Federalism Primer

​In a federation, the national and provincial or state governments work together to serve citizens and run the country. Usually, the national government deals with issues that affect the whole country like defence and international trade while sub-national governments, often called states or provinces, are concerned with more local matters like roads, schools and basic public services.

Federalism is uniquely suited to countries with diverse populations and regional interests. While respecting differences in culture, language, religion, wealth and other factors, it allows different peoples and regions to work under a common flag and prosper in ways they could not achieve on their own.

Federal states find strength in diversity, but building a strong federation is hard work. The process starts with a constitution that prescribes an electoral system, sets out the structure and powers of the national and provincial governments, and establishes a system of courts. Then, it is up to leaders from all quarters of the country to make the written constitution work in practice. They must pass laws, develop policies, raise and disburse funds, and build effective organisations to serve people.

Over time, federal systems and their constitutions evolve. The national and provincial governments learn how to work toge and to balance the needs of the federation with the needs of its parts. This evolution may not be smooth, and tensions may arise which place the viability of the federation in doubt. Around the world, however, history shows that federations are resilient. With insightful leadership they can adjust to changing circumstances, find ways to move forward and realise the promise of their founders.

This primer explains how federal systems operate, how they evolve over time, and identifies the ingredients that are essential for federations to succeed. We hope it can provide a useful guide for nation builders in Iraq. 

What is Federalism?

In a federal system, a national or federal government works with other orders of government often called states or provinces, to manage the country's affairs and serve its citizens. Usually, policies and programs in areas like defence, justice, and international affairs, which affect the whole country, are handled by the national government. At the same time, governments elected regionally or locally deal with matters that affect their immediate surroundings like roads, schools, water supply and other basic public services.

Federal systems or federations stand in sharp contrast to unitary systems where virtually all authority in public policy and programs rests with a single level government. In some unitary systems, such as the United Kingdom and France, municipal and regional governments are a real force in the lives of citizens. However, they operate as agents of the national government and wield power at its discretion.

Of the 200 or so countries in the world today, 27 have opted for federal systems of government. These range from tiny Switzerland with its 26 cantons and four official languages to the massive Russian Federation which spans 11 time zones and brings 85 territories called republics, krais, or oblasts as well as several major cities together under the federal flag. Most federations form and develop when citizens believe that by working collectively they will be better off despite differences in ethnicity, religion, language, culture, wealth distribution and other factors. In other words, they believe they can find strength in diversity.

Federations are custom-built

Federal structures differ from country to country because they are designed to address the particular challenges each country presents or presented at the time the federation formed. Inevitably, the nature of these challenges will change over time, or wholly new ones will appear, and tensions may result if the federation does not adjust to changing circumstances. Canada, for instance, is a huge, bilingual, multicultural country with five distinct economic regions. To accommodate these and other differences, the founders opted for a decentralised federation with powers over education, health care, natural resources, social services, and many other important matters vested in its ten provincial governments. Over time, however, the federal government has assumed a larger role in many of these policy areas either through formal constitutional amendments or simply by agreement with the provinces.

Constitutions exist on paper and in practice

No two federations are identical. However, there are two overarching characteristics that must be present if federal systems are to prosper and sustain themselves. Foremost, is the need to divide up roles and responsibilities for each order of government in a way that makes sense for the country? In most cases, the country's founders will have addressed this task and set out the division of powers in a written constitution.

The second precondition for success is an ability and willingness within the different orders of government to engage with each other and find practical ways to make the written word of the constitution work for the people. No matter how wise the nation's founders, the context that shaped their decisions will be under continuous pressure from economic, social, political, technological, and a host of other forces. Over time, the originally written constitution may become unwieldy are require some adjustments to keep up with changing circumstances.

The constitution specifies what the orders of government in a federation are empowered to do. How they do it and how they work together to serve citizens effectively and sustain the nation is a complex and continuously evolving political process.

