Intergovernmental Relations in Germany

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Intergovernmental Relations in Germany

• Wolfgang Renzsch

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Overview

• Functional vs. Dual federalism
• Dual federalism (North America) ? watertight
  compartments
• Functional federalism (Germany, Austria,
  Switzerland) ? intensive cooperation between the
  layers of government

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Constitutional provisions of the Basic Law (GG)

• Art. 30 GG stipulates that the exercise of state
  powers and the discharge of state functions is a
  matter for the Laender except the GG provides or
  permits otherwise
• General assumption in favour of Laender powers
• Federal powers as an exception

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Legislative Powers

• Art. 70 GG The Laender have the right to
  legislate insofar as this Basic Law does not
  confer legislative power on the Federation.
• Art. 73 through Art. 75 provide catalogues of
  exclusive, concurrent and framework legislation
  of the federation
• The bulk of public policies is regulated on
  federal level
• Little is left to the Laender education, local
  government, police, culture ...

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Administrative Powers

• Art. 83 GG The Laender shall execute federal
  laws in their own right insofar as this Basic Law
  does not otherwise provide or permit.
• The federal administration remained small
  Foreign service, defence, labour administration
  hardly much more.
• Federal law is implemented by the Land
  administration
• in their own right ? at the expense of the
  Laender! ? the Laender have to pay for the law
  adopted on federal level

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Summary 1

• The federation legislates.
• The Laender implement federal laws.
• The Laender have to pay the bill for what the
  federation has ordered.
• That is not fair!
• Therefore laws which encroach on the Laender
  need the consent of the Bundesrat

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The Bundesrat

• Art. 50 GG The Laender shall participate through
  the Bundesrat in the legislation and
  administration of the Federation and in matters
  concerning the European Union.
• Solution The Laender governments (!) participate
  via the Bundesrat in the federal decision making
  process in so far as they implement and
  administrate federal law.
• The peculiar construction of the Bundesrat (which
  is unique in world) rests in the specific
  construction of the German federal state.
• Remarkably the European order Council of
  Ministers is not so different

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Europe

• Since in European law the same principle apply
  European law is mostly implemented and paid for
  by the Laender governments the Laender
  participate via the Bundesrat in the domestic
  definition of German European politics.
• Cooperation between the Federation and the
  Laender is regulated in Art. 23 GG.

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Art. 23 GG

• (1) With a view to establishing a united Europe,
  the Federal Republic of Germany shall participate
  in the development of the European Union that is
  committed to democratic, social, and federal
  principles, to the rule of law, and to the
  principle of subsidiarity, and that guarantees a
  level of protection of basic rights essentially
  comparable to that afforded by this Basic Law.
  The establishment of the European Union, as well
  as changes in its treaty foundations and
  comparable regulations that amend or supplement
  this Basic Law, or make such amendments or
  supplements possible, shall be subject to
  paragraphs (2) and (3) of Article 79.

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• To this end the Federation may transfer sovereign
  powers by a law with the consent of the
  Bundesrat. The establishment of the European
  Union, as well as changes in its treaty
  foundations and comparable regulations that amend
  or supplement this Basic Law, or make such
  amendments or supplements possible, shall be
  subject to paragraphs (2) and (3) of Article 79.
• (2) The Bundestag and, through the Bundesrat, the
  Laender shall participate in matters concerning
  the European Union. The Federal Government shall
  keep the Bundestag and the Bundesrat informed,
  comprehensively and at the earliest possible time.

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Abs. 23 Para 3 through 7 GG summary

• Detailed rules concerning the cooperation of the
  Federal Government and the Laender. More like a
  administrative order than constitutional law
• Basically

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Summary II

• The Bundestag and the Bundesrat are to be
  informed as early as possible and shall have the
  opportunity to give their opinions.

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• (4) The Bundesrat shall participate in the
  decision-making process of the Federation insofar
  as it would have been competent to do so in a
  comparable domestic matter, or insofar as the
  subject falls within the domestic competence of
  the Laender.

