Time to reverse federal squeeze on state powers

A major missing link in political discourse in the run-up to the 13th general election is the debate on decentralisation.

The Malaysian polity has been dominated by the process of centralisation or concentration of powers by the federal government for the last 55 years.

In the first part of this article, I will explain the process of centralisation under the federal government; in the second part, I will argue the case for decentralisation.

Constitutionally, Malaysia is a federation where powers are shared between the central government and state governments. The constitution stipulates the different areas to legislate through the Federal List, State List and Shared List in Articles 74-79.

States have legislative powers over very limited matters such as land, forestry and Islam, while the federal government can legislate on almost all matters in areas concerning education, finance, trade and commerce, defence, diplomacy and national security. This has severely clipped state government powers.

The Shared List between the state and federal governments covers social welfare, town and country planning, drainage and irrigation and public health. In this respect, federal law will prevail over state law in the event of any inconsistency. Issues of increasing importance, such as water works, land and local government, which used to be under the state governments, have been moved to the Shared List.

This was implemented through constitutional amendments. In fact, the constitution has seen 42 amendments involving 650 articles. As a result, constitution scholars have often commented that the spirit of the constitution and federation has been seriously diluted.

The centralisation of power is not limited to legislative matters. The federal government has garnered tremendous power through administrative centralisation. Land matters were supposedly under state jurisdiction. However, states are increasingly losing such authority to the federal government.

After Pakatan Rakyat took over Penang, for example, Chief Minister Lim Guan Eng proposed to convert existing landed leasehold houses to freehold status in an attempt to increase quit rent income for the state government. This proposal hit a snag at the federal level. The National Land Council, chaired by Prime Minister Najib Abdul Razak, rejected it.

The federal government also centralised power by means of the privatisation of state assets. For example, local councils used to run the sewerage system. However, when the federal government privatised this service to Indah Water Konsortium, the authority was forfeited and went to a federal-controlled company.

Recent water-supply controversies in Selangor, which involve political and commercial interests, can be viewed as a continuous attempt to centralise power by the federal government. Water has always been under state jurisdiction.

In Selangor, the federal government intervened through the National Services Water Commission, which is chaired by a federal minister.

The previous BN state government lost part of its power by privatising water assets to Syabas, a company controlled by the federal government. The Penang government has been lucky to avoid such a fate because a state-controlled entity operates the waterworks.

Financial constraints

State governments also face fiscal constraints. They can only collect revenue from quit rent, land premiums and timber or oil royalties.

The federal government collects all taxes and the exorbitant Petronas oil money to fund development and operations.

Typically state governments spend less than RM1 billion in the annual budgets. The federal government’s budget, however, has ballooned to more than RM240 billion annually.

States are not allowed to collect any other form of taxes and this has severely curtailed their capacity to do more for the rakyat. The state governments in the past were able to guarantee loans for state-linked companies. Now, the federal government has prohibited such power, further clipping the financial wings of state governments.

Under such dire constraints, state governments are in no position to resist the temptation to give up some of their powers in exchange for monetary grants. A case in point was how state governments lost their local government authority to the federal government, one step at a time.

Over the last couple of years, one tussle between the Pakatan state governments and federal government was over solid waste management, a matter of grave concern to the rakyat.

Waste management is a big ticket item of expenditure in all local government budgets. Due to larger amounts of waste, local governments are finding it increasingly hard to pay for waste management.

Therefore, the Housing and Local Government Ministry privatised solid waste collection to federally appointed contractors. The local governments in return would pay a cheaper rate compared to the current contractors. Many local governments facing financial constraints have no other solution apart from reluctantly surrendering that power to the federal authority.

Consequently, local governments have lost control over garbage collectors. In many places, residents have not seen the promised better services. If residents were to complain, they have to do so to the officers sitting in Putrajaya.

The Pakatan state governments of Penang and Selangor have so far resisted such a power grab, but for how long, given the financial pressure constantly exerted by the federal government?

Concentration of power happens not only at the three tiers of governments. In fact, power is much more concentrated within the Prime Minister’s Office.

The current premier arguably yields the most power compared to other world leaders. Najib Abdul Razak(left) is also the finance minister and acting minister for women, community and family development.

Furthermore, there are six ministers in the Prime Minister’s Department. An astonishing 16 members of parliament or former MPs work in the Prime Minister’s Department, heading various portfolios. To put things in perspective, the US executive has only 15 cabinet secretaries.

The Malaysian prime minister also controls the largest share of the federal budget. The budget for the three ministries mentioned earlier would allow him to wield a total of RM60 billion, or equivalent to almost 24 percent of the federal budget.

This concentration of power is by no means an accident. It is the effect of one-party rule for over 55 years. All levels of governments in all 13 states were under BN for 55 years, except for Terengganu and Sabah for a short period of time, and PAS-helmed Kelantan for a longer period.

Without greater financial autonomy, the local and state government leaders did not have  much choice but to surrender what was left of their precious limited powers to the central leadership. Coupled with the strong two-third majority wielded by BN in Parliament, the federal government is free to amend the constitution as it likes.

Federal detachment from reality

Concentration of power has resulted in many problems at the state and local government levels. The government is increasingly detached from the real life of the rakyat.

For example, officials in Putrajaya determine bus routes in Penang and other cities. How can these officials sitting in air-conditioned rooms in Putrajaya have the slightest inkling of local conditions?

Putrajaya also gives out taxi permits and fixes fares in all cities. How many permits are sufficient to reach demand? What is the right fare? Centralisation of power results in many basic local problems ending up at the mercy of the federal government.

How long can the local people wait while federal officers drag their feet to address grave matters at hand? Would an officer be sufficiently enthusiastic to take a flight all the way from Kuala Lumpur to a small town, say Kudat in Sabah, to solve a localised problem?

Decision makers are detached from realities on the ground and, as such, the affairs of state and local authorities are in a sorry state. They are not able to respond quickly to problems because their powers have been curtailed.

Malaysia has lost its true spirit of federalism. The state and local governments have been coerced into giving up what little power they have, and this resulted in the inability to react not only quickly but also effectively to the demands of the people.

The federal government, meanwhile, has grown too big and inefficient and has lost touch with the needs of the people. This is bad for democracy and must be stopped.

Decentralisation is important for a diverse country like Malaysia.

From Sabah to Perlis, from Kota Bahru to Kota Marudu, a decentralised government can cater the needs for various ethnic groups and different regions, with diverse aspirations and needs.

This will ensure the true spirit of democracy - a government elected by the people, for the people. The only way forward for a true democracy is through decentralisation and Malaysia must start this process as soon as possible.

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SIM TZE TZIN is PKR’s state assembly representative for Pantai Jerejak. He is frustrated by how little the state government can do for the rakyat. This commentary is part of the ‘Jiwa Merdeka’ project by young PKR leaders who want real change for Malaysia.