Ingredients for success

These two overarching concepts – division of powers and inter-governmental cooperation – provide the foundations for a successful federation, but there are other building blocks which must also be present or emerging within the political and administrative life of the country. We are going to examine these essential building blocks under the following themes:

  1. Constitutionalism and the Rule of Law
  2. Leadership and Common Vision
  3. The Organization of Governments
  4. Intergovernmental Relations and Fiscal Federalism
  5. Public Governance
  6. Before diving into each of these areas, we must stress that all of the ingredients we will discuss are necessary for a federal system to flourish. None are sufficient on their own to ensure success. Absent the rule of law, for example, visionary leaders may accomplish little of enduring value. Nor will the best-designed institutions meet citizen expectations if they are mired in poor governance practices. For successful outcomes, all of the conditions must be in place and operating throughout the country.

1. Constitutionalism and the Rule of Law

The rule of law is a legal concept dating back to Aristotle and the ancient Greek philosophers. They believed government decisions should not reflect the whims or arbitrary decisions of a king or ruler. Rather, they should be based in law.

The lifeblood of democracy

Although its origins date back to ancient times, the rule of law was little more than a philosophical concept until 1215 when the Magna Carta put limits on the power of the English king. Today we see it as the lifeblood of democracy. It commands citizens, governments, and other institutions to respect their country's Constitution as well as the laws flowing from it and the courts it establishes to adjudicate disputes. When the rule of law prevails, there are consequences for any and all who breach it – from petty thieves to governments which overstep their authority.

In a democracy, the constitution underpins the legal system and provides a social contract or framework for how governments and the people will interact. It is the law above all laws that can change only through a specified amending process with broad support from legislators and citizens. A nation's constitution reflects the wisdom of its founders on how citizens should govern themselves and live together in the future. It may set out individual rights; define the powers of governments; and, gives the courts the authority, when required, to make final, binding decisions in civil, criminal and constitutional matters.

Among the world's democracies, no two constitutions are identical. Some involve a dozen paragraphs while other run into hundreds of pages. Several democracies, most notably the United Kingdom, have no written constitution at all. Instead, the British rely on a collection of Acts of Parliament, court judgments, and conventions dating back to Magna Carta to shape their concept of a constitution and the rule of law. Typically, however, a constitution refers is a formal legal document to which all other rules and laws must conform.

From country to country, constitutions vary greatly in character. Some express lofty goals, highlight shared values and speak to a common vision of the future. Others are more procedural and describe the political institutions that will shape the country. Some constitutions are highly legalistic. In the United States, for example, the founding fathers designed a system of formal checks and balances which allow Congress and the courts to limit the power of the President. Elsewhere, notably in Great Britain and other countries which follow the Westminster system, parliaments are supreme and hold the government to account in the legislative assemblies. The constitution of Iraq is a hybrid, combining elements of the British parliamentary and US congressional systems.

Constitutions evolve over time

The written constitution is the foundation of a democracy, but there is more to the constitution than words on paper. Just as nations evolve socially, politically and economically, they also evolve constitutionally. This is particularly true in federations, especially where regional diversity is reinforced by the linguistic, ethnic, religious, economic and other factors.

Recall that federalism is a tool for managing diverse interests under a common flag. It allows local and regional governments to deal with matters that are close to home and tailor policies and services to suit local needs and interests, while the federal government looks after matters of broad national concern. This division of power and responsibility between the orders of government is set out in the constitution and becomes a blueprint for state or provincial and federal leaders to build institutions establish procedures, pass laws and work together to manage the nation's business and serve the people.

By enshrining a workable division of power between the different orders of government, the constitution safeguards the right and interests of the various groups and communities who came together to form the Federation in the first place. However, protecting rights and interests by applying the strict letter of the constitution can be unwieldy, expensive and sometimes unfair. What if the states or provinces, for example, have constitutional authority to act in a certain area, like health care or education, but lack the money or the capacity to do the job effectively? Their leaders may find it make more sense to act in consort other states or provinces or in cooperation with the national government to give citizens the services they need at the most affordable price.

