The great local government gambit

It will be hell to implement, but the recently passed Punjab Local Government Bill (PLGA) 2022 has taken another step towards an entrenched, empowered, third tier of government. 

The Act, which has been one of the first and few things on the legislative agenda of a weakened Pakistan Muslim League-Nawaz (PML-N) government in the Punjab, has stripped the chief minister of his discretionary power to dissolve local councils, has placed land development authorities under the jurisdiction of Municipal Councils, has placed organisations like WASA and TEPA as well as local taxation under the control of the mayors of each district, and has formed the Punjab Local Government Commission. 

All of these are progressive moves. Yet this is not the first time an ambitious local government Act has been passed through the Punjab assembly. In 2019, the Buzdar-led Pakistan Tehreek-e-Insaf (PTI) administration in Punjab had bulldozed the Local Government Act, 2019, and the Village Panchayat and Neighbourhood Councils (VPNC) Act, 2019 through the provincial assembly on the direct instruction of then prime minister Imran Khan.

Empowering local bodies has long been a talking point of Khan, and to his credit one of the first things he attempted to do when his party first came to power in KP in 2013 was to try and set-up a local government system. That experiment of course, as we will see later in the story, was a trainwreck inside a dumpster fire – with funds not being dispersed and local representatives completely toothless. But Khan learned from those mistakes and the 2019 Act that was passed through the Punjab Assembly was progressive, ambitious, and took the issues head on. While he was criticised for dismissing more than 58,000 sitting local government representatives, the Act itself was largely seen as a step in the right direction even by his opponents. 

Yet over the three years that his party was in power in Punjab, rather than the Act being implemented and local body elections taking place, Khan’s men in the Punjab rolled back on it, with policies such as the Punjab Spatial Strategy (PSS) and the Punjab Local Government Ordinance 2021, which undermined not just the spirit of the constitution, but the 2019 Act that had been passed by the same government. 

Much like the 2019 Act brought in by the PTI, the 2022 Act is also a prgressive step towards local bodies. In fact, by disallowing things such as the right to dissolve local governments, the new law goes further than the previous one. The issue, however, will once again be implementation. Profit looks at the administrative and economic impacts that the newly passed PLGA 2022 could have, and compares it with past attempts at implementing local government systems in the country. 

Why local governments matter 

Local government makes sense. We are not speaking here specifically of any local government acts that have been passed in Pakistan, but generally of a third tier of democracy as a concept. It is a more efficient administrative system and adds another tier to the democratic process, making accountability and access to said administrators a less arduous process than it currently is. It also allows communities to look out for and administer themselves in accordance with their own best interests, and leave legislators in the assemblies to the more important task of actually legislating instead of being caught up in gali mohalla riff raff.

But more than just being a third tier of democracy, having a local bodies system means having a new economic process. In essence, it is not just a new administrative stratification, but also involves the dispensation and spending of money. Things such as education and health that people automatically look towards the provincial government for would now be handled by local representatives. Perhaps most crucially, the ability of local governments to collect taxes and release their own schedule of taxation allows them to make their own money and spend it on themselves rather than waiting for the benevolence of the provincial or federal government. 

Currently in Pakistan, the system that operates rather than local body governments is a bloated, vain, and self-contradictory bureaucracy where rather than elected representatives controlling local issues, the district is in essence the fief of a government appointed district commissioner (DC). This not just centralises authority, but means locals with a better understanding of the area’s politics and requirements are not in charge of decision making. 

The precursors to the current Act – 2013 and 2019 

When the history books are written, one of the turning points in Pakistan will be the 18th amendment. In 2010 after the long years of the Musharraf era, the country finally seemed to be on a democratic track. And while the 18th amendment will always first and foremost be remembered for limiting the powers of the President and bringing Pakistan into a purely parliamentary form of democracy, it will also be remembered for bringing about the dissolution of certain powers from the centre to the provinces.

