GOLD Report I - UCLG

75perty tax administration and business permittingand licensing). In India, many stateshave appointed a Lokayukta (ombudsman)to combat corruption and malpractice ingovernment, including local government. InJapan, there were a reported 92 cases ofcorruption in 2004 at the municipal level.Measures to combat corruption includestrengthening the external audit system andcheck up and reform of the accounting process.But elsewhere (e.g. Pakistan, Philippinesand Indonesia) the capacity of centralgovernment to monitor and audit localgovernments remains a major concern. Forexample, reports from the Philippine Centerfor Investigative Journalism point out that upto 70% of local health funds disappear as aresult of corruption.III.5. Central-Local RelationsLocal governments in the selected countriesoperate under a legal framework that is definedby higher levels of government. In unitarynations such as China, Indonesia, Japan,Korea, New Zealand, Philippines, Thailand andVietnam, central governments prescribe thepowers and functions of local government. Infederal systems such as Australia, India,Malaysia and Pakistan local governments areanswerable to the state or provincial government.In Australia, state and territory ministersfor local government may dissolve localcouncils and appoint administrators to carryout all local government functions. When thishappens, the ministers usually have to holdpublic inquires into the alleged failings of theconcerned council that justified the intervention.Even state constitutional provisionsthat restrict these powers can be amendedrelatively easily (CLGF 2005:29). In New Zealandthe 2002 Local Government Act gives theminister for local government the power toinitiate review of local governments for mismanagementor deficiencies in council decisionmaking. In India there are no specialavenues for intergovernmental relations andthere is no formal representation of local governmentin the state structures (CLGF2005:106).Generally speaking, local governments as selfgoverninginstitutions are both accountable totheir citizens and to the higher levels of governmentof which they are agents. In Pakistan,local political accountability remainsproblematic because of the control functionsthat the provincial government continues toexercise over local government on matterssuch as local personnel management and localfinances. Local governments are also helplessin influencing grant-aided programs in theirjurisdiction because these are usually determinedby provincial and national legislators.By contrast, in Indonesia, decentralizationfundamentally altered the direction ofaccountability. Prior to the 1999 reforms, localgovernment was answerable primarily to thecentral government, but after the introductionof direct elections of provincial and localgovernment executives and legislatures, thedirection of accountability shifted markedly towardsthe local electorates.In most of the selected countries, national orstate level agencies perform general oversightof local government with regard to audit andprobity. Nevertheless, the extent of this‘upward’ accountability of local government tohigher levels of government differs markedlyamong countries in the region. In China andVietnam, local governments have a dual subordination,both sectorally (to central governmentministries and agencies) and territorially(to the people’s councils). The people’s councilsare themselves subject both to supervisionand operational guidance from the nationallevel and to guidance and inspection from sectorministries and agencies of central government.In India, state sectoral agencies oftenperform functions that overlap with localgovernment functions and preempt localgovernment responsibility 4 .In contrast to many countries in the region,central government ministries and agencies inJapan do not have direct control or supervisionover local governments but may only provideinformation and suggestions. However, theMinistry of Home Affairs exercises de factocentral fiscal supervision and control by way ofthe model budget that it presents to the localLocal governmentsin the selectedcountries operateunder a legalframework that isdefined by higherlevels ofgovernment4. Sethi (ed.), 2004,(pp.15-16.)