International Development CommitteeWritten evidence submitted by Max Everest-Phillips, Director, Governance and Institutional Development Division, Commonwealth Secretariat

I am a governance expert with a professional background in diplomacy and international development. I joined the Commonwealth Secretariat in February 2011 having worked as senior governance adviser at the UK’s Department for International Development (DFID) and in the fast-stream of the UK Diplomatic Service, including on international development, multilateral institutions and UN issues. I have written extensively on governance aspects of international development, including on the state-building dimensions of taxation, on property rights and on the Politics of Competition Policy in developing countries.

1. My submission covers my views on the potential of the Commonwealth Secretariat for advancing the post-2015 MDG Agenda by promoting the importance of its democratic values in three areas: i) developing debate on a new goal for democratic governance; ii) strengthening the voice of small states; and iii) “state-building” revenue-raising for funding any new MDG effort.

The Commonwealth

2. International development lies at the core of the work of the Commonwealth Secretariat. Only five% of the Commonwealth developing countries are likely to achieve the target for reducing child mortality, and two-thirds of all maternal deaths are in Commonwealth countries. In 2005, one third of the Commonwealth’s 1.8 billion people were living on less than one dollar a day. Almost two-thirds of the world’s HIV/AIDS cases were taking place in Commonwealth countries. More than half of the world’s 115 million children without education were to be found in the Commonwealth. Not enough progress has been made since then. Five of the 10 most poverty-stricken countries by 2025 are still expected to be Commonwealth members:1 Nigeria, Tanzania, Uganda, Kenya, and Malawi.

3. Recognising the challenge, the Commonwealth is considering what focus to give its efforts, so allow me to start with a caveat: consultations are still ongoing and the Commonwealth works by consensus. My views therefore do not necessarily represent the official position of the Commonwealth Secretariat.

4. At the Commonwealth finance ministers meeting in mid-October senior officials will consider two briefing papers which will frame the organisation’s thinking.

5. The first2 offers background and suggests a potential work programme for the Commonwealth in contributing to the global debate. It proposes that the Commonwealth can play a unique role in facilitating inclusive dialogue and consensus-building using its trusted relationships. It suggests a three-pronged proposed Commonwealth work programme for the period 2013–15 of: “i) Research and Analysis: Research and analysis on key issues; ii) Convening and Consensus Building: Facilitating inclusive dialogue and consensus, based on research and analysis; and iii) Towards Political Concurrence: Seeking opportunities to connect the technical and political domains and develop mutual understanding through the facilitation of Ministerial engagement and discussion; building capacity and supporting the membership in the negotiation process; and seeking opportunities to feed Commonwealth views into the international discourse.” Specifically, in 2013 the three-pronged work programme could focus on developing a Commonwealth Statement on the post-2015 Development Framework for consideration and endorsement by Heads of Government at CHOGM 2013.

6. The second paper gives a much more detailed assessment of progress with MDG goals by Commonwealth countries, off-track in achieving 63% of the MDGs.3

7. You may also wish to note that a Commonwealth Education Ministers Working Group on a framework for post-2015 anti-poverty targets in education has been established with representatives from Bangladesh, Barbados, Cyprus, India, Kenya, Malawi, Mauritius, Nigeria, Papua New Guinea, Seychelles, Sierra Leone, Tanzania and Uganda.

8. The Commonwealth seems an undervalued organisation in UK official development circles not least because of limited understanding of the the variety of our membership, our genuine partnerships, and the importance we assign to human agency not just institutional dynamics—that is recognising “political will” of leaders for development as critical. [As an aside I would note an interesting recent academic critique of DFID’s 2011 performance assessment of the Commonwealth Secretariat and 42 other multilateral organisations. The academic notes that the UK’s Multilateral Aid Review: “claims that the results are ‘rigorous and robust’. Yet it remains extremely difficult to assess institutional performance in an objective manner. Imperfect methods, measurement errors, and incorrect assumptions undermine the scientific rigor of all attempts to assess institutional performance. It is no surprise, therefore, that DFID’s assessment is based more on theories, judgments and impressions than on objective observations. Although it uses 41 criteria, it is unclear what is ultimately being measured. Van Thiel and Leeuw (2002) call it the ‘performance paradox’ whereby the performance as measured has little or no relation with actual performance. Bilateral donors have the sovereign right to prioritise funding for multilateral organisations; but that is essentially a decision based on perceptions and politics. When such decisions are presented under the false pretence of science, they must be exposed for what they are. This particular assessment is ‘rigorous and robust’ only in appearance. It belongs to the category of ‘designed blindness’ (Friedman, 2001); it cannot be called ‘evidence-based’.”]4