Over time, some of the operating principles, co-operative mechanisms, and laws which governments put in place to serve the people may almost acquire constitutional status. These are known as constitutional conventions. They allow nation builders to invoke the spirit rather than the letter of the constitution as they search for practical solutions in situations the founders could not have foreseen. Even though they don't appear in the written document, constitutional conventions strongly influence relations among the different orders of government. They become an accepted feature of the political and constitutional landscape from which governments will rarely deviate except through negotiations.

As federations mature, national and provincial or state governmentss inevitably start to share power and revenues in ways which are not written in the constitution but make it much easier to get things done. Through negotiation and experimentation, federal and provincial leaders may arrive at ways of doing business that works to everyone's advantage. This evolutionary process, known as political constitutionalism, gives rise to the constitutional conventions discussed above. Often, these are just as important to the smooth functioning of the federation as the written constitution itself.

It takes time, sustained effort, and inspired leadership to take the written words of the constitution off the page and make the work in practice. This is no small task in a federation, especially where differences in language, culture, resource endowment and other factors break down along geographic lines. History has shown, however, that leaders with goodwill, shared vision, and commitment to finding strength in diversity can achieve remarkable things.

While formal amendments to a constitution are relatively rare, constitutional conventions accumulate through the years and keep the federation's laws and operating principles in sync with changing social, economic, or technological circumstances.

Role of the courts

The courts may give further impetus to this evolution as they are called upon to clarify the words or intentions of the founders. Where the rights of groups and individuals are defined in the constitution, people may petition the courts to review government decisions or strike down laws which they believe violate their rights as citizens.

Similarly, one order of government may challenge another's right to act or legislate in ways that contravene the division of powers set out in the constitution. Here too, the courts will hear arguments and issue binding decisions.

In principle, judges decide cases by applying the law in the light of the facts presented by litigants in constitutional or civil disputes or by prosecutors and defence counsel in criminal matters. In some cases, however, laws may be subjective or ambiguous and force judges to infer the intent of the legislature in ruling on a case. In these instances, when judicial decisions clarify the meaning of a law or of the constitution itself, they establish a precedent which will stand until they are altered by a subsequent judicial ruling or the legislature makes its intent clear by passing a new law.

Ironically, in a democracy where the will of the people is expressed at the ballot box, final decisions on important constitutional and legislative matters may rest with unelected judges.

2. Leadership and Common Vision

People come together to form federations when they can look beyond their differences and see the benefits of living under a common flag. But federations don't happen by accident. It requires unique circumstances to set a country on the path to federalism and committed visionary leadership to keep it on that road.

When empires collapse, colonial masters leave, or tyrants are overthrown, people once ruled by others get the chance to rule themselves. The kind of government they chose will depend on the nature of the country and the vision of their leaders. The more diverse the population, the more interests to accommodate within the new political order, the more likely a federal system will emerge.

Strength in diversity

Federations are built on the premise that strength can emerge from diversity. When different groups and interest come together to form a federation, they agree to share power over national affairs while largely preserving local autonomy over local matters. In theory, all regions and interests give up something to join a federation but get something in return that they would not have or could not afford on their own. What they give up and get back is determined by the constitutional bargain devised by the founders and the efforts of their leaders, through the years, to make the constitution work for the people.

Inevitably, a federal system evolves into a complex set of social, political and fiscal relationships. Even in the most successful federations, there will be tensions among different regions and interests. Some will feel they pay too much to their national government and do not get their fair share in return. Others may feel that the rights and privileges guaranteed to them under the constitution are not being adequately protected. Over time, however, all parties must believe they are getting pretty much what they bargained for, or the federation will be in trouble. Maintaining this sense of balance and fairness in the eyes of the people is a continuing challenge for leaders in a federal system.

Federations thrive on strong leadership

Successful federations are driven by leaders who command respect within and beyond their own constituencies. They must have a strong vision of what their country can become, and it's potential to leave all constituent parts better off together than they would be on their own. But there is more than vision involved. In a federation, leaders must also be also practical, empathetic, open-minded, and skilled in the arts of negotiation and compromise. They must also be prepared to work with other leaders who see the world differently and have a different vision of the laws, policies, programs and fiscal arrangements needed to balance diverse interests within the federation.

