[Submitted in Spanish, printed only in translation]

THE STRUCTURE FOR INTER-GOVERNMENTAL RELATIONS AND DISPUTE RESOLUTION

  1.  The Spanish Constitution (1978) established a model of territorial organisation on which the foundations of a multilayered State rest. Within this State there is a three-tiered system of administration: central, regional and local. The three levels independently fulfil the responsibilities which fall within their remit.

  2.  The changes to the structure of the Spanish State brought about by the Constitution were substantial, and Spain made the transition from an essentially centralist to a largely decentralised State, with devolved administrations exercising a great many functions. In 1980 the central Government was responsible for 87 per cent of all public expenditure, the devolved administrations controlled 4 per cent and local administrations 9 per cent. Today, the central Government accounts for 47 per cent of all public expenditure while the devolved and local administrations are responsible for 37.7 and 15.5 per cent, respectively.

  3.  In the 23 years since the devolved arrangements became fully operative, there has been a widely felt need for greater co-operation between administrations so that they can better fulfil their duties at each level of government. Co-operation between administrations should prevail in the relations between the State and the devolved administrations so that the actions performed by the various authorities are all consistent and may therefore realise the aims that each authority has been set.

  4.  Now that the process of decentralisation is drawing to a close in Spain—Education and Health matters have been recently devolved—we need to open a new chapter which should be governed by the principle of co-operation. The Government believes that the existing inter-governmental arrangements should be reinforced and further enhanced.

  5.  The main existing arrangements and machinery for co-operation between the State and the devolved administrations fall into four categories: i) Sectoral Conferences and Bilateral Committees, ii) Joint Planning and Programmes, iii) Co-operation Concordats, and iv) Joint Devolution Committees. All these arrangements are governed by Law 30/1992 on the Legal Regime Governing Public Administrations, and the Common Administrative Procedure, the only exception being Joint Devolution Committees, which operate in conformity with Law 12/1983 on Devolution Procedures.

Sectoral Conferences [Conferencias Sectoriales]

  6.  Sectoral Conferences are multilateral committees which bring together representatives of ministerial rank of both the State and the devolved administrations to discuss matters of common interest and settle any public policy issues on which the devolved administrations have conflicting views.

  7.  Sectoral Conferences are chaired by the relevant minister—this is dependent on the matter under discussion—and their primary objective is to debate and, where appropriate, reach agreement on the general policy in a given area. They are, therefore, of a clearly political nature, although specific decisions may be adopted which often translate into administrative actions.

  8.  Membership of Sectoral Conferences is restricted to Consejeros Autonomicos [regional ministers]. In their absence, another member of the region's Executive can attend in their place. Sectoral Conference meetings are convened by a central Government minister.

  9.  With regard to the workings of Sectoral Conferences, each Conference will abide by the rules approved by the parties at the first meeting of the Conference. These rules concern such aspects as the role, frequency, notification and agenda of the meetings, the quorum and the conclusion of agreements.

  10.  Agreements are concluded on the principle of mutual consent by the parties. In practice, unanimity is sought, ie the highest possible level of consensus. Nonetheless, and given that the agreements reached within a Sectoral Conference are only binding on the parties agreeing to them, unanimity, albeit desirable, is by no means a necessary requirement. The outcome of these meetings is often an agreement or concordat.

  11.  Each Conference has a number of support staff who are charged with organising the meetings. These usually include the Directors-General responsible for the matters to be discussed and technical staff of the devolved administrations.

  12.  There are 25 Sectoral Conferences at present, which means that the number of Conferences overseen by a given Minister will vary according to the matters to be discussed. The 25 Conferences met 40 times in 2000. The issues discussed are increasingly important and draft parliamentary bills on such key areas as education, justice and infrastructure are discussed at Conference meetings before they go through Parliament. Of particular interest is the Sectoral Conference on European Union Matters, which is convened by the Ministry for Public Administrations, and is a key element in the way in which the regions take part in the upward process of Community law-making.

Bilateral Co-operation Committees [Comisiones Bilaterales de Cooperacion]

  13.  Bilateral Co-operation Committees are the other existing co-operation route: bilateral co-operation between the State and each of the devolved administrations. Its machinery and working procedures are little regulated in order to allow the parties to determine working arrangements which are appropriate to each case. They are very flexible committees that try to respond to the need for solutions to specific problems arising within each of the autonomous communities.

