal levels, and because of political conflicts, particularly if the local government is controlled by a party opposed to the state government, coordination is often not undertaken.

The reporter in Malaysia raises an important issue when identifying two roles for local government as "provider of services" and "facilitator of socio-economic growth". The old paradigms were more suited to the provision and regulation of services. They engendered a propensity for the appointment of staff as agents of, in most cases, higher levels of government. As privatization increases as a public management policy, as for example in Malaysia, local governments become enablers, facilitating socio-economic growth. Their regulatory functions also shift to regulation of activities in private markets. As enabling local governments, these new roles demand new mechanisms to ensure transparency and accountability to communities. Parastatal quangos and the like, without directly elected membership, will not ensure accountability to the community. In fact, it may result in less transparency than the old paradigms. The challenge is to achieve balance between the need to foster efficient and effective operations of private sectors while ensuring appropriate levels of community control. The evidence in these reports suggests that further work needs to be done.

Legislation

Local government in all countries operates from a legislative base determined by higher legislatures. In some case this is the central government, in others it is the state legislature (parliament) that determines the powers, authorities, duties and functions of local government. What is evident from the country reports is considerable expectation of comprehensive reform on one hand, but reluctance of central government to effect significant change, on the other hand.

Perhaps the most advanced is the Philippine Comprehensive Local Government Code, 1991. In Bangladesh the Awami League Government is contemplating increased empowerment of local government, although there is a lack of enthusiasm in parliament to actually devolve power. There were opportunities in 1990 and 1997 for significant recognition of Fijian local government, but these were not taken up. Typical of central governments they established a commission of review. The Fijian Local Government Association has made a submission to the Commission calling for autonomy enshrined in the Constitution. At the time of writing the outcome is not known. In a national referendum in 1988 the Australian people rejected a proposal to recognize local government in the country’s constitution. This interest could re-emerge in the current debate as to whether Australia should become a republic. In the meantime significant changes occurred in the 1990s extending discretion, but not relinquishing control. Indian urban local bodies are looking expectantly for comprehensive reform.

When it comes to major legislative reform, including constitutional recognition, the question must be asked as to who is driving the demand for change. Given the opportunity, Australians rejected the opportunity; and voting is compulsory in Australia. The opportunities were also not taken up in Fiji. It is interesting to note that it was after a long struggle by academics and public administrators that local autonomy was codified in 1991. In a country of people power it appears not to have been the community at large who pressured for reform. In any event, as the Indian country report insightfully points out, constitutional recognition will not necessarily make for "vibrant and effective institutions of democracy".

Central-local relations

Local government systems in all countries have different histories but their similarity in the end is marked. They all must relate to higher levels of government, either state or provincial level, or to national governments. The higher levels, by and large, dominate relations.

Being a line agency of higher levels of government does not of itself constitute local self-government. As pointed out in the Korean report, even freely elected councils does not mean self-government if all the local politicians do is administer central commands. Central control, even to the determination of local authorities themselves, is marked in Sri Lanka. Local dependency on centrally allocated funds reinforces the respective weakness and strength of the two levels.

There are signs of increasing strength at the local level and cooperation between the levels. In China, for example, local government is increasingly playing a part in local economic development and some local governments are beginning to exercise influence on central government. In general there is a co-dependency and complementarity in central and local government relations in Japan. Rapid urbanization and growth of the metro-cities such as Bangkok, Tokyo and Manila has given them special status, receiving particular arrangements. Sheer size of a city, however, does not guarantee special treatment. It is more likely the relative size of the city’s local government. Sydney, with a population approaching 4 million, receives no special treatment, largely because metropolitan Sydney has 40 local governments, some with populations as little as 20,000.

States and provinces can get in the way of local-central relations. This may be due to overlapping responsibilities, such as in Thailand, or, as in Malaysia, the states retain control even where the central government directly funds local governments. Nevertheless, the provinces may be the routes to greater local autonomy. In Pakistan the strategy in achieving local autonomy and constitutional recognition, is to first secure provincial autonomy and recognition. There may, however, be risks in that. What certainty does local government have that provincial governments, having secured autonomy and recognition, would, in turn, work to secure local autonomy and recognition.

There is another side, the capacity of local government to fulfill its side of the relationship. Some local politicians show little inclination to build stronger relations. In Fiji there is potential for significant political cohesion but local politicians are not responding. Attaining greater freedom from central control will not remove the need for accountability, in fact in should result in greater accountability to the respective local community. This increased accountability to local communities is an important outcome of local government reforms in Australia and New Zealand.

