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Transcript- Asoka Gunawardana

25 August 2010

 Mr. Asoka Gunawardana


C.R de Silva:  Mr. Gunawardana, before we commence I wish to outline the procedure that is adopted by this Commission.  Any person could make representations either in public or in camera – the choice is left to the person who is making those representations.  At the end of your representations the Commissioners are entitled to ask you questions on anything arising from the representations that you make or in relation to any matter that is relevant in terms of the Warrant.  Now, there also you can respond either in public or in camera – the choice is yours.  That is the procedure that we adopt in the course of the working of the Commission.  So I just wanted to outline the procedure. 

Gunawardana :I would like to start by briefly trying to understand the terms of reference and it looks at events between the 21st of February 2002 and 19th May 2009.  The critical events the starting and the closing event are the ceasefire agreement and the defeat of the LTTE.  I understood the terms of reference in these two events in the context of the failure of the negotiated peace process and the ensuing necessity for the conclusion of the war through a military operation which led to the defeat of the LTTE.  Now this raises a number of questions as to how one should move … how we should move … how the country should move from conflict to reconciliation.   

My understanding is that the framework of the specific terms of reference is the broad context of conflict.  I’ll probably explain this later on.  So then the question arises as to how we envision reconciliation because that is the … I understand that to be the primary purpose of the Commission.  A few days ago when I was trying to put my thoughts together I was Googling and I came across this communiqué – probably from the press – which gave a statement by the President and I thought that was relevant in defining what reconciliation meant and I am basing myself on that statement where the President had informed the Cabinet that in order to accomplish this task it has become necessary to set in motion a mechanism which will provide a historic bridge between the past of a society characterized by inflicted strife and a future society founded on the continued recognition of democracy and peaceful co-existence and the affording of equal opportunities for all Sri Lankans as guaranteed by the constitution.  Now obviously the statement is very clear.  It goes beyond the usual dictionary definitions of reconciliation and it sets out the process of reconciliation as one which is moving from a past of conflict to a future of peaceful co-existence.  It is to be based on continued recognition of democracy and equal opportunities for all.  So I thought this sets the framework for me to look at what has happened and then to draw lessons as to how one could approach reconciliation.   

At the outset I would like to note that therefore I understand reconciliation to be about people – people of all communities, between communities and also within communities.  Reconciliation may be necessary within communities.  Therefore reconciliation must be envisioned within an institutional framework and that institutional framework is the framework for democratic governance – more democratic governance than what we have had so far. 

My fundamental position in the submissions that I will make is that the institutional structures and processes for democratic governance have been incoherent.  There has been a contradiction in approaches to conflict and development as between centralized and devolved.  Centralized approaches as far as development is concerned and devolved approaches as far as conflict is concerned.  It is necessary to resolve these contradictions in order to move ahead.  As I understand conflict and development I wish to submit that they are related.  They are not different issues.  It is therefore necessary to resolve these contradictions in order to move ahead with reconciliation move from the conflict past to a future of peaceful existence.  This contradiction or this separation of the approaches to dealing with development and for conflict I call the governance gap.  And this is important and this must be addressed as one moves on to a process of reconciliation.   

I do not want to go through the terms of reference that would be wasting time but I wish to note that the ToR accepts conflict as the core issue.  I trust I am correct, and posits the CFA as the point of departure drawing lessons from the resolution of the conflict.  Then how do we understand conflict? There are various definitions – I do not want to go into those – but conflict implies an actual or perceived differences in deeds, interests, values, leading to actions that seek to negate the opposing position towards gaining advantage to one’s own position.   

Now I think we are interested or concerned with conflict that has challenged the State rather than social conflicts that may exist in different social situations.  Conflict that has challenged the authority of the Sri Lankan state.  Lessons for reconciliation should then ask the question why  conflict took the form of challenging the state.  The issue of conflict then can be addressed around specific events or looked at in perspective especially in the context of the process of development which in the context of Sri Lanka’s experience has created imbalances as between economic, social, political aspects bringing about unequal access to opportunities. 

I also want to go back to His Excellency’s address at the meeting of the All Party Representative Committee on constitutional reforms and the panel of experts held on July 11, 2006 where he stated that any solution there is a long court but let me get to the concluding part of that.  In some any solution needs to as a matter of urgency allow people to take charge of their own destiny.  I also want to draw inspiration from the “Mahinda Chinthana Idiri Dakma” page 52 where this position is reiterated where it states that in relation to the state and conflict.  My main expectation is to break the fundamental concepts of a traditional homeland and a separate state and empower the citizens of this country to arrive at a peaceful political solution and would devolve power to all its citizens.  