The dissolution of powers, however, is not complete yet. Under the 18th amendment, when matters such as health and education were made provincial subjects the understanding was that in due time these powers would be further devolved to a third tier of government – locally elected city, district, and tehsil representatives. Before the 18th amendment, the only serious effort at forming this third tier of government had been made in the Musharraf era. After it, the first time was when the PML-N government in Punjab and the PTI government in KP tried to form local governments in their respective provinces after coming to power in 2013. 

The PLGA 2013 enacted by the PML-N left much to be desired. It was a very basic form of local government to begin with, and there was not much control that the local functionaries would have. Under this system, larger issues such as health and education continued to be run by the provincial government through their DCs. More importantly, there was no guaranteed funding that these local governments received. 

The PLGA 2019 that followed and was brought in by the PTI improved on this significantly. Under this Act, a guaranteed 30 percent of the provincial budget would be given to the provinces through the Punjab Finance Commission. The PTI’s Act also introduced directly elected mayors (a measure that has been removed by the new 2022 Act), and gave more control of some subjects to the local governments but still retained major responsibilities such as health and education. Details of how the 2019 Act improved upon the 2013 Act have been covered by Profit before.

Read more:  Will Imran Khan’s new local government system be a game changer — not just for governance but also for the economy?

What happened, however, was that no local governments were ever elected under the PLGA 2019. Constant political turmoil in the Punjab, where then chief minister Usman Buzdar seemed to enjoy only the reluctant support of a large swathe of his own legislators and that too on the insistence of the prime minister, elections just did not come about. 

Even during Shehbaz Sharif’s iron-fisted rule of Punjab between 2008-2018, elections for local governments were delayed. Sharif’s assembly passed the PLGA in 2013 but elections could not be held until 2017, and then the elected bodies were dismissed by the chief minister when the PLGA 2019 was passed. Because of this, the PTI’s 2019 Act never really got a shot at being implemented. There was also the fact that the PTI themselves sabotaged the Act through the Punjab Local Government Ordinance 2021. 

“The PTI’s ruling alliance superseded its own 2019 Act with the 2021 Punjab Local Government Ordinance and sounded the death knell for proportional representation and the council’s ability to act as a check on the mayor,” says Dr Ali Cheema, a professor of economics at the Lahore University of Management Sciences who has written on the subject. “The 2019 Act radically changed electoral rules and introduced a party-based proportional representation system for the election of upper-tier councillors. If it had been applied, it would make councils representative by ensuring that the representation of political parties is in proportion to their voting strength,” he wrote in an op-ed for Dawn earlier this year. 

Of course, the PLGA 2019 never got a shot at being applied. As Dr Cheema described it, the PTI’s draft was a radical one and never seen before in Pakistan. The recently passed act by the incumbent PML-N government in Punjab improves even on that – particularly in regards to financial controls, independence from the provincial government, and the strengthening of democracy as a result. 

How the PLGA 2022 fares 

This is the context into which the PLGA 2022 has been born. To make a complicated story simple, in 2008 the 18th amendment entrenched Pakistan as a three-tier constitutional democracy. In 2013, a first effort was made in Punjab by the PML-N, and elections were indeed held. However, back then the League was frugal with sharing power with the local bodies and they definitely had training wheels on them, with the DC being much stronger than the elected chairman of a council and the chief minister retaining the power to dissolve the LGs any time he wanted. 

Another attempt was made in 2019, when the PTI walked in with a radical plan to reform local governments and drafted a generally solid piece of law. The problem was that elections were never held, the law was never implemented, and the PTI itself rolled back on it with an ordinance in 2021. Now, the PML-N has come back again and is trying to make the issue their own. 

“On his very first day in office, Hamza Shehbaz asked me where the draft for the local governments bill was. That is how high it has been on our party’s priority list,” says Ahmad Iqbal, an up-and-coming policymaker and PML-N leader who is one of the architects of the 2022 Act along with Awais Leghari. Back in 2019, when the PTI had put 58,000 local government representatives out of office, Iqbal had been the chairman of the Narowal District Council – essentially the mayor of Narowal. “For a political party to be in favour of and promoting local governments is quite antithetical. It does involve giving up some control, but we have long felt this has been long overdue,” he says.  

