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Comparative Reflections
on Local Government and Metropolitan
Regions in Federal Systems
N I C O S T E Y T L E R
Three orders of government – federal, state and local government – are
common to all federal systems. However, the place and role of local
government in those systems vary markedly. In some, local government is
a constitutionally recognized order of government; in others it is a competence
of state government. Nevertheless, local government in general and
metropolitan regions in particular are increasingly playing a significant
role in the governance of federal countries.
Institutions of local government
Local government is the collective term referring to those institutions
with no other government between them and the people. Despite this
commonality, local authorities vary in number, size, purpose and composition.
In India a further distinction is drawn between rural and urban
local government.
In most of the twelve countries considered in this booklet, there are
large numbers of local authorities running into thousands, the majority of
which are comprised of very small populations. The extremes are presented
by Spain and South Africa: both countries have a population of 44 million,
yet Spain has 8,108 municipalities and South Africa only 284. Apart from
South Africa, only in Australia and Nigeria is the number of municipalities
less than a thousand. Given the large number of small municipalities
which are often not financially viable, amalgamation is on most national
agendas, with only occasional success. Small may, however, be politically
beautiful; in Austria the value of a small municipality is now politically safeguarded
with the prospect of constitutional protection as well. The large
numbers of municipalities most often hide the vast differences between
them in any given country – vast metropolitan municipalities of several
million people and small rural institutions with barely a thousand souls.
Nico Steytler
The size of the municipality often matters; the large urban municipalities,
usually financially self-reliant, knock at the door of the federal government
to be heard, as in Canada, while small municipalities in Switzerland are
encouraged to cooperate with one another for financial survival.
The most common form of local government is the general-purpose
municipality performing a variety of functions and providing a number
of services. Operating alongside them, one finds, particularly in the U.S.,
single purpose institutions such as school districts, water authorities and
transport authorities.
Common to the majority of countries in the booklet is multi-tier municipalities
– a number of primary municipalities falling in the jurisdiction
of a district or county which has general coordination functions and provides
bulk services. The management of shared jurisdiction can, however, be
problematic as is evident in South Africa.
A further form of local governance that has become prevalent, particularly
but not exclusively in the U.S., is the so-called gated communities –
residential areas enclosed by walls and fences where many services are provided
that duplicate municipal or county services such as street cleaning,
safety, refuse removal and parks. These private localized governments present
challenges to the stability and effectiveness of local governments.
The legal regime of local government is also characterized by a high level
of variation from state to state in most countries where local authorities fall
directly under the jurisdiction of state governments. In the older federations
local authorities are creations of state laws and their autonomy is thus
defined by such laws. However, the basic elements of local government –
its status and role – are increasingly being captured in federal constitutions.
Constitutional recognition
With the exception of Austria and later Mexico, the early federal constitutions
(United States, Switzerland, Canada, Australia) did not refer to local
government and if they did, then merely as a competence of state government.
It was only after the Second World War that local self-government
became part of federal constitutions, often as an important element of the
return to democratic rule. The first was the constitution of Germany of 1949.
Although the Spanish Constitution of 1978 was focused on the creation of
Autonomous Communities, local autonomy was nevertheless mentioned
as well. Brazil’s return to civilian rule was also marked by extensive protection
accorded to local self-government in the Constitution of 1988. While the
entrenchment of local government in the Indian Constitution in 1992 was
prompted by developmental concerns, the extensive protection of local
self-government in the South African Constitution of 1996 was the result
of both democratic and developmental objectives. Similar sentiments
informed the entrenchment of local government as an order of government
in the Nigerian Constitution of 1999. In contrast to these develop-
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ments, the recognition of local government in the Swiss constitution of
1999 merely reflected the practice on the ground.
The absence of recognition in federal constitutions has often been
compensated by the entrenchment of local self-government in state constitutions,
ranging from extensive protection of home rule in the United
States to mere symbolic recognition in Australia.
Extensive constitutional recognition, such as in the Indian Constitution,
did not remove the dominant role of the states over local government. It
has been only in Brazil and South Africa that the controlling and regulating
function of state-level government has been effectively curtailed.
Role and responsibilities
In most countries, despite variations in the size of municipalities, uniform
powers and functions are allocated to local government. However, special
provisions are increasingly made for more big-city autonomy. In theory,
the allocation of responsibilities is based on the principle of subsidiarity. In
practice, basic municipal services include water and sanitation, roads, public
spaces, safety, and in some countries, schooling.
Apart from their own autonomous functions, local authorities have been
saddled with additional tasks delegated by the federal and state governments.
In Germany municipalities have a distinct hybrid character – they
serve as self-governing units but are also the lowest order of the state
administration. In most of the countries in this volume, the complaint is
heard of the continual shifting of more and more responsibilities on local
government without matching funds. In Spain, it has led to conflict when
the Autonomous Communities assign costly services to local bodies while
only contributing modestly to their general expenses. The significance of
this problem has even led to a constitutional amendment in Germany,
allowing the Lander governments to only delegate administrative tasks to
local governments when accompanied by adequate financial reimbursement
for the performance of such tasks.