The point I want to make is that in the final analysis the focus of reconciliation is people empowering them to pursue common goals and aspirations of peace, harmony and prosperity in a spirit of cooperation and partnership as has been set out in the terms of reference.  Conflict that Sri Lanka has experienced is not only ethnic.  The status of the Tamil people in the Sri Lankan nation state engaged political discourse from pre independence times.  What is important as this issue was allowed to evolve as a political issue rather than being addressed from a development perspective that would have made sense to all of the Tamil people rather than continue the debate of the Tamil elite.   

The link between conflict and development however was brought to the fore first in the south and not in the north through the JVP insurrection.  How does one read the JVP insurrection? And I think that is important.  Sri Lanka has experience in decentralized governance had been guided by somewhat contradictory imperatives of socio economic and regional development on the one hand and those of social and political conflict and solutions thereof on the other.  Assertion of control over the state machinery has been perceived as necessary for managing development as well as conflict.  However during 4 decades following independence in 1948 Sri Lanka responded to demands of post colonial transformation socio economic development and emerging social and political conflicts by reforming the state structures within the framework of a centralized state.   

The responses to the insurrection included a series of reforms but I want to bring to your attention – to the attention of the Commission – one particular … one specific response;  the establishment of the office of a District Political Authority     the DPA was a central Parliamentarian.  So what we had here in 1972 was further central control rather than devolution of power to sub national levels in managing conflict.   

Let me move on.  I am going back in order to set the broad theme of my submission.  The next significant initiative reform political institutions was the appointment of a Commission of Inquiry in 1979 into the existing structure of local government with a view to ascertaining the manner in which economic development activity in a district could be planned and coordinated at the district level through District Ministers and District Councils.  This was the Presidential Commission on District Councils.  It is significant though the mandate concerned local government and development but the Presidential Commission dispelled any belief that their task was to inquire into the validity or otherwise of and to find a direct solution to the ethnic problems which had manifested themselves in the demand for a separate state.  This was stated by the Commission in its report.   

Now, District Development Councils that were established in 1983 were considered at that time a landmark in the process of decentralization in Sri Lanka.  It provided … what is significant is it sought to bridge this governance gap as between conflict and development.  It brought about a democratization of the district administration by providing an elected content.  While it was envisaged as the strategy for decentralized development it therefore also constituted the only available political solution to address the demand for regional autonomy by Tamil people in the north and the east.  However, rather than introduce more decentralized governance the District Councils institutionalized political de-concentration by carving out a role for Members of Parliament at the local level.  Members of Parliament were ex officio members of the Council.  With the District Minister as Chairman of the executive committee and the Government Agent as the Secretary to the Council the District Council was institutionally embedded in the de-concentrated political and administration system.  Thus the District Development Councils failed to bring about devolution and decentralized district administration as had been envisaged in the President’s letter to the Commissioners.  So District Councils fell far short of revamping local government to become an effective vehicle for development or for the elevation of the district administration to become a tier of Government.  It proved inadequate to accommodate regional pressures for local autonomy in the north and the east.  In a situation of centralized management of development District Councils were rendered ineffective in addressing livelihood needs of the people.  District Councils failed as an experiment in participatory democracy or democratic decentralization or power sharing.   

At this point though I would like to briefly refer to the Presidential Commission on Youth March 1990 though it follows the establishment of Provincial Councils.  The Presidential Commission on Youth proposed a set of fundamental principles that should guide national policy in general.  This was in response to the youth unrest that existed at that time.  I want to refer to 4 of these.  First, more democracy; adequate devolution and dialogue; Second, equality of opportunity and non discrimination in every sphere; Third, effective, expeditious and inexpensive redress of grievances; fourth, values and institutions which give expression to the diversity within our society.  I wish to refer to these because of their importance for any process of reconciliation that we may think of.  The failure of District Councils as a governance arrangement meant that more substantive devolution of power was necessary to accommodate the emergent regional interests of the Tamil people.  The shift to devolution involved carving out of jurisdiction of governance competence with political administrative fiscal authority the province and the Provincial Councils were established as units of jurisdiction allowing for far more comprehensive focus in the scope of responsibilities transferred for sub national governments.  The legal framework for the exercise of powers was vested in Provincial Councils provided for far greater provincial autonomy than what any decentralization had hitherto offered. 

