Federalism: For better or for worse?

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MAP Insights


(Last of two parts)

In search for a better governance structure — that would best fit to address “distant regional circumstances and local lesser interests” and would best “accommodate differences among populations divided by ethnic, religious or cultural cleavages yet seeking a common, often democratic, political system” otherwise ignored by the distant center of a unitary political order — a Consultative Committee (ConCom) on charter change came about. Thus, the proposed draft Constitution for a Federal Republic which says… “shall at all times uphold federalism, national unity and territorial integrity.”

But first, what is Federalism? Internet resources tell us that Federalism is about non-centralization of political power. It is “a theory for dividing political powers between member units and a common government. And this division of power is typically entrenched in a constitution which neither a member unit nor the common government can alter unilaterally. In comparison, decentralized authority in unitary states can typically be revoked by the central legislature at will.”

“The division of power between the member unit and the center may vary. Units at each level can be self-governing and have final authority in some issue area. Typically the center has powers regarding defense and foreign policy, but member units may also have international roles. The decision-making bodies of member units may also participate in central decision-making bodies (‘in a kind of collective compositional arrangement’).”

Several authors identify two quite distinct processes that lead to a federal political order (Friedrich 1968, Buchanan 1995, Stepan 1999 and others):

• “Coming together federal political order wherein independent states may aggregate by ceding or pooling sovereign powers in certain domains for the sake of goods otherwise unattainable, such as security or economic prosperity. It is so typically arranged to constrain the center and prevent majorities from overriding a member unit. Examples include Australia, Canada, USA, and Switzerland.”

• “Holding together federal political order which develops from unitary states, as governments devolve authority to alleviate threats of unrest or secession by territorially clustered minorities. Such federal political orders often grant some member units particular domains of sovereignty, e.g. over language and cultural rights in an asymmetric federation, while maintaining broad scope of action for the central government and majorities. Examples include Belgium, India and Spain.”

In a situation where “member unit representatives can participate within central bodies — in cabinets or legislatures — and get involve in central decision-making,” a so-called interlocking or cooperative federalism takes form.

The draft Constitution appears similar to the “holding together” type but cooperative in persuasion. It takes off from a unitary centralized system… moving to a non-centralized political authority, yet under a strong center where the executive power of the Federal Republic is vested on the President.

The creation of 16 constitutionally federated regions and the set-up of four high courts under the draft federalist constitution (which also has other essential game-changing provisions) appear to be the main structural changes to the Constitution and also the main bone of contention. Since it involves a new layer of governance in response to expanded functions… a complementing administrative structure necessarily results in the form of regional executive, regional legislature and regional judiciary. And this involves a movement and/or increase in “manpower, materials and processes” which translate to a good amount of talent, time, effort and financial cost.

This expanded setup brings us back to the apprehensions of the skeptics as to: (1) the economic viability and sustainability of a federal system, i.e., the risk of a federal region breaking away and/or experiencing economic/financial stress; (2) the likely spread of political dynasties; and, (3) whether the end-goal of region-wide development and inclusive growth, that is skipping off under the existing centralized system, is more attainable and worth the investment — on the premise that this time “local circumstances and distant regional interests” can be better understood, better attended to and closely followed through to its logical end.

Be that as it may, it is this non-centralization factor itself that is being strongly pointed out to favor a federated regional order precisely because “local decisions would prevent an overload of centralised decision-making, and local decision-makers may also have a better grasp of affected preferences and alternatives, making for better service than would be provided by a central government that tends to ignore local preference variations” (Smith 1776, 680).

Likewise, the “granting of powers to population subsets that share preferences regarding public services may also increase efficiency by allowing these subsets to create such ‘internalities’ and ‘club goods’ at costs borne only by them” (Musgrave 1959, 179–80, Olson 1969, Oates’ 1972 “Decentralization Theorem”). Not to mention that “a federal political order may additionally increase the opportunities for citizen-participation in public decision-making through deliberation in both member unit offices and central bodies that ensures character formation through political participation among more citizens” (Mill 1861, ch. 15).

To strengthen, in every respect, the draft Federalist Constitution and effectively fortify it versus the perceived inadequacies of the existing unitary system, relevant provisions found their way to the proposed draft, thus:

1. On economic viability: A provision for an “Equalization Fund under the General Appropriation Act for regions in need of further support to achieve financial viability and economic sustainability… to be determined and distributed on needs-basis by the Federal Intergovernmental Commission;”

2. On structural stability: The same basic executive power is vested on the President (elected along with the vice-president as a team by direct vote of the people) with the added “step in power in all regions” to prevent break-up and/or violation/non-performance of duties under the Constitution.” Checks and balances are preserved with a functioning legislature and judiciary down to regional levels.

3. On political dynasties: Inclusion of an expanded SELF-EXECUTING constitutional anti-dynasty provision.

4. On judicial reform: The creation of four high courts — the Supreme Court, a Constitutional Court, an Administrative Court and an Electoral Court — to assure speedy delivery and swift application of justice as a necessary ingredient in our quest for peace and order and discipline, as well as a major deterrent to criminality.

5. On electoral reform: A provision to regulate campaign finance and to create a Democracy Fund as a repository of campaign funds to be administered by the Federal Commission on Elections and subject to review by the Federal Commission on Audit. Also, provision against changing of political parties within their term of office, among others;

6. On Federated Regions: Constitutionally creating 16 regions plus the Bangsamoro and the Cordilleras, complete with each region’s legislature, executive, and judiciary (but with the “prohibition to advocate, demand for, or support the secession of any region from the Federal Republic”). And to argue that the regions might not be prepared for this new governance structure, because they have no prior exposure, is to take the shadow for the substance. A plain misapprehension! For how can anyone, for that matter, ever have the experience/exposure without going through it in the first place? Nobody ever learned to ride a bicycle in a classroom! And with the advances in technology and communication all around us, it is quite presumptuous to conclude and judge them as incapable of self-determination.

If the essence therefore of the charter change lies in its federal regional order, then a quite heavy load on finance it will be, given the scope of the would-be functional adjustment. And since cost and structure follow function, it will be futile without one or the other.

This makes the whole federal political advocacy more like an issue of finance! How shall it be sourced, how much and for how long? Can we indeed not afford it, when in the past it has been proven that we have the wherewithal to even fund the immorality of pork barrels, from one administration to the next?

Even so, federal proponents still have options open to them — e.g., improving revenue generation/collection and equitable sharing thereof to meet cost; and/or scaling down/reconfiguring the regional structure to something like lesser number of regions so as to be within budget limits.

Wouldn’t this advocacy be worth the investment in time, talent and effort, given the promise of Federalism… vis-à-vis the existing unitary system that has only proven to work for and benefit only the elite who has the economy in its strangle-hold, with the middle class going the way of an endangered specie, and everybody else rendered impoverished, helplessly witnessing the country’s descent to the bottom of the Asian economic totem pole?

As William Shakespeare puts it: “To be or not to be, that is the question:

Whether ‘tis nobler in the mind to suffer

The slings and arrows of outrageous fortune,

Or to take Arms against a Sea of troubles,

And by opposing end them?”


This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.


Antonio T. Hernandez is management and development finance consultant; Past President& Advisory Council member of the Government Association of CPAs; Past Director — PICPA; and former Senior officer of Land Bank of the Philippines.