Land powers and public finance – New draft constitution

By C. A. Chandraprema

(Courtesy of The Island)

Under the provisions that were introduced to our present Constitution by the 13th Amendment, rights in or over land, land tenure, transfer and alienation of land, land use, land settlement and land improvement, was said to be a subject devolved to the provinces. However, according to Appendix II of the 9th Schedule of the Constitution, State land shall continue to be vested in the Republic and may be disposed of in accordance with the powers vested in the President to dispose of land under the public seal. State land required for the purposes of the government in a Province, in respect of a national or concurrent subject may be utilised by the government after consulting the relevant Provincial Council. The government shall make available to every Provincial Council State land within the Province required by such Council for a Provincial Council subject. The alienation or disposition of the state land within a province to any citizen or to any organisation shall be by the President, on the advice of the relevant Provincial Council, in accordance with the laws governing the matter. There was a degree of ambiguity in the wording of these provisions.

The definitive Supreme Court interpretation in relation to land powers in our present Constitution is contained in the judgment of the 2013 case of Solaimuttu Rasu vs State Plantations Corporation where a three-member Bench held that under the provisions of the 13th Amendment, State land comes under the central government and not the provincial councils. The argument was that the unequivocal opener of Appendix II of the Ninth Schedule of the Constitution -”State Land shall continue to vest in the Republic and may be disposed of, in accordance with Article 33 (d) and written laws governing the matter.” points to the fact that State Land belongs to the Republic and not to the Provinces because Article 33(d) of the constitution (before the 19th Amendment) refers to the president’s exclusive power to dispose of land belonging to the Republic. Furthermore, the list of powers of the government in the Ninth Schedule of the constitution clearly states that “State Lands and Foreshore” comes under the government.

The provincial councils list of powers in the Ninth Schedule of the Constitution specifies that PCs will only have “rights in and over land, land settlement, land tenure, transfer and alienation of land, land use, land settlement and land improvement”. Furthermore, the government is to make available to every Provincial Council State Land within the Province required for a Provincial Council subject. Only after such land is provided to the provincial council by the government, does the Provincial Council have the power to ‘administer, control and utilize’ such State Land. This implies that a Provincial Council cannot appropriate state land without the government making that land available to it. The 2013 Supreme Court judgment in Solaimuttu Rasu vs State Plantations Corporation is thus the Sri Lankan equivalent of the Indian Supreme Court judgment in the 1962 case of State of West Bengal vs Union of India, which upheld the powers of the Indian Central government over State land in the whole of India.

Provinces to have complete  power over land

What the proposed draft constitution aims to do with regard to powers over land is nothing less than the complete upending of the situation that prevails at present with regard to land powers. If this constitution is implemented, the provincial councils in Sri Lanka will have much greater powers over land than the States in India. According to the proposed changes, all State land within the Province shall be at the disposal of the Provincial Administration for the purposes set out in the Provincial List. The Provincial Administration will exercise rights in or over such land, including land tenure, transfer and alienation of land, land use, land settlement and land improvement. Where the government requires State land in a Province for the purpose of a subject on the National List, they may require the Provincial Administration to make that land available to the government and the Provincial Administration shall comply with such requirement.

Where a Provincial Council does not comply with such requirement, the President shall refer the matter for arbitration to a tribunal consisting of a member appointed by the Prime Minister, a member appointed by the Chief Minister and a Chairman nominated by the two appointed members. If there is no agreement, the Chairman will be appointed by the constitutional council. The decision of such a tribunal may be challenged in the Constitutional Court. Thus the final power over land is with the province and there are various mechanisms including the Constitutional Court to enforce that provision. Even when it comes to land required for security related matters, there is no diminution in the powers of the provinces. Where following consultations between the central government and the Provincial Administration, the President on the advice of the Prime Minister is satisfied that State land in a Province is needed for National Security or Defence, the President may, on the advice of the of the Prime Minister, direct the Provincial Administration to make available that land to the Central Government. A Provincial Council, aggrieved by such decision may appeal to the Constitutional Court.

Under the provisions of the 13th Amendment, the allotment of lands in major irrigation schemes was to be on the basis of the national ethnic ratio. In the distribution according to such ratios, priority will be given to persons who are displaced by the project, landless of the District in which the project is situated and thereafter the landless of the Province. Under the proposed draft constitution, this is to be changed so that priority in land settlement schemes after the commencement of the Constitution shall be accorded to landless persons in the following order – (a) firstly, to persons of any sub-division, recognized by law, of the relevant District, (b) secondly, to persons of the relevant District, (c) thirdly, and to persons of the relevant Province, and (d) fourthly, to other persons.

Our present constitution has provision for a National Land Commission which will be responsible for the formulation of national policy with regard to the use of State land. The Commission is to include representatives of all Provincial Councils in the Island. The National policy on land use will be based on technical aspects having regard to soil, climate, rainfall, soil erosion, forest cover, environmental factors, economic viability etc. In the exercise of the powers devolved on them, the Provincial Councils will have due regard to the national policy formulated by the National Land Commission. Thus, under the present constitution, land use policy is firmly in the hands of the government and the provincial councils are mandatorily required to abide by the directives of the National Land Commission. What is envisaged in terms of the National land Commission under the proposed draft constitution, is very different.