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• (5) Insofar as, in an area within the exclusive
  competence of the Federation, interests of the
  Laender are affected, and in other matters,
  insofar as the Federation has legislative power,
  the Federal Government shall take the position of
  the Bundesrat into account. To the extent that
  the legislative powers of the Laender, the
  structure of Land authorities, or Land
  administrative procedures are primarily affected,
  the position of the Bundesrat shall be given the
  greatest possible respect in determining the
  Federations position consistent with the
  responsibility of the Federation for the nation
  as a whole. . close to a veto of the Laender!!

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• (6) When legislative powers exclusive to the
  Laender are primarily affected, the exercise of
  the rights belonging to the Federal Republic of
  Germany as a member state of the European Union
  shall be delegated to a representative of the
  Laender designated by the Bundesrat. These rights
  shall be exercised with the participation and
  concurrence of the Federal Government their
  exercise shall be consistent with the
  responsibility of the Federation for the nation
  as a whole.
• (7) Details .

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Critique

• Rather monstrous and inefficient regulation
  resulting in negative results for Germany In
  affairs of concern for the Laender Germany finds
  herself quite often in a minority position.
• The problem the Laender governments are neither
  familiar with the procedures at Brussels nor
  acquainted with the informal ways of bargaining.

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II. Finance 1

• Finance is a kind of nucleus of the German
  federal system.
• Expenditure the federation defines to a large
  extent the expenditure of the Laender since the
  Laender have to implement federal law as their
  own task (Art. 104a para 1 GG)
• Tax legislation is the hands of the federation.
  The Laender are not in the position to level
  taxes of their own. The only way for the Laender
  to raise money on their own is to borrow (Art.
  105 GG)

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Finance 2

• The revenues of the various taxes are shared
  between the federation and the Laender. Some
  taxes go completely either to the federation or
  the Laender, the important taxes like Value Added
  Tax or Income Taxes are shared between both
  levels of government (Art. 106 GG)

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Finance 3

• The vertical distribution of taxes is
  negotiated between the federation and the
  Laender. The adjustable element is the VAT.
• The horizontal distribution follows the
  principle of local revenue the Laender get
  what is raised in their territory.
• Exception VAT The part of the Laender ist
  distributed among the Laender on a per-capita
  rate. (Art. 107 para 1 GG)

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Finance 4

• The result is a rather uneven distribution of
  taxes among the Laender. Before equalization
  Hamburg raises 184 pc of the average per capita,
  Saxony Anhalt 30 pc (2000).
• However, Hamburg and Saxony Anhalt have to fulfil
  the same tasks (Art 3 GG Equality of all persons
  before law.)
• Therefore, a rather complicated system of
  equalization has been developed which level the
  differences to a gap 106 pc (Hesse) and 99,5 pc
  (8 poor Laender).

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Finance 5

• Two further points
• The city states are made poor by multiplying
  their citizens by 1.35. Hamburg (105.5 pc) gets
  in fact 142 pc.
• The East German Laender get currently further
  support which grants them about 125 pc.

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Summary II

• Two examples of interlocking federalism Europe
  and federal finance
• Policies in both areas need an extremely high
  degree of cooperation between federation and
  Laender.
• Partly institutionalized by the Bundesrat and
  informal institutions like the conference of
  the Heads of Governments of the federation and
  the Laender (Chancellor and Prime Ministers)

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• Chancellor and Prime Ministers as well as
  EU-ministers meet at least 4 times a year
• Laender Ministers of Finance meet every month,
  often together with Federal Minister
• Uncounted number of permanent and ad-hoc
  committees and working groups of the Laender or
  on federal/Laender base coordinate policies among
  the Laender and between the federation and the
  Laender
• Example Commission for modernization of the
  federal order, started November 2003

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Federalism Reform Commission

• 32 member entitled to vote plus 32 substitutes.
  Half of them are MPs, the other half members of
  the Land governments all Prime Ministers,
  substitutes either heads of PMs office or
  Ministers of Justice
• Without right to vote a few representatives of
  the Land parliaments, the municipalities, and
  experts.

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• Aim Reduce the interlocking structures, more
  room for political decision making for both, the
  federation and the Laender.
• However what needs to regulated centrally, what
  can be regulated regionally?
• What are the fiscal effects? In order to reduce
  the interlocking structure of decision making it
  is necessary to reduce the entanglement of
  finance.
• Results? Remain to be seen.