Federations flourish when leaders communicate effectively with each other and with the constituencies they represent. They must be able to explain the compromises they make and keep a clear case in front of citizens that despite their differences, they are better off together.

For a federation to succeed, each of its constituent groups must put forward skilled, visionary leaders to seek office at the national, regional and local levels, to fill senior positions in the public service, and build active, effective organisations within civil society. Building a democratic federation is an inclusive process. All legitimate interests must have a place at the table, and all voices must be heard in the national, state or provincial capitals. Leaders must speak forcefully for the regional, ethnic, religious, linguistic and other groups they represent while keeping the broad national interest in mind. Strong leadership at the local, regional and national levels of government, in the private sector, and in civil society is key to building a strong federation.

The evolutionary path for democratic federations is seldom smooth. There will always be bumps and maybe even crises along the road. This is especially true in the early days as leaders search for a common vision of where the country should be headed and establish principles and practices on how it should be run. As they gain experience, once formidable challenges may become routine. However, changing global economic, social and geopolitical forces can generate daunting new challenges and place enormous strain on a federal system. This will force leaders, collectively and on their own to recast their vision of what is possible for their country and how to achieve it.

Common vision among leaders can be the glue that holds a federation together. But it is a moving target that must be continuously refreshed.

3. The Organization of Governments

As noted earlier, the constitution establishes different orders of government in a federation, broadly defines how each order should be organised and sets up the division of powers between them. While the dividing line between federal and provincial or state level responsibilities may look clear on paper, over time, it may become murky as they interact with each other in their efforts to serve the people. The ability of governments to collaborate effectively in developing policies and, more particularly, delivering services to citizens is key to the wellbeing of a federation.

For the different orders of government in a federation to interact effectively, they must also operate effectively within their own domain. They must be organised and managed to carry out their responsibilities efficiently. To do this, democratic governments generally comprise three distinct but separate functions.

The Executive Branch

 In a parliamentary democracy such as Iraq, the executive branch or the executive is responsible for public administration; that is, for the policies, programs, and services the government develops and delivers. The executive branch is made up of two distinct components: the Cabinet or Council of Ministers chaired by the President or Prime Minister and the civil service which is the government's permanent workforce. Together, they develop the policies and programs through which the government raises and spends public money and manages the affairs of the nation, state or province.

In a parliamentary democracy, the Prime Minister is usually the leader of the political party or coalition of parties that holds the most seats in the legislature. He or she, in turn, appoints Ministers to head up the functional departments of government such as Finance, Foreign Affairs, Defence, and Education.

The federal cabinet is the senior political decision-making body in the country. Typically, it is supported by a secretariat, staffed by civil servants. Often known as the Cabinet Office, this secretariat coordinates the development and implementation of policy across the government and ensures that individual departments act on the priorities established by the cabinet.

In sharp contrast to the Cabinet, the civil service is politically neutral. Civil servants are hired for their particular skills and expertise and, generally speaking, hold their jobs even when the elected government changes. Whereas a Minister and his or her political staff might include several dozen people, a large government department might employ tens of thousands of civil servants.

In each department, civil servants support their Minister in several ways. First, they provide advice to the Minister on the legal, constitutional, budgetary implications as well as the practical design of a policy or program that the government wants to enact. Then, they draft a formal legislative proposal for the Minister to present first to Cabinet and then to the legislature. Finally, the department's civil servants are responsible for implementing policies and programs approved by the legislature.

The Judicial Branch

The judicial branch of government consists of the courts and judges who interpret and apply the laws of the land in constitutional, civil and criminal proceedings.

In a democracy, the judicial branch operates independently of the other branches of government. This means that Ministers and legislators cannot pressure judges in any way or attempt to sway their decisions save for appearing in front of them in court proceedings. An independent judicial branch is essential to the rule of law. To reinforce their essential independence, judges have secure tenure in office and once appointed cannot be removed by the government of the day.