The proposed draft constitution envisages the setting up of a National Land Commission with equal representation for the government and the Provinces. This body is to formulate national land use policy, taking into account standards relating to the appropriate amount of forest cover, exploitation of natural resources, the quality of the environment and other relevant matters. In formulating such policy the National Land Commission shall afford ‘a margin of appreciation’ within which the Central Government or Provincial Administrations may pursue their respective policies. Where, after affording the Central Government or the Provincial Administration an opportunity to be heard, the Commission forms the opinion that the Central Government or a Provincial Administration is acting in deliberate non-compliance with guidelines or directions made by the Commission, the Commission may refer the matter to the Constitutional Court.

These provisions indicate quite clearly that the authority that the present Land Commission has, is to be whittled down under the proposed draft constitution. The Constitutional Court may, where it is of the view that it is necessary to do so, make permanent or interim orders directing the Central Government or the Provincial Administration (or specified officers / authorities thereof) to comply with such guidelines or directions or such parts thereof, as the Constitutional Court may direct. Where the Provincial Administration acts in contravention of a permanent or interim order made by the Constitutional Court, the Constitutional Court may make order that the Central Government shall assume control over such extent of specified land as necessary to ensure compliance, for a specified period. What these provisions are meant to look like safeguards are actually meant to allow the provinces to dance circles around the central government in terms of land use policy. Ecologically, how feasible is it for a country like Sri Lanka to NOT have a centrally planned and administered land policy?

Public Finance

Under the provisions of our present Constitution, Parliament has unequivocal control over public finance. Article 148 of the Constitution clearly states that “No tax, rate or any other levy shall be imposed by any local authority or any other public authority, except by or under the authority of a law passed by Parliament or of any existing law.” As has been made clear in previous instalments of this series, aim of the proposed draft constitution is to have a weak centre and very powerful quasi-independent provinces and the provisions relating to public finance are also to be changed appropriately. For example, the present Article 148 of the Constitution is to be amended to read as follows: “No tax, rate, or any other levy shall be imposed by Parliament, Provincial Councils, Local Authorities or by any public authority, except by or under the authority of an Act or Statute passed in accordance with the Constitution.” It will be noted that authority over public finance is thus to be shared between the centre and the provinces.

Under the present Constitution, there is a Consolidated Fund to which is paid the produce of all taxes, imposts, rates and duties and all other revenues and receipts of the Republic not allocated to specific purposes. Withdrawals from the Consolidated Fund will be by the Minister of Finance on the basis of a resolution of Parliament allocating the money for that purpose. Under the proposed draft constitution, the exclusive powers of Parliament over public finance is to be diluted by enabling both Parliament and the Provincial Councils to withdraw money from the Consolidated Fund and to impose taxes. The PCs are also to have their equivalent of the Consolidated Fund in the form of ‘provincial funds’ to which revenues raised and all fees accruing to the Provincial Council, all loans raised by such Council and all other monies received by such Council will be credited. Furthermore, Provincial Councils are also to have Contingency Funds on the same model as the Contingency Fund of the central government.

According to Article 154R of the present Constitution the Finance Commission consists of the Governor of the Central Bank, the Secretary to the Treasury and three other members appointed by the President on the recommendation of the Constitutional Council, to represent the three major communities. The task of the Finance Commission is to make recommendations on allocations to meet the needs of the provinces. In making such recommendations, the Commission is to take into account – (a) the population of each Province (b) the per capita income of each Province; (c) the need to progressively reduce social and economic disparities ; and (d) the need to progressively reduce the difference in the per capita incomes of the Provinces. Under the proposed Constitution, the Finance Commission is to be expanded and consist of the Governor of the Central Bank of Sri Lanka, the Secretary to the Treasury, five distinguished financial experts, appointed by the President on the recommendation of the Constitutional Council, three members to represent the Provinces, and one member to represent local government institutions.

The task of the Commission will be to make recommendations to the government on the allocation of finances to the National, Provincial and Local spheres of government and allocation of funds to individual Provinces and Local Authority areas, taking into account factors such as the national interest, any provision that must be made in respect of the national debt, the needs and interests of the national government, the need to ensure that the provinces and local authorities are able to provide basic services, the fiscal capacity of the provinces and local authorities, the developmental needs of the provinces and local authority areas, economic disparities within and among the provinces, etc. The most important thing to note is that under the present constitution, the Finance Commission has only a consultative role and it can only make recommendations.

But under the proposed draft constitution, there is a provision which reads as follows: “Parliament shall take due cognizance of the recommendations of the Finance Commission in making decisions in the exercise of its powers and duties relating to public finance.” What this means is that the Finance Commission is to become a decision making body which can actually dictate terms to Parliament. The Provincial Councils will make allocations to the local authorities in accordance with the guidelines and criteria or directives specified by ‘the Finance Commission, or Parliament, as the case may be’. In addition to this powerful Finance Commission, under the proposed new constitution, there is to be a ‘Forum of Finance Ministers’ composed of provincial finance ministers and chaired by the Finance Minister in the central government which will meet bi-annually for consultation between the national, provincial and local spheres of government in matters relating to finance.

(To be continued)

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