I want to look very briefly at Provincial Councils … devolution and Provincial Councils.  Devolution had been advocated for Sri Lanka and been introduced as a political strategy for resolution of the ethnic conflict and for the restoration of peace.  It was not introduced explicitly as a strategy or an approach for development.  However while the rationale for devolution in general has been political all over the world in the final analysis it is the effective management of  development that must justify the decision to devolve.  So devolution … though decisions on devolution have always been political the test of devolution has been on how effectively devolution has been able to manage development.  After all the decision to devolve is invariably based on the demand for a better voice of regional local people in decision making regarding matters that are of concern to the realization of the aspirations and needs.  The case for devolution is therefore argued on the basis that it would be possible to understand and assess the needs of local people better on account of account of proximity to them which would thereby enable more responsive provision of public goods and services and foster greater efficiency and effectiveness in the use of social and economic resources.  

What has been the experience?  Sri Lanka’s experience in devolution under the 13th Amendment has suffered from inadequacies in design as well as in practice especially from a lack of coherence and commitment in moving from centralized to devolved governance.  It has been suggested by a foreign expert who visited Sri Lanka around mid 1990s that the break with the centralized tradition represented by the 13th Amendment was less than it seemed.  The reality of devolution to provinces was little different in practice from the preceding centralized institutional arrangements.  Inadequacies in adjusting to devolution created an inefficient public sector duality negating the potential of devolved provision for better management of resources and targeting of services.   

If one looks at what has happened and not happened what do we see as far as the 13th Amendment and Provincial Councils are concerned.  There are gaps in constitutional required national level actions.  Law and order – very controversial – Police powers and lands; the appointment of the Constitutional Land Commission … National Lands Commission.  There have been executive  interpretations of subjects and functions; declaration as national institutions; national schools; national hospitals; and then we have the Aggrarian services incident.  Continued executive action by the centre in devolved subjects; central control of provincial discretion in cadres and staffing; financial dependence on the centre; uncertainty of financial transfers; parallel systems of administration at the sub national level raising questions or issues of sub national coordination.  Two decades later Provincial Councils yet in pre devolution status of administrative decentralization functioned as operational agencies of the centre there would seem to be no drive from the centre.  One must remember that Provincial Councils were introduced as a top down process.  It was a response to a demand only from the north and east.  Transfer of legislative,  executive and fiscal powers are yet to produce a sense of provincial governance.  There would seem to be not much demand from the periphery and this is as far as the 7 provinces in the south.  It is based on that experience.  Provincial finance is treated as a residual concern in national resource allocation decisions and emphasis on the uniformity of provincial structures that reflects imperatives of central control; centre province relations unequal and dependent in the absence of formal channels for engagement and driven primarily by a policy implementation orientation.  Provincial Councils continued to function in relative isolation.   

I also want to refer to local government; that is a part of the governance system that I am talking of.  In post devolution Sri Lanka or in the 13th Amendment, the discourse, debate around the 13th Amendment the primary if not the sole concern hitherto has been a centre province relationship leaving out the local level as a sub system – leaving the local level as a sub system of the provincial interest.  The 13th Amendment while establishing Provincial Councils for every province guaranteed the status of local authorities in a two way relationship with the province and the centre.  The assignment of the responsibilities for the supervision of administration of local authorities to PCs does not and cannot in any way detract the role and function of local authorities.  Indeed the significance of local interest in governance and indeed it is important to note the significance of local interest in the governance concerns of the nation or the provinces.  So therefore the powers and responsibilities of local authorities – Municipal Councils; Urban Councils and Pradeshiya Sabhas – constitutes an integral sphere of devolution and a partner in devolved governance making for a tri partite governance relationship.  Thus we see the 13th Amendment in effect establishes two arenas of devolved governance – the province and the local – in a multi level system of governance.  I wish to note that local authorities provide the necessary institutional framework for local level democracy and governance.   

We find today that local authorities have been left stranded in a scheme of devolution where they must relate to the province on matters of administration and the centre in respect of matters of national policy.  The dividing line between policy and administration are therefore to be sorted out between the centre and the province with little if no involvement of local authorities.  So we have a system of local government that has got marginalized in the course of devolution. 