The Legislative Branch

In a parliamentary democracy, the legislative branch of government consists of representatives or members elected across the country to sit in one or more of the legislative assemblies or legislatures. As legislators, their role is to debate, amend, approve or reject laws and budgets which are sent to them by the executive branch or originate in the legislature itself. Thus the legislature or Council of Representatives as it is known in Iraq, provides a vital check on executive power and holds the Cabinet to account for its management of the nation's affairs.

In parliamentary democracies, the Prime Minister and Cabinet Ministers are normally members of the legislature. Conversely, in congressional democracies, Cabinet Ministers are usually appointed from outside of government and are not elected. In Iraq, which borrows elements from both parliamentary and congressional models, Ministers may be selected from the legislature or the public at large.

Many federations have two legislative assemblies at the national level. These are known as bicameral systems, which literally means, two rooms. In a bicameral system, one legislative assembly serves as the voice of the people while the other serves as the voice of the provinces, states or regions which make up the federation.

Bicameral systems are less common at the provincial or state level but do exist in some federations.

State and provincial governments

Often, there will be sharp differences in the political and administrative cultures of national and sub-national governments and very different titles attached to various bodies and positions. However, in most federations, the two levels of government are organised and operate in quite similar fashion.

It is often the case in young federations that the central government will have more resources to invest in policy research, expert personnel, and information technology than the states or provinces. As a result, in the early years, the playing field for federal-provincial negotiations on complex matters like taxation and revenue-sharing may not be entirely level. However, as federations mature, these differences in capacity should diminish allowing the two levels of government to operate as equals in policy discussions.

Non-government Organisations in a democratic federation

As mentioned earlier, civil society groups, including the business sector, trade unions, professional organisations, and other groups can play an important role in a country's governance. In speaking for their members, they bring a valuable diversity of views, insights, and information to bear as policy issues are debated in federal and provincial cabinets, legislatures and in the public arena.

As democracies mature, members of the governing and opposition parties start to hear voices from beyond their initial constituencies and will actively solicit opinion and expertise from civil society groups. In their efforts to influence policy decisions, leaders from these groups will often prepare and submit briefs and position papers to frame formal and informal discussions with Ministers, legislators and senior civil servants in the national and the provincial capitals.

The media is also an important non-government player in mature democracies. It gives voice to diverse viewpoints, informs the debate on policy issues and holds governments to account for acting on their promises.

4. Inter-governmental Relations and Fiscal Federalism

In a federation, the constitution divides up authorities and responsibilities for running the country between the federal and other levels of government. However, if this dividing line is clear on paper, it may be less precise in practice. With the increasing complexity and interconnectedness of policy issues, it may be unclear which order of government is constitutionally empowered to act in a particular instance. Or, it may simply make sense for them to act together. The ability of governments to collaborate effectively in the development of policies and delivery of services to citizens underpins the well-being of a federation and its people.

In a successful federation, the different orders of government share responsibility for making their federal system work. They work openly and honestly with each other, share information and nurture a culture of engagement around important issues. This will include one- on-one interactions involving ministers, political staff and civil servants from the different governments as well as formal bilateral and multilateral meetings. In many mature federations, there is a regular cycle of meetings where the Prime Minister and First Ministers from other states and provinces meet to discuss pressing concerns.

Intergovernmental relation is an executive function
Making a federation work is a vital responsibility of the executive branch within each order of government. It also takes constant work and attention. Indeed, it is common for national and sub-national governments to designate a specific Minister to take charge of intergovernmental affairs. In addition, the Prime Minister or First Minister at the state or provincial level may strike a Cabinet committee to continuously assess the fiscal, political and other dimensions of issues which have intergovernmental implications. It is also common to create high-level offices within the civil service, usually at the centre of government, to support Ministers and constantly monitor the ebb and flow of intergovernmental relations.
Fiscal federalism

There is no end to the kind of issue which can crop up in the intergovernmental arena – from the rights of minorities to jurisdictional questions to the management of national institutions. However, the most common ones revolve around money and the sharing of costs and revenues. These are called fiscal arrangements. In most federations, complex fiscal arrangements grow up over time in response to fiscal imbalances or as a result of decentralisation.

