Transferring governance functions back to the Centre will go hand in hand with increased demands for greater resources for the Centre
The passage of the 18th Amendment was a watershed moment in the history of our constitutional development. Having been rejected for more than six decades, the demand for greater provincial autonomy was finally met when the 18th Amendment to the Constitution was passed in 2010. The Concurrent Legislative List was abolished and all residuary powers were transferred to the provinces. This included a wide range of legislative subjects including education, health, curriculum, environment, labour and so on.
Based on the principle that “finance follows function”, the transfer of legislative and executive competence from the Centre to the provinces was accompanied by a historic change in the operational design of fiscal federalism in Pakistan by increasing vertical transfers from the federation to the provinces. The idea was that as more functions are devolved to the provinces, they also need to be given greater resources in order to discharge those functions.
Article 160(3A) was brought in to lock that arrangement in place. It provides that the share of provinces in each National Finance Commission Award “shall not be less than the share given to the provinces in the previous award”. So once a province’s share has been set out in the NFC Award that share can never be reduced.
This is presumably fine so long as finance follows function and both move in tandem from the centre to the provinces. But if this chain is broken – and this is where the judiciary comes in – the disruption caused by this breakdown can plunge the existing system into a state of disequilibrium. There are signs that that process has already begun.
Consider the Supreme Court’s decision in Sui Southern Gas vs Federation of Pakistan. Decided in 2018, the Supreme Court ruled that entries in the Federal Legislative List of the Constitution are to be given their “widest possible meaning”. Because the Federal Legislative List determines the legislative competence of the Centre, an interpretive rule that prescribes an expansive reading of the list actually enlarges the legislative competence of the Centre and expands the range of functions that it can perform.
The impact of this interpretive rule is evident in the court’s detailed judgment in Government of Sindh vs Nadeem Rizvi where the court ruled that the transfer of Jinnah Postgraduate Medical Centre (JPMC), National Institute of Cardiovascular Diseases (NICVD), National Institute of Child Health (NICH) and Shaikh Zayed Postgraduate Medical Institute (SZPMI) from the Centre to the province was unconstitutional. Relying on the interpretive rule laid down in Sui Gas, the Court held that the Federal Legislative List is to be “liberally construed” and found the institutions to fall under Items 15 and 16 of the Federal Legislative List whose ownership should therefore revert back to the federal government.
The majority in that judgment went a step further and in a puzzling passage tried to justify the federal government’s ownership and control over these hospitals by tying it to Article 9 of the Constitution and the state’s duty to protect and guarantee the “right to life”. The federal government “cannot be absolved” from its responsibility of protecting fundamental rights as this duty “prevails, notwithstanding the respective domain of [f]ederal and [p]rovincial executive authority”, the court held.
Both these decisions have far-reaching consequences for the future of the 18th Amendment because the contours of provincial autonomy post-2010 are still in the process of being judicially defined. Issues such as control over curriculum, education, taxes and other regulatory institutions that have historically been significant in defining the relationship between the Centre and the provinces are currently being litigated before the high courts. As and when some of these cases get decided under the expansive rule laid down by the Supreme Court in Sui Gas, and the exceptionally broad duty to protect fundamental rights upheld in Nadeem Rizvi (which can be used to justify federal intervention in just about any area), subjects that had otherwise been devolved to the provinces will gradually move back to the Centre.
Calls for reviewing the 18th Amendment will only get stronger and as this movement gathers steam, the historical conflict between the Centre and the provinces will resurface with a more intense and emotive appeal.
As provincial functions move back to the Centre without the accompanying transfers needed in finance, this expansion of the centre’s legislative competence will generate a demand for an increase in the federation’s fiscal share from the divisible pool because it will be needing greater resources to discharge those functions. Given the constitutional bar contained in Article 160(3A) any change in the vertical distribution of fiscal resources would require a constitutional amendment.
This means that unless the Supreme Court revisits the expansive rule laid down in Sui Gas and limits the reasoning given in Nadeem Rizvi, the process of transferring more and more functions back to the Centre by way of judicial fiat will be hard to stop and the resulting demand for greater resources for the Centre will grow louder. As a consequence, calls for reviewing the 18th Amendment will only get stronger and as this movement gathers steam, the historical conflict between the Centre and the provinces will resurface with a more intense and emotive appeal.