3 Overseas experience
While subsidiarity has been given most attention in Europe, the issues involved have also been addressed, not always explicitly, elsewhere. This section compares US, European and Australian approaches.
3.1 US experience
The concept of democratic federalism involves assigning each responsibility according to how the assignment best ensures personal, political and economic liberties (Inman and Rubinfeld, 1998, p10). Other priorities are of course possible.
In the case of the United States of America, the powers of the Federal government are technically strictly defined by the Constitution. In practice the definition can be more free ranging due to varying Court interpretations of these powers and as a consequence of the States seeking powers and/or resources from Congress.
Extensive debates occur about imposing responsibilities on the States without any supporting resources, although the cost of unfunded mandates must be reported (not the case in New Zealand), and about limited or no State discretion in meeting Federal targets. Nonetheless, actual challenges to Federal competence in recent times are rare.
The general approach of the US Supreme Court is that the legislative process itself is the protection for State autonomy The Court will not review a Congressional decision to pre-empt State regulation, or subsidise the States adopting a standard regulatory model (Bermann, 1994, p423-427). The subsidiarity principle is not as central to debates about the location of governance in the US as in the EU. Effectively the division of powers and the representation of the States in Congress have come to fulfil the role for which the principle of subsidiarity has developed in Europe.
3.2 EU experience
The US constitution was intended as such from the beginning. The EU (European Union) constitutional framework, if it can be described as such, evolved from an international agreement. This may explain why it does not deal comprehensively with issues such as enumeration of EU powers, EU pre-emption of national law and implied powers. This has left significant scope for judicial interpretation by the European Court of Justice (Bermann, 1994, p348-362).
EU decision-making is based on determining at what level to regulate, based on whether there is direct assignment to the EU or exclusive powers at EU level in the relevant area or the subsidiarity test, and how to regulate at the EU level, based on proportionality (with implementation and enforcement usually done at national level (Stauffer, 1999)).
The origin of subsidiarity as discussed in the EU context is drawn from 20th century Catholic philosophy, in particular from the following text (Pope Pius XI, 1931): “The supreme authority of the State ought, therefore, to let subordinate groups handle matters and concerns of lesser importance, which would otherwise dissipate its efforts greatly … in observance of the principle of "subsidiary function."
It has been suggested that subsidiarity in the EU was initially advanced by Christian Democrat politicians as a justification for enlarging the Commission’s competencies, i.e. increasing the efficiency of government now demanded achieving certain goals at the EU level (Kersbergen and Verbeek, 1994, p216). However the argument runs both ways, and now subsidiarity appears to be one of the main arguments used by national and sub-national governments to limit the Community’s role.
Subsidiarity in Europe has been seen in the above terms as a concept of the relationship between the state and society, or (particularly in Germany) as a lasting constitutional principle of distribution of powers or an ongoing counterbalance to “creeping federalism” (Kersbergen and Verbeek, 1994, p226).
The subsidiarity principle is now embodied in the Treaty with two facets, the EU must act where the objectives can be better attained at Community level and the EU must not act outside its exclusive competence where objectives can be sufficiently achieved by Member States acting individually (European Communities, 2000).
The subsidiarity principle is closely linked to the proportionality principle (a common basis for judicial review in European law) which generally requires that the measure must bear a reasonable relationship to the objective, the costs must not manifestly outweigh the benefits, and the measure must be the least burdensome option.
In practice, EU constitutional arrangements can be described as a form of decentralised federalism, with continual pressures towards greater centralisation of responsibilities in many areas, for example to achieve advantages of scale or avoid “destructive competition” between regulators, the “race to the bottom” theory (van den Bergh, 1996, p364).
Greater integration in some areas, such as open borders, increases those pressures. One consequence has been weakening of the majority requirements for joint decisions in a number of policy areas.
This may be a major reason for the increasing contrary pressure to increase the role of regions as opposed to national and community governments and put substance behind the principle of subsidiarity, so that as well as determining whether it can exercise powers, the EU must evaluate whether it should do so. The latter is a matter for judgement which will often be highly subjective.
The EU has released a White Paper on European Governance for consultation until March 2002. The specified work areas are broadening and enriching debate on European matters, the process of producing and implementing rules, decentralisation, promoting coherence and co-operation, contributing to world governance and integrating policies across the continent.
Issues identified for public comment include, whether the allocation of competences between levels of government is “per se” or as a means for achieving objectives, how dynamic factors (for example, crises, technology etc) cause shifts in policy responsibilities and whether principles such as the protocol to the Treaty of Amsterdam are adequate; and how to organise interaction between the various levels of government.
These questions could presumably equally be asked with respect to the trans-Tasman relationship and relations between New Zealand central, regional and local government. It is not clear, however, that they will be given the lack of formal institutions for intergovernmental relations across Australasia or within New Zealand.
3.3 Australian experience
Within Australia, subsidiarity arises primarily as a Commonwealth vs States and Territories issue. The degree of Commonwealth authority varies widely, often due to explicit or implicit constitutional constraints, with implementation details frequently a matter of state discretion.
Some bodies (such as the Australian Competition and Consumer Commission) draw on both federal and state laws, while the national electricity grid is owned by a company set up by the States (Wilkins, 2000).
Fiscal pressures create the strongest drive towards centralism due to the dependence of the States on the Commonwealth’s wider funding powers. This is a classic issue of efficiency in revenue collection and debt raising encouraging centralisation while efficiency in expenditure encourages decentralisation. Control of the purse can negate the intent of strict constitutional allocation of roles.
Within states, the form of the debate is less clear and the division of powers appears to be substantially at the discretion of the state government – a situation more parallel to that of local government in New Zealand.