Fiscal imbalances arise when some provinces, states or regions lack the revenues needed to deliver the quality or volume of services enjoyed by citizens in other parts of the federation. So, in the interests of the federation, the national government may step in and transfer funds from its revenue pool to help poorer jurisdictions improve service delivery.

In a federation, fiscal imbalances may originate with a constitution that assigns superior taxing powers to the federal government compared to the states or provinces. Or, at the birth of the nation, the constitution may have made the states or provinces responsible for services like health care or education which once cost little to deliver but have become extremely expensive with the passage of time. As a result, these expenditures may crowd out other important items in state or provincial budgets like roads and water supply.

Under a decentralisation scenario, the national government negotiates arrangements to have states or provinces carry out activities within the federal constitutional domain. This may be done for reasons of efficiency, service quality or as a concession related to negations on other matters. Whatever the reason, when responsibilities are transferred from one order of government to another, the money required to carry out those responsibilities is often transferred as well.

The complex network of arrangements governing financial relations among different orders of government is known as fiscal federalism. Over time, these negotiated fiscal arrangements may become entrenched in a federal system and acquire the status of constitutional conventions.

Fiscal federalism is part art and part science. When a federal government transfers a program and money to a sub-national government, it will want to ensure local authorities respect the intent of the program and be accountable for achieving specific results. Provincial officials, on the other hand, will want as few strings as possible attached to the transfer. They may have distinct ideas on how the program should be delivered and may want to divert some of the funds involved to other priorities. Relationships between governments evolve in formal arenas where Ministers discuss initiatives, air grievances and sit down to negotiate joint approaches to policy challenges. However, personal relationships which grow up over time and evolve behind the scenes among government leaders and ministers, political staff and civil servants in both levels of government are often key to resolving disputes and moving a federation forward.

Tools of fiscal federalism

When Ministers and officials sit down to negotiate a transfer of funds to finance a program or activity, there are many considerations to keep in mind. They must aim for an agreement which respects the spirit of the constitution and provides for predictable flows of money well into the future. Their agreement must also preserve the intent of the program or activity being transferred, but allow some flexibility in how to achieve those expected results.

Federations around the world have developed a range of instruments or approaches to accommodate fiscal imbalance and facilitate program decentralisation from one order of government to another. Four models are particularly common and useful. 

Unconditional Block Transfers

Under this model, funds flow from the central government to the states or provinces with virtually no conditions attached. Unconditional block transfers are often intended to correct fiscal imbalances within a federation and sustain a comparable level of public services throughout the country. The size of the transfer to each state or province may be determined by a formula incorporating factors such as population, economic output (gross provincial product per capita) and tax yields. Usually, these are continuing programs, subject to renegotiation at regular intervals.

Conditional Block Transfers

Under a conditional block transfer arrangement, the recipient government must meet certain eligibility conditions to receive funds. The transfer agreement will also stipulate specific activities to which the funds may be applied such as post-secondary education, child welfare or health care. Allocating funds within these prescribed activities may be left entirely in the hands of the recipient or subject to negotiation. The details of the transfer agreement will be set through negations in a one-on-one setting, or through multilateral talks involving federal government and all of the states or provinces.

Performance-Based Sectoral Transfers

Under a performance-based sectoral transfer agreement, the federal government supports activities in a specific sector of the economy or society. However, the receiving state or province is left free to design and execute programs as it sees fit, as long as they meet agreed-to performance targets.

Conditional Sectoral Transfers

In a conditional sectoral transfer, the federal government provides funds to one or more state or provincial governments to support programs aimed at a particular economic or social group such as senior citizens, older workers or young children. Fairly strict conditions may be placed on the actual use of funds and the recipient may be required to produce audited financial statements and performance evaluations to demonstrate the results which the transferred funds achieve. In some cases, the donor government may insist that its officials participate in the management of the program.