Now, what is significant is that the Government has adopted a national policy on local government.  It was gazetted – in the gazette of 18th December 2009 – to strengthen and broaden democratic structure of Government and the democratic rights of the people by decentralizing the administration and by affording all possible opportunities to the people to participate at every level in the national life and in Government.  The objective of the policy has been stated as being to make local authorities an integral part of the system of representative government with highest permissible level of democratic decentralization and autonomy. 

I wish to conclude this part of presentation by stating that this is our experience with devolution; a case of missed opportunities and distorted implementation.   

Let me briefly move on to the ceasefire initiative where I have had very little hands on experience but I wish to note one point; that is that the ceasefire initiative did not have a clear idea as to how to move ahead with the governance arrangements in the north-east, especially in regard to the provision of public services, rehabilitation and development.  The ceasefire agreement was essentially to find … was a cessation of hostilities with a view to finding a negotiated solution to the on going ethnic conflict in Sri Lanka.  So therefore there was experimentation during the cease fire period on institutional mechanisms to get rehabilitation going in the north and east.  The first such mechanism to be established was the Sub Committee on Immediate Rehabilitation and Humanitarian Needs referred to as SCIRAHN jointly headed by the Secretary General of Government’s Peace Secretariat and the LTTEs Political Wing Leader.  The LTTE was not satisfied with SCIRAHN as being an “effective mechanism for governance of rehabilitation”, and I trust the matter was raised and the Government – the Prime Minister – responded at the time with a proposal for the establishment of a Development and Reconstruction Council for the North-East which provided for a 3 layered structure – Policy Board; Project Committee and an Administrative Body.  The LTTEs response to the Development and Reconstruction Council was the demand for an interim council with LTTE participation and we have the proposals for ISGA.   

Let me conclude this part by noting that the LTTE did not want to work through Provincial Councils for the north-east.  The Government proposed SCIRAHN and the Development and Reconstruction Council and the LTTE the ISGA.  It is also noteworthy that the triple R or the rehabilitation, reconstruction and resettlement – I trust I am right on that – programs were executed from the centre and implemented through the District Secretaries.  They were largely external to Provincial Council structures and processes.  Local authorities had no role.   

Let me, before I conclude, refer to findings of a study that I was engaged in, in the east.  This was called a policy dialogue on development, democracy and peace carried out by the Marga Institute.  Now we found that the project or the dialogue was initiated on the basis that the election of a Provincial Council, Local Councils and the restoration of civilian administration marks the transition into a future of peaceful co-existence and opportunities for all.  Our findings suggest that the end of the war has allowed people of the eastern province to return to their homes, cultivate their lands and move about.  Despite these positives we found that the province remains fundamentally a case of arrested potential.  While the Government machinery is yet to get moving and become supportive of a return to livelihoods the citizens remain constrained by ethnic prejudice, physical insecurity, official indifference and above all rampant corruption.  Our findings are based on a perception survey of about 100 people in the 3 districts and a focus group discussion also conducted at the community level conducted in all 3 districts and we found a strong correspondence of the perceptions as between the perception focus group discussions and the perception survey.  These problems are rooted in institutional weaknesses at the provincial and local levels.  The transition from conflict to post conflict; from military to civilian has created a governance vacuum in the east where political power brokers decide on what gets done or not done.  The Provincial Councils and Local Councils have little influence in governance.  Until these issues are addressed the eastern province will impose serious constraints to reconciliation. 

My conclusion of the presentation, reconciliation is about moving from a conflict past to a future of opportunities for all.  The transition must be managed and therefore cannot be ad hoc.  It requires involvement of people participating actively in managing the transition as it is about a transition of the circumstances that determine their livelihood and livelihood opportunities.  I have made reference to democratic governance and I believe a clarification is in order before concluding.  The notion of democratic governance goes beyond that of good governance.  It recognizes that citizen participation in governance involving political and civil freedoms have basic value as development ends in themselves and not just as means for achieving socio economic progress.  So therefore democratic governance is about modes of decision making in respect of development ends involving the making of collectively binding rules and policies over which people exercise control in a manner that all members of the collectivity enjoy equal rights to participate in such decision making.  Democratic governance requires devolved structures and processes.  Reconciliation then must move at different levels – national, provincial and local. 

