In Brazil and Argentina, as in Australia, public welfare goods and payments have become increasingly targeted. They also increasingly have conditions attached. The ‘targeted’ welfare state has become the new global norm for a plethora of ideological, political and fiscal reasons. From a normative perspective, investing socially in the 21st century is about ‘preparing’ society, and not ‘repairing’ it.
Increasingly, recipients of publicly provided welfare goods and payments in many countries are expected to be ‘active’ recipients, as opposed to ‘passive’ recipients, and are ‘forced’ to do this by the conditions attached to the welfare goods. In Australia, for example, the Commonwealth has introduced effective January 2016 a “No Jab No Pay” policy intended to improve vaccination rates for children. Parents who fail to fully vaccinate their children can lose their child care benefits and family payments. Policies of Income Management have also been applied mostly to Indigenous recipients of welfare payments in Australia, for example, the BasicsCard, recently evaluated by the DSS (see here).
Welfare conditionality is designed as a means to achieve national social development goals across the world. It appeals to governments across the ideological and regional spectrum and is an international policy prescription that crosses the once firm divide of ‘developing’ compared to ‘developed’ countries.
Aside from the normative and sometimes controversial debates, an important research question is whether, and how, these conditional welfare payments can actually be delivered by governments. In particular, how do they work in countries that are federations, where central governments and state or local governments have different responsibilities for delivering welfare? The main question in my research is how federalism impacts a central government’s ability to deliver targeted social policy goods. It is, therefore, more focused on the ‘how’, as opposed to the ‘what’ or the ‘why’?
Federalism Matters
Federalism matters for delivery of social policy in Latin America. In Brazil and Argentina, national governments have been unable to resolve their most important social and economic problems without involving both central and state levels of government. National governments in these federations have been dependent on subnational governments, both to pursue national executive preferences and to carry out important policy objectives. Multiple tiers of government competing for both institutional and political power can lead to policy innovation and successful delivery of new programs. It can also, however, have a deleterious effect on social policy outcomes that require intergovernmental cooperation.
Conditional Cash Transfers and Alleviating Poverty
Conditional Cash Transfer (CCTs) are social programs that transfer small amounts of cash to socially vulnerable families, who are usually selected through some form of means testing. In return, program recipients must meet certain conditions that are linked to fulfilling human development goals in the areas of health, education, and nutrition. It is these conditions that are intended to break the intergenerational transmission of poverty, not the actual transfer of cash. The delivery of targeted social welfare or, more generally, ensuring access to those with the most need for basic social services in any federal system of government where power is formally divided among multiple levels of government, requires intergovernmental collaboration.
CCTS in Brazil and Argentina
Brazil and Argentina each offer important lessons to other countries, federal or not, both within the region and beyond, about how to broaden social agendas using targeted social policy initiatives.
Brazil’s highly celebrated national CCT, Bolsa Família, has been very successful in terms of the households included, the territory and social groups covered, and its empirically established ability to reduce poverty. Within three years of this CCT’s introduction, it had reached its intended target. By 2006, poverty alleviation benefits were being delivered to more than 11 million households in all 5,564 Brazilian municipalities—today it covers over 14.1 million households. Brazil’s poverty alleviation strategy can be characterized by both continuity and gradual change. In terms of program design, rules, processes, this CCT has been seldom changed since its introduction over more than a decade ago.
In contrast, Argentina’s poverty alleviation efforts since 2003 have been volatile and characterized by unsustainable, short-term initiatives. The latest program, Asignación Universal del Hijo (AUH), replaced an earlier CCT, a labour-based program designed for unemployed heads of households (PJJHD), and a second human capital-based CCT, Programa Familias. The AUH is distinct from the two previous initiatives because of centralization of its delivery and the ambiguous nature of its conditions, which are linked to human capital investments at the subnational level.
Federalism and the Politics of CCTs
What factors caused the failure of the previous CCT initiatives in Argentina and the success of Brazil’s benchmark program? The evidence brought forward in my research shows that broader structural, institutional, and political factors impact on the performance of CCTs in these two countries. Although both countries’ systems are considered ‘robust’ Brazil was able to seek uniformity of outcome through bypassing the state government level and using municipalities, or local governments, as the prime agents of the federal government. The central government of Brazil avoided the undermining constraints of federalism that are usually present in such strong federations. For this to occur, however, certain key conditions must be present.
Why Municipalities Do or Do Not Collaborate with National Policy Objectives?
In Brazil, powerful governors at the state level have historically captured redistributive welfare goods in order to use them for their own political gain (patronage), and so the federal government had a political motive to bypass state governors. Local municipal mayors are not necessarily more trustworthy than governors, but they have fewer political incentives to control their territorial boundaries and often have fiscal and political incentives to collaborate with the central government.
First, the constitutional recognition of local governments creates a three-level federal game that provides local mayors a choice of either being subordinated by the state governments or being the prime agents of the centre.
Second, subnational finances are an important part of understanding the politics of any federal game. Soft budget constraints encourage state governors to overspend, which further enables them to capture local mayors who become excessively dependent on them for fiscal favours. It is also well known to facilitate ‘shirking’ behaviour whereby subnational actors shirk their policy responsibilities back onto the centre. By contrast, hard budget constraints do provide greater fiscal incentives to national-local cooperation because of the decreased ability of local governments to raise revenue sources. Particularly, when performance-based incentives are present, this can have a positive effect on actual policy outcomes.
Third, the type of political regime in the federation matters. This is the most counter-intuitive factor. Brazil and Argentina are both presidential federal systems but Argentine democracy is far more majoritarian with single-party cabinets, executive leverage over congress, and national two-party dominance that encourages the logic of punishment and reward federalism. Brazil has a more consensual regime type that is governed by large multi-party coalitions. The Brazilian system provides local mayors with greater incentives to promote national objectives, in particular, those objectives that provide indirect benefits to their local communities, for which the mayors can mutually credit-claim. The importance of partisan ownership over policy ideas are far less important, promoting both continuity and gradual changes over time which are clearly beneficial for social investments with longer term objectives.
The ability of the federal centre to ‘close the gap’ within a federal system of government depends on all of these explanatory factors so that local governments can have a positive impact on centrally designed targeted welfare initiatives by ensuring their promotion and uniform delivery throughout a nation’s territory. It is clear, however, that the political dynamics in a federation, in particular, the relationship and incentives between local, state and central governments that certain regime types produce, can have a big impact on the success of targeted welfare programs such as CCTs that aim at poverty alleviation.
This article is based on a recently published book, Fenwick, Tracy Beck. 2016. Avoiding Governors: Federalism, Democracy, and Poverty Alleviation in Brazil and Argentina. Indiana: University of Notre Dame Press.
There will be a book launch on Thursday 10 March 2016 4:00pm – 5:00pm at the ANU Centre for European Studies, The Nye Hughes Room, 67C Liversidge Street, ANU. RSVP here.
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