  14.  The range of matters which the bilateral committees may discuss make them an ideal tool for tackling specific issues at the highest political level as the bilateral committees bring together political representatives of the State and an autonomous community. The number and membership of the delegations will vary according to the matters to be discussed.

  15.  Since the amendment of the Organic Act on the Constitutional Court pursuant to Organic Law 1/2000, bilateral committees have played an important new role. In Spain, when the State or an autonomous region considers that a law infringes upon its competences, it can approach the Constitutional Court and request that a decision be made on whose remit that particular matter falls within. The revised Act provides that the parties may extend the deadline for challenging a disputed piece of legislation from three to nine months in return for a compromise that the State and the autonomous community will reach a negotiated solution in a bilateral committee, thus averting the risk of an appeal of unconstitutionality being lodged. Since this amendment of the Constitutional Court Organic Act was approved, a number of agreements have been reached which have prevented five Acts from being challenged before the Constitutional Court.

Joint planning and programmes

  16.  These are very important co-operation arrangements. Very often joint actions are needed in respect of matters over which both the State and the autonomous regions have powers.

  17.  Joint plans and programmes set common objectives to be achieved, work to be completed by each administration, funding and human and other resources to be committed and the timescale for plans and programmes, as well as monitoring arrangements.

Co-operation concordats

  18.  These are by far the most commonly used co-operation arrangements between the State and the autonomous communities. Every year hundreds of co-operation concordats worth several hundred million euros are approved. (Between April 2000 and April 2001, 665 co-operation concordats worth more than

1,600 million were authorised or concluded between the State, the autonomous communities and local government agencies.)

  19.  Concordats are agreements between public administrations involving a Ministry and one or several autonomous communities. Local government bodies also often take part.

  20.  A concordat is a legal instrument of a contractual nature. Its aim may vary in scope. A wide range of matters have been the subject of concordats, including the exchange of information, public works, the provision of technical assistance and the management of resources. At any rate, concordats are invaluable instruments which make it possible to act jointly and share the costs incurred and, more important, involve several administrations with a common aim.

  21.  Within the State General Administration, it is Ministers who are authorised to conclude concordats, although prior authorisation from the Ministry for Public Administrations must be obtained.

Joint Devolution Committees [Comisiones Mixtas de Traspasos]

  22.  These are bodies established with the single purpose of conducting negotiations between the State and each of the devolved administrations. Their aim is to define the specific terms whereby human and other resources are transferred to a devolved administration in order that it can fulfil the duties which have been previously allocated to it.

THE OPERATION OF INTER-GOVERNMENTAL ARRANGEMENTS AND THEIR EFFICACY IN THE EVENT OF POLITICAL DISPUTES

  23.  Some of the arrangements described above, including Bilateral Co-operation Committees, are of a mixed political and administrative nature and their chief role is to ensure co-operation. Their efficacy would therefore be self-evident should a politically-charged dispute arise. These bodies have the power to set up any appropriate fora to discuss political matters on which there is disagreement between the State and the devolved administrations or between devolved administrations.

  24.  One feature worth noting is the role of Bilateral Co-operation Committees, markedly political bodies which allow the highest State and regional political representatives to get together and reach a negotiated solution to any conflicts which may arise between two administrations, in an informal and direct way. As already mentioned, the role of these arrangements, which seek to achieve agreement and avert conflict, is to prevent recourse to judicial review by the Constitutional Court.

USE AND USEFULNESS OF FORMAL AND INFORMAL RELATIONS

  25.  Both types of relations are essential for the smooth running of Spain, which is a decentralised State. Formal arrangements have already been described. Nevertheless, it is worth noting that preparatory work aimed at bringing the parties closer together and discussing issues is required in order that bodies such as the Sectoral Conferences and Bilateral Committees can carry out their tasks and reach agreements that are satisfactory for all the parties involved. This preparatory work is often carried out by means of informal arrangements involving interaction between political parties.

  26.  Informal relations between public servants from different administrations are also important. These public servants look after the technical side of the arrangements, laying the groundwork in working groups and through other arrangements.

DO INTER-GOVERNMENTAL RELATIONS TEND TO BE BILATERAL OR MULTILATERAL?

  27.  In Spain, central Government and the devolved administrations maintain bilateral and multilateral relations, depending on the area concerned, sometimes overlapping each other. Wherever possible, agreements are reached, and decisions taken, on a multilateral basis.