I have attempted to address issues that exist in the provincial and local levels.  Thank you very much.  I have not talked about the Finance Commission and if required I could get to the Finance Commission where I was Chairman for the last about 10 or 11 years.  Thank you. 

Q & A

Rohan Perera: Thank you Mr. Gunawardana.  Let me first of all thank you for your presence before the Commission this evening and for this very informative presentation you have made.  But you made a very important observation that the constitutional initiatives from the mid 80s and the devolution structures have overlooked a very important aspect – the 3rd tier as you referred – the local government.  So I take it the conclusion from that is that any efforts towards greater devolution must take this 3rd tier into account so that the benefits of devolution reach the people at the local government level. 

Second point is what you just mentioned.  I think the Commission would benefit by hearing – you have been the Chairman of the Finance Commission – because political devolution without financial devolution to achieve balanced regional development would mean very little.  And what is the role of the Finance Commission would play; what are its current constraints and the areas of improvement or special focus in the context of financial devolution. Final request would be whether you could make available the copy of the Marga study which you just referred to for the benefit of the Commission.  Thank you very much. 

Gunawardana: On the last, I worked as Executive Governor and obviously I would place the request before the Chairman and I believe he would readily agree – he himself gave evidence here.  Chairman is Mr. Mangala Moonasinghe.  On the first, that is one of the very fundamental points that I want to make that the importance of local government, the marginalization of local government in the present system of devolution and its importance if democratic governance is to make sense to people.  People participate in the public life of a country at different levels.  People participate at the local level through elections to local councils; they participate at the provincial level through elections to Provincial Councils and they participate at the national level through elections to Parliament.  That each one of these tiers or levels of governance should have a distinct role.  The discourse debate today is on the relationship between the centre and the provinces and what we have had is transferring powers from the centre to the provinces.  Literature talks of moving from the bottom up what is usually referred to as the principles of subsidiarity(?) where you start by locating those functions that are most competently discharged at the local level at that level.  There is an accountability aspect in the principle of subsidiarity(?) which I referred to which makes it all the more important that those … where accountability can be established most directly should be located at that level and where the costs of service provision can be met at the local level to be located at the local level.  The importance of this is that it establishes an accountability framework between people and Government, and to my mind any reconciliation should be based on such a relationship. 

Now as far as the Finance Commission is concerned the Government … the 13th Amendment guarantees funds as are adequate to meet the needs of provinces being allocated from the budget … under the budget … from the annual budget, in consultation with and on recommendation of the Finance Commission.  What is the status of the fiscal aspects of devolution?  Provinces are assigned responsibilities in terms of the 3 lists.  List 1 – I trust this one is the provincial list – yes List 1 the provincial list.  What does this mean?  This means the assignment of responsibility for incurring expenditure for spending.  This requires resources and the resources are provided for by way of powers of taxation that are assigned to Provincial Councils.   

Now what we have … the situation that we have is one where overall taxation raises about 20% of the expenditure requirements of Provincial Councils; the balance 80% comes by way of grants from the Government … from the centre allocated for in the budget.  So provinces are responsible – over the last about 10 years – for about 11% of total Government expenditure in any year – 11 to 12%.    Local authorities are responsible for another 4 to 5%.  So overall Provincial Councils and Local Authorities are responsible for about 15% of total Government expenditure in a year.  So this gives us an indication of the size of devolution or the scope of devolution. Now Provincial Councils raise about 3% of total revenue that is raised by Government.  So there is the imbalance between 11 or 12%; 10 or 11% and 3%.  So imbalance of about 7% which is met by grants.  If one looks at the expenditure of provinces, approximately 80 to 85% of that expenditure is on recurrent costs of providing services.  There is about a 15% of expenditure which goes for development activities.  So the significant aspect and issue of fiscal devolution is the question of adequacy of resources for provinces.  Now how does one address the question of adequacy?  There are competing demands; transfers to local authorities or grants to local authorities are provided for in the budget.  We do not have revenue sharing provided for in the 13th Amendment to the constitution which would guarantee a certain amount of revenue which does not have to go through the discretion of the national budget process.  Obviously if one is to address this situation one needs to look at the total process of resource allocation at the national level.  This has not happened and therefore we have this situation continuing over the last … continuing up to date. 