The basics of the PLGA 2022 are pretty simple. Nine Municipal Corporations will be created in the largest cities, namely Lahore, Faisalabad, Multan, Gujranwala, and Rawalpindi. These cities will have a three-tiered local government system, of which the basic building block will be Union Councils which have been restored. A similar system has been set up for other cities and divisional headquarters, with an overall 234 Municipal Committees being set up for all cities with populations between 25,000 to 250,000. 

All of these local government units will have the power to collect their own taxes, however because of a lack of infrastructure they will have to do this through the provincial tax collection machinery. One of the most impressive parts of the PTI’s 2019 Act had been the financial freedom and promise that nearly 30% of the provincial budget would be dispersed among the local governments. 

Under the recent Punjab budget, it was announced that Rs 528 billion is allocated to local governments. Of this, and any future budgets, 10 percent will go directly to the Union Councils through the Punjab Finance Commission – meaning around Rs 55 billion. “Around 26% of General Revenue Receipts (GRR) in the first two years and 28% of GRR from the third year onwards will be transferred directly to local governments (LGs) through the PFC. Approximately PKR 550 billion will be allocated to LGs,” explains Iqbal. 

This is pretty much a carry forward compared to the 2019 Act that the PTI had brought in terms of how much revenue is being given to local governments. The last time elected local governments were around in 2017 under the 2013 PML-N Act, district councils would have to get funding approval from the local DC on a project to project basis. This time, they will be empowered to make their own budgets with auditing oversight but no oversight from the DC. “As far as budgetary allocations are concerned, we tried to build a consensus. Back in January the PTI had been a part of the standing committee on this and we tried to include all of the things that had cross-partisan support,” says Iqbal. 

The really big changes 

According to a source close to the matter, the Act was nearly brought into force through an ordinance and not through the assembly. That is because the act has not been without its fair share of resistance. According to Iqbal, one of the sticking points was the control that the new Act has given local governments over local development authorities. This means that in Lahore, for example, the Lahore Development Authority (LDA) will now fall under the jurisdiction of the municipality. 

You see, land is one of the most important sources of revenue for local governments. Taxes on land transfers, taxes on immovable property, taxes on unused property, building taxes – all of these are major streams of revenue for local governments. Particularly in large cities where there is real estate development. In most of these cities, all of these streams of revenue are controlled by development authorities, like LDA and Faisalabad Development Authority (FDA) in Faisalabad and even by private housing societies like DHA. 

“There is some confusion regarding this as well. Because of the resistance, we have not been able to achieve the ideal situation of completely devolving these bodies to the local governments. Instead what we have done is empower the Punjab Local Government Commission to at some point completely devolve these companies. Until then, any action of these companies that is covered under local govt law – such as LDA building a road – they will now have to get approval from the MC.” 

This, of course, will be a big change. Development authorities all have a lot of power and unbridled powers. A lot of the ways they make money are by cannibalising revenues that would normally go to local governments, but in the absence of a three tier infrastructure the development authorities have been allowed to grow and become bloated. They will naturally be opposed to local government’s taking over. 

To give even more control to local governments over development authorities, one more significant change is that wherever the chief minister heads an authority or company, mayors will serve as vice chairmen; in all other cases, mayors will serve as chairman of authorities and companies performing functions that overlap with LGs. This is important for authorities like LDA because there the chief minister is the chairman but does not sit on the meetings and the vice-chairman takes control of the matter. So under this, the mayor of Faisalabad will be the vice-chairman of the FDA. 