  28.  There are several reasons for this. First, under Spain's territorial system, all devolved administrations possess an equal legal and institutional structure and remit. This means that all devolved administrations are at the same institutional level and there is no room for discrimination or inequality unless it is clearly justified.

  29.  Secondly, there are 17 devolved administrations in Spain, which makes it very difficult to reach agreement on a bilateral basis. Thus, the best way to reach transparent and satisfactory agreements for all devolved administrations is by conducting multilateral negotiations with all the parties involved. No devolved administration will then be able to plead ignorance or claim that a given autonomous community has been discriminated against.

  30.  However, some issues can only be dealt with bilaterally as they do not affect the entire country but just central government and a devolved administration. In this case, bilateral arrangements such as Bilateral Co-operation Committees are used, which only discuss issues concerning the State and one devolved administration.

  31.  Thirdly, despite the fact that all devolved administrations are at the same institutional level, as mentioned above, there are several elements that differentiate some devolved administrations from others and require the use of bilateral relations:

—  a second co-official language is spoken in six devolved administrations;

—  insularity;

—  the special financial regime for the Canary Islands;

—  two devolved administrations—the Basque Country and Navarre—have a separate tax system; and

—  the existence of a regional police force for Catalonia and the Basque Country.

  32.  These specific features make it necessary to resort to bilateral arrangements to address any related issues.

HOW THE DEVOLVED ADMINISTRATIONS ARE STAFFED

  33.  There are two types of civil servant in Spain's devolved administrations: civil servants who were first employed by central government and later transferred to sub-national government bodies under devolution arrangements; and those who were directly recruited by the devolved administrations.

  34.  Since their inception 20 years ago, devolved administrations have been recruiting their own staff and have their own cadres of public servants.

  35.  Devolved administrations also employ civil servants who were previously employed by central government. These were recruited and trained by the latter but were transferred to a devolved administration because the public services they worked in were devolved to regional administrations.

  36.  A national civil servant who is transferred to a devolved administration which has become the holder of devolved resources (human or material), is considered a full civil servant of the new administration, including for salary, professional and working purposes. A former central government civil servant may not be treated any differently to devolved administration staff, including in respect of pay and benefits.

  37.  Because devolved administrations have powers in such areas as health and education, the distribution of civil servants by employer as of July 2001 was as follows:

—  Central Government: 33.7 per cent (614,283)

—  Devolved administrations: 45.9 per cent (1,138,492)

—  Local government: 20.4 per cent (456,091)

FISCAL AND BUDGETARY ARRANGEMENTS

  38.  The introduction and gradual consolidation of a financial system by the devolved administrations has been one of the key elements in the devolution process over the last 22 years. The introduction of an appropriate financial system, which covered the growing financial needs of devolved administrations, has gone through several stages. The last of these stages closed with the adoption of a new common funding system. It was agreed with all the devolved administrations concerned in July 2001 and came into force in January 2002.

  39.  Article 157 of the Spanish Constitution provides that devolved administrations shall raise funding by:

—  levying their own taxes;

—  levying taxes transferred wholly or partly by the State;

—  receiving part of the State's revenue;

—  allocations from the National Budget; and

—  borrowing.

  40.  Devolved administrations have two separate sources of funding. Firstly, funds that originate outside the State/Devolved Administrations financial arrangements, namely:

—  taxes levied by devolved administrations—Surcharges to state taxes: Devolved administrations are allowed to set their own rates of tax within certain limitations. They cannot levy taxes on any goods or services that are already centrally taxed. Despite having tax-raising powers, funds raised in this way by devolved administrations accounted for 1 per cent of all funds in 2000;

—  earnings: Devolved administrations may raise funds through credit operations. Their borrowing powers are negotiated with the Inland Revenue. Such earnings represented 4.5 per cent of regional government funds in 2000;

—  European Union grants: Support is provided by the European Union through a number of funds, including the European Regional Development Fund [ERDF], the European Agricultural Guidance and Guarantee Fund [EAGGF] and the European Social Fund [ESF]. This aid amounts to 12 per cent of regional government funds; and

—  grants resulting from agreements between administrations: They represent 2 per cent of regional government finances.

  41.  Secondly, funds which are allocated under the provisions of the Financial System for Devolved Administrations [Sistema de Financiación Autonomica]. This system, based on the principles set above, is set out in Organic Law 7/2001 of 2001 and in Act 21/2001 and Act 22/2001 of 2001.

