PUBLIC

ADMINISTRATION
LECTURE 5
 IGR

Variance of programs by information and goal:

• Bureaucratic organizations very different – generalizations
difficult.
• Agency theory can be used to understand how administrative
practices varies in terms of information costs and goal
congruency.
• Programs with least problems. Civil aviation authority air
traffic controllers. Goal congruency: high, information costs:
low.
• Programs with most problems. CAA regulation and inspection
of airlines. Goal congruency: low, information costs: high.
 VARIANCE OF PROGRAMS BY
INFORMATION AND GOAL

• Managing contracts: information costs high, (govt. doesn’t

know qualification of contractor, doesn’t get daily feedback)
goal congruency is high in case of negotiated agreements.
• Welfare programs (no goods and services returned to govt):
information costs low, goal congruency: low.
 NEGOTIATION

• Effective tool for managing IGR.

• E.g., provincial agency to carry out fire hazard inspections in
factories.
- Ability to manipulate outcome is limited as management tools
are inaccessible to it. (building control authority, police, fire
brigades, provincial courts).
• Need to negotiate with resources, work out conflict, chart out
coordination issues. Actions will be implemented better when
parties with different preferences come to a joint agreement.
 CONTD.

• Negotiating consists of three activities:

1. Preparing: faulty preparation is lack of ability to ask right
questions.
- What are the precedents? (what happened in similar situations
to give legitimacy).
- What are the issues and alternatives? (think about multiple
related issues and their alternatives course of actions within
issues).
- What are the interests?
- What are the deadlines – for me and for them? (know realistic
deadline to know your own leeway and theirs)
- What are the strengths and weaknesses of the participants?
(your own and theirs).
- What is your ‘best alternative to a negotiated agreement’? –
accept set of terms superior to your BATNA and reject
outcomes worse than it.
- Continually improve your BATNA, how? Follow the ‘falling
in love with 3 not 1’ rule, strive for not one decision but its
alternatives also.
- Will make bargaining position strong and give competitive
edge.
- What is the other party’s ‘best alternative to a negotiated
agreement’? (collect information on their cost of compliance,
cost of litigation, their resources, stronger their BATNA,
stronger their negotiating power).
2. Probing:
- Skilled negotiating requires better listening and asking more
questions.
- Focus on arguments, problems not personalities.
- Create open/trusting environment to reach win-win
settlement.
3. Proposing:
- Initial proposes are extreme and unrealistic and means to
encourage the other party to propose as well.
- Quality of proposal depends on quality of probing and
preparation. (broader interests, mutually beneficial options
lead to better agreement).
- Issue in proposing: win-win or win-lose game?
- Think of it instead as creating value or claiming value.
- Value creation: negotiators should be creative enough to
devise an agreement that benefits both. (solving a joint
problem, brainstorming).
- Value claiming: such negotiating is viewed as tough hard
bargaining.
- Convince the other party that he wants your offer much more
than you want his.
- Convince the other party that you have all the time in the
world while he has deadlines to meet.
- Must start high, concede slowly, exaggerating the value of
what you offer and minimizing the benefits the other party
offers, conceal information, make commitments to accept
only highly favorable agreements and outwait the other
party.
- E.g., purchase of a new car.
- Value claiming: dealer quotes price, buyer starts out low.
Dealer’s concession is the buyers gain and dealers gain in the
buyers concession. Each party’s BATNA is to walk away
from the deal.
- Value creating: discussion on dealers cost, his commission
target, the buyer’s ability to pay, the demand of the model.
Focus on shared interests: customer refers to others, will he
purchase another car anytime soon, his experience affect on
dealers reputation.
- Lessons for the public administrator:
- Assess opportunity for achieving a win-win outcome.
- Both parties better off, then encourage creating value.
- To create continuing relationship of trust.

- Strategy of Conditional openness:

- Start with open and collaborative approach.
- If other party becomes aggressive, you do too until a
collaborative approach by others begins.
ADMINISTRATIVE RELATIONS BETWEEN
THE FEDERATION AND THE PROVINCES

• Chapter 2.
• Articles 145-149 confer powers on the Provinces and to
entrust functions to the Federation. They are also concerned
with the obligation of the Provinces in certain cases.
• Article 151 deals with inter-provincial trade
• Collective leadership by Federation and the Provinces in
Articles 153 and 154 of constitution.
• Council of Common Interests consisting of Chief Ministers
and equal number of members from the Federal Government,
to be nominated by the Prime Minister.
• Responsible to Parliament.
• Formulate and regulate policies in relation to matters in Part II
of the Federal Legislative List entry No.34 (electricity) in the
Concurrent Legislative List
• Dispute resolution role of the council of Common Interests;
upon receiving a complaint from a Province
• Article 156 provides for a National Economic Council, Prime
Minister, Chairman, President may deem fit.
• Review the overall economic situation in the country.
DISTRIBUTION OF REVENUES BETWEEN
THE FEDERATION AND THE PROVINCES
• President shall constitute a National Finance Commission
(NFC) - Article 160
• Minister for Finance
• Ministers of Finance of the Provincial Government, appointed
by President after consultation with the Governors.
distribution between the Federation and the Provinces net
proceeds:
taxes on income
 taxes on the sales and purchases imported, exported,
produced
export duties on cotton
 duties of excise
 other taxes
 grant-in-aid.
• The recommendation of NFC, shall be laid before both Houses
of Parliament and the Provincial Assemblies.
• Royalty collected by the Federal Government, shall not form
part of the Federal Consolidated Fund. Instead, it shall be paid
to the Province well head - Article 161
• Bulk generation of power at a hydroelectric station shall be
paid to the Province in which the hydroelectric station is
situated
PRIME MINISTER ZULFIKAR ALI BHUTTO REMARKS
IN THE NATIONAL ASSEMBLY ON 10TH APRIL,1973:

• “We have the four most difficult Provinces in the

subcontinent. Always, historically, they have been a free
people.”