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The Unanimity Trap BY George Anderson

Argentina has a federal fiscal
regime that few will defend but
no one sees how to change. It
has no underlying principle
regarding fiscal capacity, or need, or
derivation,
but is essentially the opaque
product of past deals. Its main defenders
are some provinces that are “winners.”
Unfortunately, in 1994 this fiscal “co-participation”
agreement was entrenched in
the constitution so that all twenty-seven
provinces as well as the federal Congress
and President would need to agree to any
change.
Unanimity is the most rigid of all decision-
making rules. In fact, the founding
of the first modern federation in 1789
emerged from the unhappy experience
of the American states with confederal
arrangements that required unanimity
for any collective action.
Federalism was meant to break away
from this by creating two orders of government,
each normally able to make
decisions in its own area of jurisdiction.
Joint decision-making between the
orders of government is very much the
exception in federal constitutions. The
biggest exception is constitutionalamending
formulas, where there are
often rules requiring some measure of
consent from both orders of government
for certain amendments. But even here,
unanimity is rare. Since 1981, the
Canadian constitution requires unanimity
for changes to the monarchy, the Supreme
Court or the amending formula itself.
However, one day such a formula could
lead to a real crisis of legitimacy should
one small province exercise a veto.
Federations can slip into a requirement
for unanimity in ways that constitutional
drafters never envisaged. In Argentina, it
arose initially as the price the federal government
paid for taking over various
provincial taxing authorities. Something
analogous has arisen in Brazil, where
efforts at fiscal reform must come to terms
with a unanimity rule regarding changes
to the states’ value added tax regime.
In both cases, the unanimity
rule was rooted in an
agreement by the two orders
of government to cooperate
in using their respective
authorities. Could it have
been avoided? There are
various alternatives.
One alternative i s
weighted voting. The
European Community (EC)
long used unanimity for its
decision-making. At its worst, this led to
paralysis during former French President
Charles de Gaulle’s “policy of the empty
chair.” As the EC added members and
deepened its functions, it eventually
moved to weighted majority voting,
except in exceptional circumstances. It
has served them well, though some
would like to see further evolution in a
“federal” direction.
Within federal constitutions, weighted
majority voting is uniquely found in
Germany, where the Länder governments
form the Bundesrat, Germany’s
upper chamber, and vote on laws affecting
them. Even this frequently led to
blockage, known as the “joint decision
trap.” The recent constitutional reforms
have thus reduced the number of laws
requiring Länder approval. Australia’s
two orders of government have delegated
powers to a competition commission
whose members are elected by the states
(one vote each) and commonwealth government
(three votes). But even Australia
has fallen into the “unanimity trap” with
its goods and services tax.
Under Canada’s social union accord
the federal government will not introduce
new social transfer programs in
areas of provincial competence without a
majority of provinces agreeing. However,
provinces that disagree are given a right
to equivalent transfers so long as they
introduce new programs that achieve the
same objectives.
The reality is that in modern federations
the two orders of government
frequently bump up against
one another so that they try to
work out integrated arrangements.
In practice many
federal governments address
this by effectively imposing
their will on subnational governments
– legally or through
fiscal levers. Such unilateral
federalism is probably more
functional than excessive
dependence on unanimity,
but many federations would do well to
explore alternatives to these extremes.