This also points towards the importance of the formation of the Punjab Local Government Commission. This is a body in addition to the Punjab Finance Commission and is unique to the new Act. “The Punjab Local Government Commission will arbitrate all disputes and protect the autonomy of LGs as their guardian. There is no provision for early dissolution of LGs. Arbitrary control powers of CM, Secretary LG, Provincial Government; under past laws, have been deleted,” says Iqbal. 

This is a major change. The chief minister also no longer has the ability to dissolve local governments at his discretion, which is a major step towards entrenching local representation as a permanent law. “New Punjab LG Act (freshly approved) takes away the discretionary right of the CM/provincial government to dissolve local councils. One step closer to an actual, permanent third tier of government,” Dr Umair Javed, a professor of sociology at LUMS, tweeted after the Act was passed. 

In addition, all future recruitment in LGs above BPS-11 will be conducted competitively and transparently through the Punjab Public Service Commission (PPSC) to strengthen the administrative and technical capacity of LGs, Around 150 LG officers recruited through PPSC regularised effective immediately. 

Where (and why) did the mayors go? 

There is, of course, one glaring thing missing from this Act. In fact, it is not just missing, it is a regression. “A major shortcoming of the new Act is reversion to indirect elections for heads of local government, as in 2001 and 2013. Only the UC/ward tier is directly elected,” tweeted Javed. The absence of directly-elected mayors means that there will not be strong mayors around who will be able to lead the financial and economic strategy of a city. “Mayors vested with direct electoral authority will have greater bargaining power vis-à-vis the provincial government, which will help local governments take root,” says Cheema. 

“City or district-wide electoral mandates provide a powerful point of mayoral accountability. This will incentivise mayors to focus on district or city-wide issues, rather than hyper-local issues that become the focus of local councillors elected from small wards.”  

The Act has, to be fair, made a number of changes that make local governments more autonomous and powerful. The threat of the chief minister dissolving their assemblies at any time is no longer constantly dangling above their heads. This in addition to collecting taxation and controlling development authorities means they will be able to tailor their own responsibilities. In addition to this, bureaucratic oversight has also significantly decreased. The former post of ‘chief officer’ which had been introduced in the 2019 Act had a lot of oversight. 

The DC and the MPA are household terms – princely figures in local politics and the distribution of money. But what the PTI’s plan introduces is the concept of a chief officer, a figure now verging on the Kingly in his district. You see, in the new system, the PTI has argued that a district is too large to be run by a single body efficiently, so the largest division in the new local bodies system will be a Tehsil. 

“In the new Act we have increased the administrative autonomy of mayors and LG heads. Mayors and chairmen will interview a panel of officers  for selection as chief officer and will have the power to surrender them back to the Punjab LG Board in case of poor performance,” says Iqbal.  

However, there not being directly elected mayors is possibly a large downside of the Act, one recognised even by Iqbal himself. “I was conflicted initially over this as well. The thing is right now, one of the biggest changes in the offing is real estate being controlled by local governments. If a real estate developer wants to throw Rs 20 crore at an election campaign and then run a city to benefit himself, the damage will be immense. This way through indirect elections we are trying to encourage middle-class politicians to come up as mayors and heads of LG admins.”  

Conclusion 

The PLGA 2022 is a well thought-out piece of legislation. It honestly takes a look at previous policy and has incorporated parts of the PTI’s PLGA 2019 as well, and has tried to take a practical approach to issues that LGs have had in Pakistan historically. To their credit, the PML-N have not gone back to their original 2013 plan, which had its fair share of issues. The problem, of course, is that it is not a final draft and implementation will come with compromise. 

Currently, the PML-N is in a difficult position in Punjab. Its government has been formed through turncoats, whose votes have been ruled to not count by the Supreme Court. The Act was also taken through the Punjab Assembly without the presence of an opposition and a lack of debate. 

Local governments are a major political and economic issue in the country. Their formation requires political consensus which the PML-N does not have at the moment. The Act itself is ambitious and well-intentioned. The problem, of course, is whether or not that will be enough. For that, we will all have to wait and watch.