Local governance

The previous section addressed issues of structure and institution. Central control over local government is characterized by financial control, in some cases, appointment of senior staff and local politicians, determination of powers and functions of local authorities and strained relations between the levels of government. In this section the focus changes to that of governance. Autonomy has two dimensions: administrative and financial autonomy, and autonomy of governance. Administration can be delegated, as an agency function, but governance, particularly local self-governance, must have a local or grass-roots basis. Local governance is ultimately about control. It is the ability to reach decisions locally outside the control of a higher level of government. Local governance is discussed in terms of local autonomy; local elections; and civil society and participation.

Local autonomy

The proposed World Charter of Local Self-Government is based on principles of autonomy, subsidiarity and proximity. A copy is attached as an Annex. Articles 3 and 4 of a draft released for discussion in May 1998 outline the concept and scope of local self-government:

Article 3. - Concept of local self-government

1. Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interest of the local population
2. Councils shall exercise this right or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage and which may possess executive organs responsible to them.

Article 4 - Scope of local self-government

1. Local authorities shall have full discretion to exercise their initiative with regard to all matters that are not excluded by law from their competence nor assigned to any other authority.
2. The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by law. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes.
3. In accordance with the principle of subsidiarity, those authorities that are closest to the citizen shall generally exercise public responsibilities. In the same spirit, any allocation of responsibility to another authority must be based on the requirements of technical or economic efficiency.
4. Powers given to local authorities shall normally be full and exclusive. They should not be undermined and may not be limited by another authority except as provided for by law;
5. Where a central or regional authority delegates powers to them, local authorities shall be given discretion in adapting their implementation to local conditions.
6. Local authorities shall be involved in due time and in an appropriate way in the planning and decision-making processes for all matters which affect them.

In these terms New Zealand local government seems to have the greatest autonomy where central government has transferred substantial powers and responsibilities to the local level. In Australia the system is often characterized as "the Commonwealth collects and holds all the money, the states hold all the power and local government is left with all the problems". The Government of the Republic of Korea is reluctant to transfer power and maintains control on local affairs even to the extent of cars and lunches. There are, nevertheless, expectations that the new president will devolve powers to the local level. Currently in China, local autonomy is of subordinate autonomy, typical of not just command economies. That is, lower levels of government must complete tasks derived from higher levels of government and what local autonomy they exercise can only be within the guidance of those higher levels. This is different from the concept of subsidiarity where local autonomy is excepted only where it has been excluded by law from their competence or assigned to any other authority. In the Philippines a highly centralized system developed under Spanish colonization. "Filipinization" of the national government was undertaken during the colonial government of the United States of America. In 1991 the national government moved toward local autonomy and decentralization. The central government has a role of policy formulation and setting standards together with the power of general supervision. Central government has the power of dismissal, but can only proceed to do so on the basis of a favourable referendum. Local government in Sri Lanka is supposed to be a democratic administrative unit under national policy and provincial management supervision, but lacks autonomy.

Of interest to this study is not only the fact of the transfer of power from higher to lower levels of government - or the resistance to transferring such power - but the motivations and process. New Zealand and Pakistan provide contrasting examples. In the former power has been transferred, in the latter central governments have retained power. Whereas Japan views local government as essential to democracy, New Zealand local government has achieved independence and autonomy through the managerialist reforms of the New Zealand economy, based on principles of efficiency and subsidiarity. Subsequent independence and autonomy arose firstly, by making local governments directly accountable to their local communities through annual planning processes, and, secondly, through withdrawing central funding, forcing dependence on local funding. Importantly, while central government retains oversight of local government's stewardship roles, it does not have the power to either dismiss a council or run one. As the country report points out, now that all the microeconomic reform is behind them, the challenge as New Zealand sees it is to create a vision and future for local government. Management strategists would suggest that the vision should be developed first and then the necessary change implemented. But in New Zealand’s case it has been the reverse. Like Victoria (Australia), change was short, sharp and widespread. The question is, would that change ever have happened with the more rational approach? One suspects that without the rapid change there may have been much talk but little actual change.