Clearly, there is a continuum of options for transferring funds between orders of government to decentralise program delivery within a federation. These range from very loose unconditional agreements to highly structured arrangements which may involve co-management of programs and other forms of power sharing.

Choosing from among these models or developing new ones as required is a job for Ministers and their officials in bi- or multi-lateral talks. Each will bring different ideas, interests, and priorities to the negotiation table. Initially, central governments are predisposed to holding on to power and resources while states and provinces want maximum discretion over funds that arrive in their coffers. Over time, however, experience around the world have shown that good will, compromise, and shared vision can lead to fiscal arrangements which maximise the wellbeing of citizens and reinforce commitment to the federal system.

5. Public Governance

In a federation, the constitution sets out the rules for what each order of government can do. This provides an important foundation but says nothing about what governments will actually do or how well they will do it. The quality and cost of government activities depend on people including those who hold executive office, sit in legislatures or work in the civil service at the national, state and provincial levels.

Groups and individuals outside government also have a say in what gets done. During election campaigns, for instance, political parties, release a platform or plan listing their objectives if they form or play a role in the government. Civil society groups – from trade unions and professional associations to women's organisations – are also players in this process. As advocates for their members, they try to influence government policies and priorities around issues that are important to their members.

The media too plays a role by providing a channel through which governments can speak to the people and vice versa. A free press is vital to a functioning democracy. It plays an important role in informing the debate on policy issues, exposing corruption and holding the government to account.

Finally, of course, citizens fit into the picture as well. Ultimately, governments exist to serve the people and, in a democracy, people shape policy directions and rate their government's performance when they cast their ballots in an election.

We refer to this broad system for developing policies and delivering services which meet the wants and needs of citizens as the governance system. When we explore a country's governance, essentially we are asking how they get things done. In particular, we want to look at who makes decisions, what voices are heard in decision-making processes, how decisions get implemented and how people throughout the system are held to account for their decisions.

If governance is about getting things done, good governance is about getting things done well and giving citizens what they want – goods, services, security, and quality of life – at a price that is acceptable to them. By applying good governance principles, organisations and societies achieve their goals in the most efficient way.

To help assess a country's governance system and identify possibilities for improvement, the UN and World Bank have identified a number of factors they consider essential elements of good governance. These include:

Enthusiasm for Democracy (instead of legitimacy and voice)

In young nations emerging from colonialism or one-party rule, it takes time for democratic institutions, traditions and processes to develop. In the long run, however, democracy is a necessary condition for good governance because it encourages governments to hear the voices of and act in the interest of all citizens. To gauge the quality and strength of democracy in a country, we would look for answers to questions such as:

  • Do governments respect the rights of citizens set out in the constitution and the law, including freedom of speech and association?
  • Are political parties allowed to form and operate freely?
  • Is the voter turnout rate high enough legitimate election outcomes?
  • Do governments readily accept the outcome of elections?
  • Do governments seek out a range of views and opinions from civil society groups and external experts and welcome their participation in public policy discussions?
  • Do the print, broadcast and other media provide free and vibrant forums for discussion and debate of the issues facing the country and policies for addressing them?
Direction and planning

For good governance, leaders and citizens must have realistic and broadly shared perspectives on where their country, province or city is headed and what it can achieve. This vision provides a framework for governments to develop policies and programs and equips citizens to judge how well their governments perform in order to hold them accountable for what they do.

To assess whether this essential shared vision is present or emerging in a country, we would look for answers to questions such as:

  • During election campaigns, do political parties set out clear programs for moving the country toward achieving its potential?
  • Do governments release planning documents such as budgets which set objectives for short, medium and long term and explain how these will be funded?
  • Do government departments have the capacity to issue clear, medium and long term plans and monitor progress against them?
  • Is there a capacity for government-wide policy and program coordination and fiscal planning?
  • Do civil servants keep Ministers well informed of the results their departments and government are achieving and of progress toward planned outcomes?
Sound management

The capacity to set goals and develop plans to achieve them is a vital precondition for good governance. However, the capacity to carry out plans to completion is no less important. Whether a government has undertaken to build an irrigation dam or bring in a health insurance program, it must have the skills and resources needed to do the job efficiently.