9. The Commonwealth, as a values-based organisation of 54 member countries from six continents and home to over two billion citizens of all faiths and ethnicities, brings four important attributes to the post-2015 framework debate:

(a)Our focus on democratic values: the Commonwealth believes that democracy and development should be built concurrently. This guiding vision was stated in the 1999 Fancourt Commonwealth Declaration which emphasised that “good governance and economic progress are directly linked”. It emphasised the importance of democratic freedoms, while development processes should be participatory and give a voice to the poor and vulnerable. A Commonwealth Expert Group on Development and Democracy was established. Chaired by Manmohan Singh, now the Prime Minister of India, the Report of the Expert Group concluded that “while development and democracy are goals in their own right, they must be mutually reinforcing.”

(b)Our focus on small states: The membership of the Commonwealth is dominated by small states. Although it includes enormous countries by size like Canada and by population such as India, some 32 out of 54 members are small states—which the Commonwealth defines as containing 1.5 million people or less.5 Indeed no fewer than 19 of the 30 smallest states in the world—defined as having a population of less than half a million—are in the Commonwealth; and exactly half—15 of the 30 sovereign nations in the world with a land-mass area less than 1,000 km² (386 sq mi)—are in the Commonwealth.

(c)Our common tradition in public administration: development is unlikely without a fair, effective and efficient public service. As Kamalesh Sharma, the Commonwealth Secretary-General, said in 2011: Just and honest government—that is, effective public institutions, clear sighted and ethical political leadership and capable and fair public administration—is of critical importance. This is because it is fair and effective public administration that makes the state legitimate in the eyes of its citizens.6

(d)Trusted partner: The Commonwealth Secretariat is particularly trusted by its members because, as a membership organisation without an agenda of its own it solely devoted to promoting the interests of its member countries. This makes it the ideal partner for sensitive issues around improving democratic governance and public administration.

10. Recommendation 1: the Commonwealth Secretariat be encouraged by the UK government to develop dialogue on a post-2015 Development Goal that links Commonwealth democratic governance values to development outcomes: the process of development matters, not just the ends. This would involve developing a recommendation for simple, clear goal with robust, clear indicators. The process of developing indicators and mechanisms for the implementation monitoring and evaluation would be transparent and involve the participation of researchers, experts and public. Proposed partners for consultations could include the Commonwealth Foundation7 and organisations such as International IDEA. This process could build on existing indicators such as developed in Mongolia through their “MDG-9” process.8 It should be clearly structured, perhaps around three core elements:

(a)Legitimacy—political will, process and oversight.

(b)Voice—Quality of Civil Society space and media coverage.

(c)Effectiveness—Quality of Public Administration.

11. Recommendation 2: the Commonwealth be encouraged by the UK government to give voice to the very smallest countries on the post-2015 agenda: Nineteen of the 30 smallest sovereign states in the world—those independent countries having a population of less than half a million people—belong to the Commonwealth, and constitute 40% of its membership. Five very small states are high-income of which four are islands (The Bahamas, Barbados, Malta, St Kitts and Nevis), leaving 14 developing countries, 13 of which are islands. These 13 Very Small Island Developing States (VSIDSs) are made up of five lower middle-income countries (all in the Pacific: Nauru; Kiribati; Tonga; Samoa and Vanuatu) and eight upper middle-income countries (one in the Pacific, Tuvalu; five in the Caribbean: Dominica; Antigua and Barbuda; St Vincent and the Grenadines; Grenada and St Lucia; and two in the Indian Ocean: Maldives and Seychelles). Together these 13 VSIDSs comprise a quarter of the Commonwealth membership, but, with a combined population of barely more than one and a half million people, account for only 0.06% of the Commonwealth’s population. None are low-income, so these countries get overlooked by DFID. Yet they are 10% of the UN membership.