Despite its long history, for the last 40 years local government in Pakistan has been a dispensable commodity of national and provincial governments, whether they were military operating under martial rule or democratically elected. In Pakistan, elected local governments have been recently restored only in one province, since their dissolution in 1989. In the other three provinces, local administration is in the hands of an administrator appointed by the provincial government. The country report makes the point that: "Provincial governments can dismiss local governments by themselves, or on the advice of the Federal government. Clearly, this is a highly subjective, dominating, relationship with local government having no independence from, leave alone influence on, the provincial government". The country report also points out that funds are given to central politicians to spend on development projects in their electorates. It might be argued that politicians are more sensitive than bureaucrats to the needs expressed by their local constituents and that placing this responsibility in the hands of elected politicians ensures accountability to local communities. This might be so, but it does put immense power in the hands of the politicians and is open to charges of political patronage and largesse.

Privatization-corporatization

A most important aspect of local autonomy is the trend to the transfer of power from local authorities to other parastatal (semi-government) agencies, through corporatization, or through privatization. Corporatization refers to the reshaping of a publicly owned organization to operate on private sector corporate principles. Corporatized public agencies are often called parastatals. Privatization refers to the transfer of a function entirely to the private sector. This can be by contracting out with the local authority maintaining some control mechanisms or "getting out" of the function entirely, leaving provision of goods and services to the marketplace.

Privatization and Corporatization are most pronounced and advanced in New Zealand, with Australia moving down a similar path, although, at this stage, not at the same pace or as dramatically. What has been described as its "Great Experiment" the New Zealand reforms started centrally with the principle that "the state was to deliver policy and goods and services only where market failure demonstrably existed". Where the state was to remain a deliverer, - i.e. those policies, goods and services not transferred to the marketplace through privatization - corporate principles were to prevail. At the local level corporatization has been more common where the local government becomes more market oriented, policy and trading arms are separated, wholly owned government trading enterprises are established and activities are contracted out to private companies. Accountability is required to the local community rather than central government through rigorous consultation and reporting.

Australia's national and state governments have pursued policies of privatization and corporatization, although, with the exception of the state of Victoria, privatization has been less common. Local government is, however, becoming more corporate, particularly with the introduction of the purchaser/provider model. These reforms are reinforced by the national competition policy that requires market contestability on the provision of goods and services. One Australian local government researcher has described the Victorian experience.

"Victorian local authorities, in particular, have been forced to competitively tender many of their services. To operate in this competitive environment, local authorities have established internal business units that lodge tenders to perform work for their council in competition with external organizations. It has not been uncommon for an external contractor to win over the internal business unit. Not all external contractors are from the private sector, nor are they always Australian organizations. In several instances the winning contractor has been a business unit of a New Zealand council. Many of these changes have not been universally welcomed, such as the downsizing of the local government workforce. Some have argued that withdrawal from service delivery by local authorities has enhanced local business opportunities. Others have lamented the impact that workforce downsizing has had, especially in smaller communities." (Aulich 1997)

But these trends are not confined to these two countries. The Malaysian government is pursuing a policy of deregulation and privatization, including "deregulation of building control by giving this task to professional bodies or privatizing cleaning and maintenance works of parks to private contractors". In pursuit of a more market-driven, customer-oriented and corporate approach Malaysia is introducing corporate management techniques: total quality management, Client’s Charter, ISO 9000. Until recently, local governments in Pakistan had their own staff in the taxation department collect Octroi, but the tax is now collected by contractors who bid in an open auction. "These contractors who reap the benefits above the guaranteed minimum pledge a certain minimum amount." In Sri Lanka some local authority functions have been even handed over to Government owned and operated Boards/Corporations/Statutory Authorities that directly serve the local community. Local leaders have lost influence on central government, but studies indicate that the public prefers these government corporations to manage public utilities such as water and electricity. The situation with the Fijian villages in the urban areas provides an interesting twist on privatization. Because the villages do not pay municipal rates and councils make only ad hoc arrangements, they look to private contractors to provide services such as garbage collection.

Corporatization and privatization have important implications for local self-government in that they may provide for local decision-making but not necessarily local governance or local democracy. As discussed earlier, where there are local committees of parastatal organizations, membership usually reflects special interests and expertise rather than the community as a collective of people. Membership is mostly appointed rather than elected from and by the community. These trends towards committees and trusts, albeit with local membership, reflect prevailing managerialist approaches. This is the "culture of technical control" that stresses information, not judgement. Decisions are delegated to groups of technical experts or those with special interests. Their role in decisions is important but will not inevitably reflect wider community opinion and values. This may be local decision-making, not necessarily local governance.

Local elections

Article 3 of the draft world charter of local self-government stipulates the right of local election.

(Draft) Article 3 - Concept of local self-government

1. Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.
2. This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage and which may possess executive organs responsible to them.