To assess whether governments, particularly the civil service, has the management capacity required to achieve results which meet the expectations of citizens, we would look for answers to questions such as:

  • Do government officials understand the needs and preferences of all citizens and design policies and programs with those needs in mind?
  • Do government officials fully understand the impact of their policy, regulatory, and program decisions on various groups in society and the economy?
  • Do government departments and agencies deliver good value for money in the projects and programs they administer?
  • Do they understand the full costs involved in the projects and programs they administer?
  • Do they monitor program and project performance against plans and budgets and make course corrections as required?
  • Do they have an internal audit function?
  • Does the government have a program-based budgeting system?
  • Is there an independent Auditor General who reviews all government spending for efficiency and effectiveness?
  • Does the civil service attract and retain the people with the skills required to plan and manage effectively?
  • Do the incentive and reward systems in the public service encourage sound management?
Transparency and accountability

Transparency means citizens can look into government operations to see how decisions are made, money is spent and what outcomes achieved. Accountability means that people and organisations are judged on whether they meet the objectives set out for them and face sanctions or rewards according to their performance.

At a macro level, transparency and accountability mean that citizens have sufficient information to judge their government's performance and to re-elect or reject those in power via the ballot box. This essential principle is already discussed above under Enthusiasm for Democracy.

Transparency and accountability take on a different meaning when examining government performance at an operational level. As noted above, holding people to account for their performance on the job is a central tenet of sound management.

At an operational level, transparency means the inner workings of government are open to inspection by citizens, legislatures and the media.

To assess whether government operations are transparent and standards of accountability are sufficient, we would look for answers to questions such as:

  • Do government organisations readily answer inquiries from citizens about policies, programs, service, etc.?
  • Is there an Access to Information Act and an independent Information Commissioner to investigate and adjudicate access complaints?
  • Are there strong anti-corruption laws and established procedures for investigating allegations of corruption?
  • Do those found in breach of anti-corruption laws face serious consequences?
  • Is program and project performance objectively measured, documented and reported to compare performance against intended results?
  • Is the political/administrative culture oriented toward secrecy or openness?
Equity and Fairness

In a democracy, all citizens regardless of gender, ethnicity, religious beliefs, or geographic origin should have the opportunity to advance their wellbeing and participate in the economic, social and political life of their country. Acting on the principles of equity and fairness also contributes to the quality of governance by bringing a diverse range of views to public decision-making and encouraging governments to act on behalf of all of the people.

To assess whether equity and fairness are entrenched in the economic, social and political life in a country, we would look for answers to questions such as:

To what extent do a country, state or province's legislatures and civil service reflect the make-up of the population they serve?

Are there effective policies in place to build public institutions that reflect the make-up of the population?

Are there laws which prevent gender discrimination in the workplace?

Rule of Law

The concept of the rule of law is discussed at length at the beginning of this primer as an essential ingredient of democracy. It is equally vital for good governance. When a federation operates under the rule law, all parties, public and private can be certain that agreements between governments will be respected and that office holders will be motivated to serve the public as opposed to their private interest.

To assess whether a country's governance system is underpinned by the rule of law, we would look for answers to questions such as:

Are formal intergovernmental agreements and fiscal arrangements respected?

Is corruption perceived as a significant factor in federal, state or provincial government operations and are anti-corruption laws enforced.

Concluding Note

This primer outlines the very basic concepts which underpin federal systems of government. It is an introduction, but far from complete. Over the coming months, we will be adding new content to these pages to present a more comprehensive picture and illustrate the dynamics of federalism by drawing on real life experience in federations around the world. 

Features of Federalism
Fiscal Federalism and Decentralization