Now what has the Finance Commission done about this?  Obviously that is the question that would be posed.  The mandate of the Finance Commission is basically two fold – first; to consult with Government and recommend to Government on the requirement of funds by Provincial Councils.  The final decision as to what funds are allocated rests with the Government, and usually the experience … my experience over the last 10 years or so has been that the recurrent expenditure is accommodated because 80% of the recurrent expenditure is on personnel and the salaries and personal emoluments must be met.  But as far as capital expenditure is concerned what is allocated would depend upon competing demands.  So the Finance Commission goes through a process of consultation with Provincial Councils before making its submissions to the Ministry of Finance.  There are negotiations with the Ministry of Finance on the needs of provinces. 

Finance Commission is to apportion this amount of money as between different provinces and the Finance Commission is required to take into account the disparities between the Western Province and the other provinces in order to bring about greater regional balance – balanced regional development.  The balanced regional development is a larger issue though provided for in the constitution which cannot be addressed through the grants to Provincial Councils and particularly in the context that provincial expenditure constitutes about 11% of total Government expenditure.  The devolution and fiscal devolution was a totally new experience.  We have had assessments of the current status of fiscal devolution; recommendations for improvement of the status of fiscal devolution and the Finance Commission has worked closely with an institute in India called The National Institute for Public Finance and Policy.  Now in the context of this overall situation what the Finance Commission has done, or has sought to do, is to improve how funds are utilized in the provinces which is also important, maximizing the returns from funds that have been allocated.   Now that is briefly the role and responsibility of the Finance Commission and the fiscal aspect of devolution as it exists today.   

Palihakkara: Mr. Gunawardana, thank you for you’re first hand experience.  You said in your presentation the 13th Amendment you described it as a missed opportunity and one in which you find design flaws as well as practice flaws.  Now given you’re first hand experience as a key official associated with its implementation for 10 years or more – I guess one of the most experienced public officials – what do you think has contributed more to its what you described as missed opportunity.  I am asking this because there was debate and we heard different views here in the Commission that what you need most is a good constitutional provision some say; others say no existing law is good enough, we should implement it properly.  That is my question to you. 

Gunawardana: How do I respond to that question?  The inadequacies or the shortcomings or the design flaws in the 13th Amendment, particularly in respect of fiscal devolution, arises in the context of how you look at the 13th Amendment.  If one looks at the 13th Amendment from the point of view of a federal constitution or a federal approach, then obviously there are significant gaps.  Now, I firmly believe that one can take the 13th Amendment as it is and achieve the full results that one can expect from … effect proper implementation of devolution.  Now let me clarify that very briefly.  It has been said that the success or failure of decentralization – and that applies to devolution therefore – is not so much design issues; I am not for a moment saying design issues are not important, but it is more on how it is implemented; how it is practiced.  There is an inherent problem with the 13th Amendment because it was introduced into a centrally driven system.  So unless the necessary restructuring takes place as between the roles of the centre and roles that have been created for the provinces, one is not going to have devolution working and that is what we have had.  I recall a project funded by the World Bank in 1988 or 89 called The Public Sector Restructuring Project which addressed some of these issues but very little has moved thereafter. 

 So I would state that despite design flaws it is more the practice of implementation that accounts for the current status of devolution in Sri Lanka.

 Hangawatte : Thank you Mr. Gunawardana.  I have a question on the same lines.  I think you answered partially when you said 13th Amendment was introduced in a central governance structure.  And having said that, the approach that the Finance Commission has taken so far – as you described – seems to be further strengthening the central governance by – you know when you hand over money to local authorities – but my question is within a unitary structure is it possible to have an administrative structure system whereby the local bodies – whether they be local government bodies or provincial – whatever you want to call them – can generate their own income and use that for the development within those localities whatever and which will make them more responsible then in terms of the expenditure and they will feel that is their own rather than some money coming from some entity – some Government or whatever right.  Is that possible or …? 