  42.  There are two separate regional financial regimes. The Basque Country and Navarre have, for historical reasons, a separate system based on the ancient "fueros" (historical rights). The other 15 administrations share a common financial regime, which regulates financial relations between the State and the devolved administrations and is based on the following principles:

—  sufficiency: to ensure that devolved administrations have enough resources to discharge their functions;

—  independence: Devolved administrations may design their own budgetary and financial policies;

—  solidarity: It seeks to ensure that all citizens, notwithstanding the region where they live, enjoy the same standard of service;

—  co-ordination: Its purpose is to ensure that public administrations have efficient financial mechanisms, thus avoiding inconsistencies in the different tax-collecting levels;

—  tax co-responsibility: Its aim is to delegate responsibility to the regions not only for expenditure policy but also for the collection of taxes; and

—  budgetary stability: This seeks to achieve fiscal consolidation.

  43.  These principles shaped the new financial system, which completed its passage through Parliament [Cortes] last December. This is the last of a series of financial regimes applied since 1980.

  44.  During the first period (1980-86), the Government paid block grants direct to devolved administrations on an annual basis.

  45.  During the second period (1987-1996), the block grants given to devolved administrations were intended for a five year period.

  46.  The third period (1997-2001) saw greater decentralisation in respect of the financial regime of devolved administrations, allowing these to administer part of the income tax levied by the central government. Devolved administrations were also given regulatory powers over certain aspects of the income tax they administered and other devolved taxes and duties—these are set and regulated by the central government-, ceding the devolved administrations a proportion of the revenue collected and/or regulatory powers over certain financial matters.

  47.  The current financial system, which has been in operation since January 2002, was approved for an indefinite period with the support of all of the devolved administrations.

  48.  Firstly, the financial requirements of each devolved administration are calculated by means of mathematical formulas which take account the following variables:

—  the region's population (94 per cent of General Fund allocations);

—  surface area (4.2 per cent);

—  population density (1.2 per cent); and

—  insularity (0.6 per cent).

  49.  These funding requirements are met from two funding sources: the General Fund (common responsibilities) and the Health Services Management Fund.

  50.  The following funding sources are used to meet expenditure:

—  Devolved Taxes: Wealth Tax; Estate Duty; Inheritance and Bequest Tax and Gambling Taxes. At present devolved administrations are also responsible for levying 33 per cent of personal income tax; 35 per cent of value added tax; 40 per cent of beer tax; 40 per cent of the tax on alcohol and derivatives; 40 per cent of fuel tax; 40 per cent of tobacco tax; 100 per cent of electricity tax and 100 per cent of the tax on specific means of transport;

—  Sufficiency fund: It is a new source, funded from the General Budget, to fill the gap between the financial needs and the revenue obtained by a particular devolved administration;

—  Levelling grants: They were established under the new Financial System for Devolved Administrations to guarantee that health and education services maintained a minimum standard throughout Spain;

—  Inter-territorial Compensation Fund [Fondo de Compensación Interterritorial]: It was established by the Constitution with a view to ensuring solidarity between the regions. At present it funds investment projects in those autonomous communities that are considered Objective I regions under the European Union Structural Funds.

  51.  The new model envisages establishing co-ordinating arrangements between the central government and the devolved administrations and the participation of the latter in the Inland Revenue. These are essential arrangements to ensure the necessary co-ordinated actions and the exchange of information.

  52.  Lastly, two Acts, requiring all levels of government to secure budgetary stability, were passed in December 2001 with a view to achieving the budgetary stability required by our membership of the single European currency.

  53.  Navarre and the Basque Country enjoy a special financial regime, based on the financial relations that existed between these two regions and the Exchequer in the nineteenth century. The Constitution of 1978 acknowledges and safeguards these rights.

  54.  Under this system, Navarre and the Basque Country can each legislate in respect of fiscal matters and levy all taxes and duties, both State and regional, raised within their respective territories. This could easily be described as tantamount to full fiscal sovereignty for the Basque Country and Navarre. In return for services which the central government continues providing in the two devolved regions, these have to make a single payment to the central government every year. The central government, the Basque Country and the three Navarran Provincial Councils [Diputaciones Forales] conduct negotiations to regulate, manage and levy taxes.