The Federal System Federal Features in Malaysia

Federalism is an association of states. Its defining feature is that there is duality of government. There is a common central government in charge of matters of general concern.

 In addition there are a number of semi-autonomous regional units whose rights and responsibilities are clearly demarcated in a supreme Constitution. The division of powers is protected by judicial review.

Federal Const provides for a division of legislative, executive, judicial and financial powers between the center and the states

 All states are allowed to retain their own Constitutions subject to the requirement that their Constitutions shall contain certain essential provision about parliamentary democracy and constitutional monarchy provided in the Eight Schedule of the Federal Constitution.

 The legal and political set up in the States must reflect the fundamental features of the Federal Constitution The sovereignty of states rulers is guaranteed by the Fed Constitution.

 Article 71 guarantee the right of a State Ruler to succeeded and hold, enjoy and exercise the constitutional rights and privileges of Ruler of the States in accordance with the Constitution of that State

 The boundaries of a state cannot be altered by Federal law without the consent of the state Each state has been given a wholly elected one chamber legislature from amongst whose numbers are appointed the CM and EXCO members

 The states have their own administrative services and the qualification for the appointment and condition of service Art 132(2) The judiciary is largely federal, all states have their own Syariah Crt.

Under Art 121(1A) Federal Crts have no jurisdiction in respect of matters within the jurisdiction of Syariah Crt. Sabah and Sarawak have their own Native Crt The legislative powers of the Federal Parliament and the State Assemblies are specified in Five legislative lists in the Ninth Schedule

 The Federal List contains 122 entries under 27 main heads external affair, citizenship, finance, trade, shipping. The State List contains 37 entries under 13 main heads Malay reservation land, land tenure, Muslim law, riverrine fishing, turtle.

 The Concurrent List having 10 items welfare, scholarship, drainage. In case there are both federal and state laws on topics in this Concurrent List , the federal law will prevail Art 75

 Supplementary State List for Sabah and Sarawak confers additional 7 matters Any topic not found in the Nine Schedule is deemed to reside in the hand of States Art 77

states have legislative authorities, they also have executive authorities The principle that legislative power and executive responsibility should always go together, except in relation to land and local government where federal laws are implemented by state authorities

 In DN all states are represented equally by two Senators who are elected by the Legislative Assembly of each state

 The protection of state interests is also secured by the CoR Art 38(2) o Art 38(2)(b) agreeing or disagreeing to the extension of any religious acts, . o Art 38(2) - consenting or withholding consent to any law and making or giving advice on any appointment.. and may deliberate on question of national policy

Historical Aspects Modern States like Canada, USA, India, Australia and Malaysia adopt the Federal model of Government

 Territorial political organization chosen by states that have large territories: o To accommodate unity o Regional autonomy o Within a single political system

 The basic idea is to combine effective central powers for handling common problems with preservation of regional distinctiveness smaller state like Singapore opt for a unitary system of government

Malaya in 1957 could have gone either way:

 How truly does Malaysia conform to a federal model?

Basic characteristics of Federation

Association of States

o When a number of states, previously independent, unite together and form a central govt for administration of certain matters, formed a Federation

Duality of Government

o In Federation there is a common central govt, charged with general administration of affairs of general concern. The central and regional governments both operate directly upon the people and each citizen subject to two governments

Non-centralization

o Distinguishable from decentralization or devolution in which there is conditional diffusion of specific powers by a central government to local government subject to recall by unilateral decision of the central government

Semi-autonomous units

o Federation links people and institutions in lasting yet limited union by mutual consent o Without sacrifice of their respective integrities o States government are not legally or politically subordinate to the central government o The States which form the Federal union do not sacrifice their authority in all matters to the federal government

Demarcation of Powers

o There is constitutionally defined division of legislation, executive, judicial and fiscal powers between central and regional authorities o The power of the federal and provincial governments must be well defined

Supreme Constitution

o The Federal-states allocation of powers is safeguarded by adopting a written Constitution which is accepted as the highest law of the land.