12. To give voice to the very smallest on the post-2015 agenda, the Commonwealth would organise a consultation process with three aims:

(a)To give opportunity to small and very small states to articulate their views.

(b)To draw attention to the capacity needed in public administration is needed to achieve to implement the current MDGs and any new ones: to co-ordinate across overlapping objectives, to set priorities, to allocate resources, to work effectively with the private sector, to deliver services and bolster the democratic legitimacy of the state.

(c)Political will to achieve development goals: a fundamental building block for improving national development outcomes.

13. Recommendation 3: the UK government encourages the Commonwealth Secretariat to work with its membership and relevant bodies such as the Commonwealth Association of Tax Administrators, to promote for post-2015 a goal of applying Commonwealth democratic values to resource mobilisation for “state-building” development, and to promote dialogue on mechanisms for achieving it.

14. In the mid-5th century AD the theologian Salvian the presbyter of Marseilles sought to make sense of the decline and fall of the Roman Empire that he witnessed happening around him. Salvian concluded that the Empire’s collapse lay in the interconnection between governance and taxation.9 Bad governance manifested itself through an unjust tax system and rampant tax evasion.10

15. Such recognition of the relationship between tax evasion and effective governance is being re-discovered in general, and in particular in connection with development. The G8 world leaders, meeting in July 2009, declared: “Tax evasion has particularly damaging effects for developing countries, jeopardising good governance and efforts to increase public revenues.”11

16. Modern research validates Salvian’s specific analysis, the G8 call and general thesis: effective states require effective, efficient and equitable tax systems. Building commitment not to evade taxation is a political process central to “state-building”; cajoling elites to pay taxes has always been an essential step to any state becoming effective.12

17. Aid now needs to be anchored in the broader context of resource mobilisation, for building commitment while ending the culture and mind-set of dependency. In 2011 the World Bank estimated Malawi’s tax evasion stood at around 8 to 12% of GDP. Tax revenue actually collected by the Malawi Revenue Authority (MRA) is 22% of GDP. Thus, if the MRA could successfully collect all the taxes it was due, government revenue would increase by 50%. This is almost exactly how much Malawi receives in foreign aid (11.7% of GDP). As one Malawi Revenue official stated: “if we collected all the taxes, we will then not have to depend on foreign aid”.13

18. Taxation—policy, administration, evasion, the democracy dimension of “no taxation without representation”—therefore needs to be on the post-2015 agenda: both an aim in itself and as a proxy indicator of commitment to development by governments and taxpayers in DFID’s partner countries. It needs to be pro-growth: the International Growth Commission in 2008 pointed out that no country had achieved transformation without it.

19. “Tax for development” facilitates changing the mind-set as well as the process around devising the next generation of MDGs. At present the MDGs suffer one serious flaw, that the link between the global targets and country-led aims has never been clear because MDGs were imposed top down. The MDGs are global ambitions and not meant to be used mechanistically to judge each country. How to link global aims with national determination of priorities has never been satisfactorily resolved.

20. Post-2015 the need is to start the other way round, with developing countries’ own national vision for ending dependency. Tax is a critical factor, but is of course only one among many sources of development finance: investment (external and domestic), deepening financial markets to improve gross domestic savings, the contribution of South-South trade and investment (a new dynamic since 2000); new approaches to private investment in development (not only in infrastructure), for example through impact investing; and also the rise of Southern aid, and securing concessional finance for development. But a focus on democratic values places particular attention on taxation. Tax has been central to the emergence of effective democracy at least since 1340, when your predecessors for the first time explicitly linked its approval of taxation to the redress of public grievances over bad governance.

21. Citizens as voter-taxpayers, acting collectively, can play a key part in building the constitutional checks and balances that provide oversight of the executive. So more attention to domestic resource mobilisation would achieve two things:

(a)Genuine focus on country ownership; and

(b)Put the Commonwealth’s democratic values around tax capacity-building at the centre of post-2015 development discourse.

4 October 2012