Municipal finances
The financing of local government ranges from self-sufficiency to reliance
on either state or federal transfers. For example, in Australia, Canada, and
South Africa, local government raises more than 80 percent of income
from own sources, while rural local government in India is entirely
dependent on Union and state transfers, most of which are tied to
government programs and guidelines. Transfers often come directly from
the federal government which allows the latter to assume the initiative in
urban development, as in Brazil. The complaint voiced in Nigeria, among
others, is that when most income is derived from federal transfers, the lack
of own revenue undermines the autonomy implicit in the idea of three-tier
government. Even in those countries with overall self-sufficiency, there is
Comparative Reflections 5
Nico Steytler
usually unequal distribution of resources among municipalities where
most rural municipalities are dependent on transfers while the urban centers
are able to rely on their own revenue.
The main sources of own revenue are property taxes, commercial taxes
(in Germany) and user fees for services. The common complaint has been
that municipalities are too dependent on property taxes, which do not enable
them to meet the ever increasing needs for service and infrastructure. In
the U.S., reliance on property rates has waned, placing more emphasis on
taxes on retail sales and income. User charges have also become the fastest
growing and most important type of own-income revenue in that country.
Supervision
The extent of the supervisory powers of the senior orders of government
reflects the level of autonomy of local government. In most countries in
this volume, the states exercise monitoring and intervention powers. In the
latter case, there is a wide variety of measures that may be taken, ranging
from judicial review only to the dissolution of democratically elected councils.
In South Africa, the intensification of financial oversight points toward
the diminishing autonomy of local government. In contrast, the Spanish
local government system provides for very limited central and regional
government supervision, placing more reliance on effective intergovernmental
relations.
Intergovernmental relations
While in theory and practice local government interacts primarily with the
next level of government – the states – increasingly there are direct relations
with the federal government, not only in the form of federal grants
that leapfrog the states, but also participation in federal governance structures.
Although local government has no constitutional standing in the
Australian federation, organized local government is nevertheless a full
member of the Council of Australian Governments, a federal intergovernmental
relations forum. On the other hand, despite pressure from organized
local government in Canada for “a seat at the table of government,”
the federal government is disinclined to interfere in fields of provincial
jurisdiction. In Germany, local government is also seeking an official role
in federal legislation and a voice in the impact assessment of such legislation.
South Africa stands out as the country where the formal intergovernmental
relations structures have cemented local government as a key partner in
national governance, including having speaking rights in the National
Council of Provinces, Parliament’s second chamber.
Intergovernmental relations are also extensive on a horizontal plane.
While resisting amalgamation pressures, municipalities cooperate with
each other often in voluntary contractual agreements, as evidenced in the
U.S. and Switzerland.
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Political culture
Given the nature and organization of local government, ranging from
mega cities to small rural municipalities, the political culture varies considerably
between countries and often within countries as well. Municipal
politics are generally non-partisan, which also means that, for example in
Canada, party channels cannot be used for communication with other
orders of government. Where party politics take place, it is to a lesser
extent than at state and federal level, as is the case in Germany. At the
other extreme, municipal governments are fully organized along party
lines in Austria and South Africa. Unique is the Indian use of quotas to
increase the representation of women and disadvantaged groups; a third
of councilors and mayors must be women. Popular participation in local
elections also show considerable variation, from higher voter turnout than
in state and federal elections in India, to lower levels which is the more
common trend.
Metropolitan regions
Common to most countries in this volume are massive conglomerations of
people in metropolitan regions. In these regions of developing countries,
such as Brazil, Mexico, Nigeria and South Africa, intra-urban inequality is
the greatest – home to economic prosperity and the poor. Even in Canada,
cities worry about concentrations of poverty and the social exclusion of
immigrants and urban Aboriginals. The governance of metropolitan regions
is thus of considerable import and five distinct models of governance are
evident in the countries under review.
First, in Australia, where large cities are divided into numerous small
municipalities, the metropolitan regions are managed principally by the
state governments. The second model joins a number of local authorities
in a metropolitan area in a formal overarching coordinating structure,
without sacrificing the existence of the constituent members. The 1993
amendments to the Indian Constitution, for example, provides for such
a governance structure. Third, the informal version of the former model
is where a number of municipalities work collectively on specific issues.
This model is being applied in Brazil without much success. The cooperative
model of Switzerland appears to be more successful, with constitutionally
recognized “agglomerations” of inner city municipalities and their
surrounding municipalities. The fourth model is single-purpose local
government structures. Prevalent in the U.S., special districts are ad hoc
institutions dealing with specific aspects of metropolitan life such as
public transport, pollution control, water and sewage systems, and fire
protection. The least popular model has been the consolidation of metropolitan
areas into unified multi-purpose political structures. There has,
however, never been a comprehensive inclusion of the entire region into
one municipal structure.
Comparative Reflections 7
Nico Steytler
Given the growth of metropolitan regions, the effective governance of
these areas is one of the key issues facing local government. In Germany
the debate is how metropolitan regions should be governed: jointly by the
cities involved or by forming a new and separate level of administration
with its own directly elected councils? Likewise, in Mexico there is an
increased interest in establishing new metropolitan coordinating bodies
and reinforcing old ones.
Conclusion
The increasing recognition of local government as a full partner in government
reflects a broader shift in the conceptualization of federalism. It
signified a movement from dual federalism, where governmental functions
are divided among two orders of government only (federal and state) to
multi-level government where governmental powers are divided and
shared among three orders of government. This has meant, however, that
the interrelationship between three orders of government has produced
an inherently more complex system of federal governance, placing new
demands on the theory and practice of federalism.
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