Judicial Review

o The Superior Courts are given the power to rule upon disputes and to declare null and void any legislative or executive action that violates the constitutional division of competence

Amendments

o Federal Const should be difficult to amend Art 159 o As the process complied with, the amendment become part of the Const, even though inconsistent with Const Art 159(3)

Government of the State of Kelantan V

Govt of Malaysia V Govt of Kelantan (1968)

Article 111(2) of the Federal Constitution provides that a State shall not borrow except under the authority of State law, and State law shall not authorise a State to borrow except from the Federation or, for a period not exceeding 12 months, from a bank approved for that purpose by the Federal Government.

Mamat bin Daud V Govt of Malaysia [1988] 1 MLJ 119 In this case, each of the petitioners was charged for an offence under s 298A of Penal Code for doing an act which is likely to prejudice unity among persons professing the Islamic religion. They were alleged to have acted as an unauthorised Bilal, Khatib and Imam at a Friday prayer in Kuala Terengganu without being so appointed under the Terengganu Administration of Islamic Law Enactment 1955.

Nordin bin Salleh & Anor v Dewan Undangan Negeri Kelantan & Ors [1992] 1 MLJ 343 The plaintiffs were elected to the Dewan Undangan Negeri Kelantan (Kelantan State Assembly) during general elections held on 21 October 1990 and were subsequently sworn in as members. On 25 April 1991, the first defendant passed the Enakmen Undang-Undang PerTubuh Kerajaan Kelantan (Bahagian Pertama) (Pindaan) 1991 (Laws of the Constitution of Kelantan (First Part) (Amendment) Enactment 1991) and introduced a new art XXXIA (which has retrospective effect from 19 November 1990) reading as follows:

(1)If any member of the Legislative Assembly who is a member of a political party resigns or is expelled from, or for any reasons whatsoever ceases to be a member of such political party, he shall cease to be a member of the Legislative Assembly and his seat shall become vacant.

Ketua Pengarah Jabatan Alam Sekitar & Anor v Kajing Tubek & Ors and other appeals

All three appeals arose from a judgment of the High Court and concerned the same subject matter. The respondents complaint related to the Bakun Hydroelectric Project (the project) which Ekran Bhd was in the process of constructing near Belaga in the Kapit Division of the State of Sarawak. The whole of the affected area belonged to the State of Sarawak, though about 10,000 natives were in occupation of it under customary rights. The respondents were three such natives and they and their ancestors had, from time immemorial, lived upon and cultivated the land in question

The respondents were three such natives and they and their ancestors had, from time immemorial, lived upon and cultivated the land in question. While the project would deprive them of their livelihood and their way of life, all those affected by the project would be resettled by the state government and their customary rights would be extinguished in accordance with the Land Code (Sarawak Cap 81)

The issues to be decided in these appeals were: (a) whether the EQA applied to the project; and (b) whether the respondents had locus standi to bring this action.

Holdings Held, allowing the appeals: (1) (Per Gopal Sri Ram and Mokhtar Sidin JJCA) Courts should, when determining the scope of Federal and state legislation upon a particular subject, ensure that the enactments of each legislative power were read so as to avoid inconsistency or repugnancy between them. While both Parliament and the Sarawak Legislative Assembly had concurrent power to make law regulating the production, supply and distribution of power, since the environment in question, by reason of item 2(a) of List II and item 13

Federal Government Power Over The State Government

Federal Government can encroach on states rights without much difficulty in many occasions

Amendment to the Fed. Constitution (1) Power to amend the Federal Constitution belong to Fed Govt subject to procedures Art 159 and Art 161E

(2) Armed with two-third majority that it has in Parliament, the federal government can curtail the rights granted to the states by the forefathers of the Constitution without much difficulty.

(3) Doest not require consultation with or consent of the West Malaysian states in the amendatory process except for Sabah and Sarawak.

In Dewan Negara there are two Senators from each State. Theoretically, they can block any attempt to amend the Constitution to affect the rights or interest of the States.

Emergency Powers

(1) On the Proclamation of emergency, the legislative authority of Parliament widened Art 150(4) extend to any matter within the legislative authority of a state and to the giving of directions to the state

(2) Judicial review on constitutional grounds becomes difficult if not impossible

(3) Art 150(6) no law shall invalid on the ground of inconsistency with any provision of Constitution (4) Constitutional provision requiring consultation with the state do not apply

(5) While proclamation of emergency is in force, the executive authority of the federation may extend to any matter within the legislative authority of a state.

