2.3 Accountability and participation
Another factor to consider is the relative effectiveness of governance and accountability arrangements at each level of government. Optimally any such problems would be dealt with in the institutional design. If this is not achieved, then any decisions on the allocation of responsibilities will inevitably reflect those actual or perceived problems. Failing to address governance and accountability issues can therefore block institutional change, regardless of its desirability.
In the trans-Tasman situation, one example would be a joint regulatory agency which in theory would need to (not an exhaustive list) consult in both countries, be answerable to Ministers in both countries, and possibly the states and territories, report to both national Parliaments, and be supervised by both sets of ombudsmen and covered by both official information regimes.
Such a set of arrangements would be difficult to design, and require significant effort by the agency, Ministers and Parliaments to make them work effectively in practice.
At the local government level, delegation or joint provision of powers creates the same problems regarding accountability to the public and opportunities for public input. The recent proposal for a trust to manage water supply in Wellington raised concerns about precisely these issues.
2.4 Subsidiarity - decision criteria
To allocate responsibilities between levels of government in the optimum manner; i.e. to make subsidiarity effective in practice; requires clear criteria to guide decisions.
Such decision criteria could include (Kerr, Claridge and Milicich, 1998, p16) where the relevant expertise and/or knowledge exist (which may differ), where effective accountability arrangements exist (for example, close to those affected by the policy, but avoiding small group domination), and how best to make trade offs.
| Goal for Decisions | Assumptions | Local control | Regional control | Central control |
|---|---|---|---|---|
| Balanced | Allocation of powers is optimal if decisions are made by those who feel the effects and bear the costs. | no externalities exist; | externalities can be internalised within region; | significant externalities exist; |
| Informed | Whether the necessary information is objective or subjective (or specific/idiosyncratic and non-specific/general) affects who is best-placed and most capable to make decisions. |
info is held locally or is unimportant; preferences varying and important; |
regional scale data is important; |
info is held centrally and is important or complex; preferences homogenous or unimportant; |
| Cost-effective | Economies of scale in decision-making may exist, particularly if preferences are homogenous. | low decision-making costs; | medium decision-making costs; | high decision-making costs; |
Table 1 illustrates how factors such as whether or not externalities exist, the costs of gathering the information needed to support a decision and the degree to which preferences vary by jurisdiction affect the preferred level for making decisions that are simultaneously balanced, informed and cost-effective.
In applying such criteria it may also be useful to focus on why local governance is valued, for example (Bermann, 1994, p339-344) facilitating effective accountability of decision-makers to those affected, allowing self-determination and political liberty, achieving flexibility to take account of local circumstances and preserving identities and diversity.
The key balance in trade-offs is therefore between meeting the specific needs of one community; and delivering consistency between jurisdictions. Local identity and national consistency both have pluses and minuses. In particular, minimising transactions costs is important (through measures such as removing customs barriers, and having consistent provisions in areas such as occupational licensing and health and safety rules) while reflecting local conditions and culture increases acceptance of the regulatory regime. It is also important to ensure that inter- and intra-national commitments are met.
Some high-level examples of possible outcomes of the decision criteria described in Table 1 are listed in Table 2.
| Function | Balance | Information | Costs | External Commitments | Provision |
|---|---|---|---|---|---|
| Defence | Costs and benefits are highly dispersed. Significant externalities. | National government holds crucial information which is highly subjective. | Significant economies of scale. | Essential. | Central. |
| Environment | Costs or benefits can be dispersed. Externalities can be significant. | Held at all levels. | High. | Can be essential in some cases. | Mixed central, regional and local. |
| Road names | Highly localised. | Local. | Low. | Low. | Local. |
The same criteria are likely to apply in general across national borders as within them. Claridge and Box (2000. p73) suggest that trans-national decision-making may be optimal where externalities cross national borders, international public goods exist, objective scientific information is important and hard/expensive to access, international preferences are homogenous and decisions could be more cost effectively made by or with others.
These criteria are consistent with the general approach taken by the EU and the various definitions of subsidiarity cited in this paper. Not all of them need apply in any given case (and often won’t), but the more that do apply, the stronger the argument will be for regulation through a trans-national mechanism.
An example of where responsibility for regulating different aspects of a single area of policy can usefully be assigned to multiple levels of government, which each have appropriate knowledge and powers, is maritime safety where international organisations set minimum standards and co-ordinate policy setting processes, national governments can set more stringent standards for their own waters, provide rescue services and inspect visiting vessels and local governments can control inshore activities such as jet-skis and ferries.