The certainty of that right of election of local councils or assemblies varies across the region. In Kyrgyzstan "local Keneshes are elected by their citizens on the basis of a general, equal and direct elective right, through a secret vote", although leadership of state administrations and Bishkek city are under ultimate control of the President of Kyrgyzstan. "Political participation is the core content of the people's participation" in China where communities elect their respective congresses that in turn select the administrators for the country towns, counties, cities and provincial levels. In Bangladesh increasingly local representatives and mayors of metropolitan cities and large municipalities are elected directly by the people.

Several issues emerge in relation to local governance. Firstly, there is the provision for special places reserved for women. Women in Bangladesh can stand for open seats or those reserved for them. Similar provisions apply in India. Secondly, there is the degree of central control on who is elected. Elections in Fiji are centrally controlled administratively and politically, run by the Electoral Commission that decides the number of councilors for council as a whole and for the wards. India has a dual system involving elected and nominated councilors. For each Municipal Corporation or Municipal Council the community directly elects the prescribed number of councilors. These councilors in turn nominate additional councilors on the basis of their "special knowledge or experience in Municipal administration." This dual system avoids problems of decision-making being in the hands of elected representatives who may have no expertise in the area. It also avoids the corollary of technocracy where decision making is left to experts who may have no sense or interest in the values and interests of the local community. Malaysia has "Malayanised" local government, moving away from the inherited British model into a more centralized system with limited devolution. Councilors are appointed by the government to sit in the local councils. "Even though the state government [appoints] them, the councilors may be viewed as representatives of the area from where they hail or representing various business communities or interest groups".

Thirdly and fundamentally, there is the matter of dismissal or withdrawal of the right of election. Ultimate political control was illustrated, in Fiji, when elections were suspended after the military coup in 1987. Pakistan provides a picture of hope for a return to election against a reality of central reluctance to do so. To quote the country report:

"The reasons why elections to local government have not been held are revealing. If we look back at the history of local government, interestingly, elections have only been held by Pakistan's two military authoritarian regimes, that of Ayub Khan and Zia ul Haq. Since all other avenues for public participation were closed under these dictatorships and elections to the national and provincial assemblies not allowed, perhaps local body elections were the ploy used by the dictators to allow the public some minimal recourse to participation. Interestingly though, under both the military regimes, elected local bodies played a very useful and productive role in many areas of the lives of people. With the return to democracy, however, when elections to the national and provincial assemblies were held, elected local bodies lost most of their importance and their role and potential was severely undermined by elected representatives of the higher tiers of government. This is despite the fact that a very large number of members of the national and provincial assemblies had previously been elected to local councils when other forms of representation did not exist. Moreover, patronage and grants to members of the provincial and national assembly, bypassing local governments, helped further weaken the position of local government. Possibly, by realizing the potential of effective local government, representatives of higher tiers of government, many of whom had themselves experienced the power of this lowest tier and had hitherto played a prominent part at the local level, felt threatened by the possibility that this level of government would undermine their new roles and privileges. Hence their reluctance to revive this institution".

"Although democracy in Pakistan at the provincial and national level has been wrought with glaring inconsistencies and shortcomings, an uninterrupted process of participation at all levels of government may, given time, initiate a process which improves the quality of participation and representation and hence, of governance. Hence, the minimum condition for the improvement of government and governance, is that elections be held at regular intervals at all levels of government".

Civil society and community participation

Local self-government is more than structures and instruments of government. It includes the engagement of citizens in voluntary associations, networks, alliances and other forms of connection that contribute to local governance. To cite the draft world charter again:

Article 10 - Participation of citizens and partnership

1. Local authorities shall be entitled to define appropriate forms of popular participation and civic engagement in decision-making and in fulfillment of their function of community leadership.
2. Local authorities shall be empowered to establish and develop partnerships with all actors of civil society, particularly non-governmental organizations and community-based organizations and with the private sector and other interested stakeholders.

Demands for participation

There are two sides to demands for participation. On one side there are arguments that citizens should participate in the affairs of state. Its importance is emphasized and promoted as a democratic right or, as in China, participation "is the expression and essential character of the socialist democratic system". On the other side, as evidenced in Bangladesh, "civil society groups are now coming forward to begin action and invite/encourage local governments to participate with them." This has been in response to the inaction or incapacity of local governments to develop innovative approaches to problems. Likewise, increased public participation in Japan has been a response of citizen action.