Implementing Treaties

(1) After consultation with the State, Parliament may make law in the State List (2) Art 76(1)(a) for the purpose of implementing any treaty, agreement or convention between Federation and any other country

(3) Art 76 (2) no law with respect any matters of Islamic law or the custom of the Malays or to any matter of native law or custom in the States of Sabah or Sarawak or no Bill shall be introduced into Houses of Parliament until the Government of any state concerned has been consulted

Promoting Uniformity of Laws

Adoption by the state is waived in the matter of land and local govt.

Compliance with Constitution (1) Parliament may make law to secure compliance with Fed Const

(2) Art 71(3) if it appear to Parliament that any State any provision of this Constitution or of that State Constitution is being habitually disregarded Parliament may, make law securing compliance with those provision

Policy Making Bodies (1) Many national policymaking bodies whose expert advice is binding on state government

(2) Art 91- National Land Council consisting Minister as Chairman, one representative from State

Art 95A - National Council for Local Government

Development Plans (1) Art 92(1) - YDPA to proclaim an area of a state as development area (2) Thereupon Parliament has power to give effect to the development plan (3) Art 92(3) define development plan

Public Servants Art 134 - Many important posts in the states are filled by federal officers on secondment to the states

Inconsistent Art 75 if any state law is inconsistent with Federal law, the Federal Law shall prevail and the State Law shall to the extend inconsistency be void.

FISCAL FEDERALISM
Money represents power, and is at the heart of govt

An equitable distribution of financial recources between the federation and the states is the ultimate test of a true federation.

Under Malaysian Const there is a clear demarcation of financial power between federal and state government The balance of financial powers in favour of federal government:

Federal Revenue Most of the lucrative sources of income are assign to the federal govt, income tax, customs and excise duties, banking, capital issues, passports, visas and other charges are assign to the federal exchequer

Federal expenditure Most of the onerous items of expenditure are placed on the federal govt. Thus, national defence, the armed forces, the police, prisons, education, medicine, transport etc are exclusive responsibility of the federal goverment

State revenue Eventhough there is heavy preponderance of financial power in the hand of the Federal govt., Constitution guarantees certain sources of income to states:

Capitation grants
Art 109 - This an annual grant by the federal govt to each state based on the states population

State road grant the federation is required to pay each state a compulsory road grant to cover the average cost per mile of maintaining state roads

Taxes and fees * Allocate to the states 14 sources of revenues Art 110 and the 10th Schedule. * The most lucrative of these is the income derived from natural resources like land, mines and forest

Art 110(3) each state receives 10% or more of the export duty on tin produced in the state
* Extra-territorial explorations are not under the state control. This fact complicates the relationship between KL and KT on the contentious issues of petroleum royalties

* States are entitled to received all taxes and fees from toddy shops, entertainment places, water supplies, rent on state property, fines and forfeiture in state courts, zakat, fitrah and other Islamic religious revenue

State Reserve Fund Each year the Federal govt after consultation with the National Finance Council, deposit into the fund for state propose development

Conditional grants The federal govt allocate further conditional grants to supplement state own revenue. These grants are discretionary and are much influenced by the fiscal policies as by political considerations

Loans
State not allowed to borrow money except from fed government or federally approved bank

Sabah and Sarawak * Federal dominance of revenue is less pronounced

* Due to special needs of states and size and potential resources

Enjoy fiscal privileges Art 112B allow to raise loan Allocate special grant Art 112C and 112D Assigned 8 sources of revenues not permitted to other state Art 112C and Schedule 10, Part V

The Constitution has been so devised that almost all important direct and indirect taxes belong to the Centre. * The States have no major tax source within their domain. * Less than 10% of the nations development expenditure originates from state sources

This concentration of taxes at the Centre enable efficiency and the highest degree of coordination of federal finance and fiscal policy with a view to the nations development effort. * But , it also makes the states, especially the poorer states heavily dependent on federal aid for their development plans.

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