Financial autonomy

Both the SPAD Act (2010) and the PAD Act (2010) give SPAD resources to create its own transport funds – the SPAD fund for operational purposes and the PAD fund for industry. However, the SPAD respondents reported that only the SPAD fund is operational, and the PAD fund is not anticipated to be active in the near future. The SPAD fund generates revenue from licensing fees, administrative fees, and compound fees, and these are all used for overhead expenditure, and the PAD fund is expected to use congestion pricing for its main source of revenue.

The respondents from SPAD made it clear that SPAD is an authority and a regulator rather than a funder, although in the long-run, if and when they start to generate revenue, they may be able to provide some financial support for the project implementation agencies. They realised that their lack of financial autonomy strongly impacts on their performance, and two respondents from the operators group said that all of their proposals and ideas are being brushed aside by SPAD on the grounds of financial constraints. However, three respondents (G4, G14 and O1) claimed that financial autonomy was not crucial for SPAD, reasoning that it is under the Prime Minister’s wing, and that the Prime Minister is also in charge of the EPU and the MOF, who control funding. These respondents also felt that financing is not a major issue, and that SPAD gets funding from the MOF on an annual basis as well as receiving revenue from its licensing exercise.

6.3.6 Reflections

SPAD has been delegated powers to plan, regulate and enforce the licensing conditions for land public transport under the SPAD Act (2010) and PAD Act (2010) and it was envisaged to be a commission. However, Radin (2003) pointed out that the model of the commission is partially self-defeating. He stressed that whilst they are often used as mechanisms to improve horizontal coordination, commissions often appear to shift power to a centralized level, which then makes coordination difficult. This is seen in the case of SPAD, which is placed directly under the Prime Minister’s Office, and thus higher in the hierarchy than the other actors it is supposed to be coordinating, thus making them less approachable. Moreover, agencies that lost power or had to share power with SPAD after its creation, such as the RTD and the MOT, express less willingness to work collaboratively, are highly critical of SPAD, and show signs of self-protection in their behaviours because of concerns of losing further powers.

The actual autonomy given to SPAD as a commission is explored using the six dimensions of autonomy proposed by Verhoest et al. (2004) and Laegreid et al. (2006), as shown below in table 6.5.

(2006)

Autonomy Dimensions Autonomy given to SPAD

Legal

Intervention The extent to which the agency is free from ‘reporting’

SPAD is yet to be the single regulator it was envisaged as. Its regulatory powers are incomplete because some of its powers still lie with the RTD and look unlikely to be transferred because of the strong resistance that the RTD and the MOT put up to this. SPAD has to acquire the authority to regulate vocational licensing from the RTD in order to be able to regulate the sector as a whole. However, it was pointed out that this presents some difficulties as the vocational license is linked to the private license and separating the two will raise operational issues. The only way to resolve this would be for these agencies to put aside their differences and work together, but there were no positive signs that this could be made to happen, with power struggles likely to be ongoing. There are also disputes about enforcement roles between the Attorney General’s office, the RTD and SPAD. The reform was used by the Attorney General’s office to strengthen its prosecution power. The former wants the RTD and SPAD to perform the enforcement process without devolving its powers, and this conforms to White’s (1991:

189) thesis that governments often seek ‘power-over’ state agencies, as well as a number of other findings in the literature concerning decentralisation, which contend that the transfer of responsibility without actual power is the most favoured mode of decentralisation in developing countries (Rondinelli, 1983).

The provision of legislative support for a single transport authority is strongly supported by researchers and international development agencies (Naniopoulous et al., 2012; GTZ, 2004; World Bank 2002b). Legal backing can also be perceived as a source of ‘hard power’ in Nye’s (2011) power model (see section 2.5.3), as it provides SPAD with the mandate to command and to use coercion as a mechanism for achieving its ends. Legal backing is perceived to be important for SPAD for numerous other reasons particularly to minimise the chances that the agency will be impacted by a change in political leadership. However, it emerged that whilst having a clear act is important, what is more crucial is operationalising the act and having additional powers build-in which could be operationalised when needed.

One of the important elements of the act that has not been implemented is the commission status, which is linked to financial independence. Flinders and Buller (2006) and White (1991) have argued that the government often seeks to control or influence decision-making and behaviours of its agencies and semi-autonomous bodies to achieve government objectives, and this phenomena is seen in this case study. If the central government wanted to make SPAD financially independent, then they could do so, and a proper

line of accountability could be designed to ensure that SPAD was answerable for its actions. That is yet to happen. On the other hand, SPAD sees financial independence as a way for it to be free from accountability to the central government, but Flinders and Buller (2006) has pointed out semi-autonomous agencies are still subjected to political influence and government control.

Although the Prime Minister has approved SPAD to receive full commission status, it still has to deal with procedural issues and seek approval from administrators. This fits with the conception of power outlined by Flyvbjerg (2001,131-132), who holds that “power is not only something one appropriates, but also something one re-appropriates and exercises in a constant back-and-forth movement in relations of strength, tactics and strategies”. The findings suggest that reforms are often only partially complete due to the complexity of existing interactions. In the ongoing process of negotiations between the affected parties – mainly SPAD and the central government – the outcome will be dependent on the resources, behaviours and resistance that exist at particular decision-making times and situations (Nye, 2011). This shows how difficult it is to accurately predict likely outcomes, and that having legal backing doesn’t ensure that a newly established authority will be given all the powers it needs to function well immediately, but may also require it to undertake negotiations with cleverly designed strategies.

Funding is critical for SPAD to steer the implementation of its plans and be able to control the provision of transport services on the ground by regulating the subsidy. The current mechanism which makes use of its licensing authority, the NPPC and consultation with stakeholders may not be sufficient. Without proper funding, SPAD may end up like the TCPD, which produced good plans but implemented few of them. However, giving these powers to SPAD will require the EPU and the MOF to give up some of their existing powers, and these agencies will not give them up willingly. The expectation of the central government that SPAD has to prove to be self-financing before commission status can be granted is also impractical as none of the transport authorities in the developed cities has proven to be self-sustaining (GTZ, 2004). According to Peters (2010), the profit goal should be secondary to social responsibility, especially in the case of public transportation. Hence, the central government, especially the MOF, may need to allocate a certain amount of annual funding to SPAD for providing

incentives to implementing agencies that comply with its guidelines and plans.

6.4 Research question 3: How have the reforms affected