Much of the debate about participation presumes that people will participate. Such presumption may be misplaced. For example, an unsuccessful attempt was made to engage citizens more closely through Community Development Councils in Colombo. You can provide mechanisms for people to participate but you cannot make them do so. The Sri Lanka reporter laments that "it is sometimes disheartening to note that popular participation ends after elections, making way for the traditional stronger member participation". It may be that citizens do not necessarily want to participate but demand the right to be able to participate if they choose. In other words, they want the right to participate but accept no responsibility to do so.

Geography and population are also important features that shape of participation. As is the case in Fiji, the close proximity and ready access of local communities to their national politicians may, to some extent, negate the need for local civil action. In marked contrast, Indian local politicians face daunting tasks of engaging such large populations. The large areas and huge population mean that participation through small groups may be the only effective mechanisms for engagement of citizens.

Civic groups

The Malaysian report identifies four general features of participation: consultation, direct involvement, power sharing and community action. The emergence of a larger middle class has given rise to a proliferation of interest and pressure groups and non- governmental organizations, voluntary welfare-oriented organizations, citizen watch groups, consumer and neighbourhood associations and environmental protection societies. For their part, such groups seek to contribute to issues pertaining to urban management such as environmental pollution, beautification, improving the quality of life of residents and preserving the heritage of the community. Malaysian governments capitalize on this by promoting and supporting community-driven programs such as the "Love Your River Campaign". Communities are loaned equipment such as lorries and provided with refreshments in return for their self-help on maintenance and routine services. As evidenced by participation in slum improvement projects in Bangladesh, especially by women, it is easier to engage people in identifiable projects than to convince them of more general concepts of participatory democracy.

Japanese governments have recognized that as society has grown more complex and people’s thinking and sense of values become increasingly diverse they must take the initiative to look to new ways to engage their communities. Not only can they not rely on old ways, the onus is on the authorities to generate innovative mechanisms for building partnerships with the civic society. In the face of a lack of participation local authorities are all too ready to blame the apathy of local communities rather than acknowledge the deficiency of their own outmoded techniques.

Equipping for participation

Central governments espousing participation as a basic element of democracy, the latest techniques being available and civic groups emerging, are no guarantee of successful participation. As pointed out in the Thailand report they provide only the potential for engagement. No amount of institutional structures will ensure meaningful participation when "the general public by and large have little knowledge about local government" and the education system at all levels produces graduates with little or nor knowledge of "the functioning, the problems and the general affairs of local government". Not only should governments devise innovative techniques of engagement, they must also equip their communities to participate. This is an important element in the formation of the community’s social capital.

Having said that, the evidence of these reports indicates widespread reluctance of higher levels of government to equip citizens to engage with them. The situation in Pakistan highlights the problems of centrally controlled formal institutions of public participation where, "despite playing such a potentially prominent role in the lives of the people in Pakistan, elected local government in Pakistan has been non-existent for almost six years".

Participation by disadvantaged groups

In the preamble to the draft World Charter the conviction is stated that gender equality and social inclusion must go hand in hand with local democracy and participation and that these goals are mutually reinforcing. On the basis of these country reports progress on both gender equality and social inclusion has not been great.

Inclusion of indigenous peoples in local self-government is an issue in Australia, Fiji and New Zealand, although inclusion in what may well be the deeper issue. Native Fijians already enjoy special status under the auspices of the Great Council of Chiefs. For Australian aborigines and New Zealand Maoris it may be more a matter of self-determination than inclusion in the vestiges of ruling colonial institutions. In a particular way the multicultural composition of Australian communities places additional demands on inclusion.

Several countries have specific provisions for election of women, others are working towards that. One of the sweeping changes introduced by the Indian Seventy-Fourth Constitutional Amendment Act, 1992 has been the "reservation of one-third seats for women and weaker section in municipal bodies". Pakistan makes provision for separate representation of non-muslims, peasants, workers and women., although that would seem meaningless if elections are not held. The election of women in Bangladesh so far has been indirect. The present government's Local Government Commission has recommended election of women representatives (in reserved seats) directly by the people at all levels of local government.

Gender balance and social inclusion may not be attained easily. In Sri Lanka the relatively excessive cost of electioneering has meant gross under-representation of poor people. A stronger economy and consequent rises in income are seen as part of the solution, permitting more people to fund an election campaign. Attaining gender balance may confront cultural issues. In Sri Lanka between 1991 and 1997 the already minuscule representation of women fell. Reasons for this include "their reluctance to compete with men of different political parties, expensive nature of the present system of proportional representation, cultural background where women are reluctant to be involved in conflicting political situations etc. The hectic campaigns are also not to the liking of women".

Go to III. Local Capacity

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