Gunawardana : It is possible, but there are limits.  When one constitutes spatial jurisdictions for devolution – local authorities, Provincial Councils – you are carving out jurisdictions within the existing economy and obviously there will be disparities in the size of the economy – the provincial economy or the local economy – and on that will depend the scope for collection of revenue and for being able to collect adequate revenue for a local authority to manage itself.  So obviously therefore there is always the gap between the expenditure requirements and the revenue that is generated.  So this has to be made good.  There is much that can be done in the current situation to improve the performance of local authorities within the existing structure … 

Hangawatte: Within the existing structure by creating some kind of competitive structure, you know, competitive process and competing with each other and generating … 

Gunawardana: That is one; and also creating incentives to collect more revenue.  The current system of grants to local authorities does not create incentives because the current system of grants to local authorities is for the reimbursement of salaries so that it does not create an incentive for a local authority to improve its revenue performance.  So major restructuring of local government is necessary.  But that does not require … at least the fiscal aspects don’t require any amendments to laws.  There is currently work being done on bringing about amendments to the relevant Ordinances and enhancing revenue raising capacities but the particular issue that I referred to can be worked out as a policy measure but it requires extensive consultation and discussion with local authorities. An issue that bugs the system as it is, is the fact that there is a Finance Commission and a Ministry of Local Government and Provincial Councils.  Not that there is no clear demarcation.  The Finance Commission is set out in the 13th Amendment but the Ministry of Local Government and Provincial Councils is the agent of the centre for devolution.  So there is a certain ambiguity as to who would be responsible for … but when one goes beyond the specific mandate of the Finance Commission as far as the Finance Commission is concerned. 

Hangawatte: Just one question about the Marga Institute study regarding the methodology.  This is a methodological question really.  You said that you used a sample of 100 persons – am I right? 

Gunawardana: Yes, approximately about100. 

Hangawatte:So with that 100 sample size – that population – what type of population did you extrapolate your results to? 

Gunawardana: I agree that methodologically it is inadequate, but we set up groups of about 30 to 35 in each of the districts and they responded to our questionnaire; and then we conducted a separate focus group discussion with members at the community level drawn from different strata – officials, agriculture, women, youth and trade chambers.  But what surprised us and what is important to us was that the perceptions of these two groups broadly corresponded – there was large area of correspondence between these.  So we thought that would be good enough to go ahead with our findings and publish our findings.

Hangawatte: Thank you.

Chanmugam: Yes Mr. Gunawardana.  I would just like to ask you one or two questions.  One is – now in the separate Provincial Councils were there some Provincial Councils that administered their territories better than the others, and was there any reason because of human resources or anything like that? and two, when the elections were conducted was there an environment that it was reasonably free and fair or perceived to be free and fair?          

Gunawardana: The second question is tough.  I am not sure whether I will be able to respond to that.  But on the first, there were some early starters; for example, the north western province.  They got on to their job very quickly and passed a number of statutes, especially the statute on environment which establishes a provincial environment authority and which now excludes the Central Environment Authority from the North Western Province.  So the North Western Province was an early starter.  I have talked with the Chief Minister in the course of some other work I was doing and he said … and the senior officials there.  Their position was that they recognized the limitations in working Provincial Councils – political limitations rather than legal or constitutional limitations.  I was Additional Secretary to the Ministry of Provincial Councils in 1988 the first Ministry when it was established and I recall the Chief Ministers were getting a little – what shall I say – out of hand, and they were then brought into the meetings of the Government Parliamentary Group in order to ensure that there was coordination at the political level and there were no problems at the political level.  The political context in which Provincial Councils worked is important.  So, there were early starters like the north western province.  There were innovative measures taken by almost all Provincial Councils – Western Province under the Chief Minister Mr. Susil Moonasinghe – introduced a system of registration of vehicles as an ongoing process rather than doing it at the end of the year making it more convenient for people to get their vehicles registered.  I mean this may be considered a small thing but there were many innovations like that.  Some were definitely affected by the capacity of staff officials they have had.  Senior officials of the public service showed no interest in taking up positions with Provincial Councils, and even to-date there are serious problems as regards capacity for planning; capacity for budgeting in Provincial Councils.  I am not sure whether I answered your questions.  

Paranagama: Mr. Gunawardana.  What is the failure of implementing the 13th Amendment and the devolution of power?  Can you say that there was no real intention to devolve power?  It was first introduced to merely get over some problems.  

Gunawardana: Yes, I think I said that the 13th Amendment was introduced for political reasons but at the same time I also did say and I do say that its relevance rests on how devolution manages development and that is precisely the situation that we have today. 

C.R de Silva: Thank you Mr. Gunawardana for that well structured presentation.  I think we all benefited by the ideas that you expressed and certainly it will be very helpful in formulating our recommendations.  Thank you. 

Gunawardana: Let me express my deep appreciation of the opportunity that was afforded to me to come before you and make my submissions.  Thank you.






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