- The constitutional proposal establishes that the state will have public initiative in economic activity, to be governed by the principle of economic efficiency.
- It includes the possibility of creating regional or municipal public companies, which would no longer require a law with a qualified quorum, as provided for in the current Constitution.
- The draft does not stipulate that public companies must be governed by the ordinary law applicable to private individuals, unlike the current Constitution.
The draft Constitution submitted by the Constitutional Convention states that the Autonomous Region, through its organisms, can create regional public companies in accordance with the procedures regulated by the Constitution and the law. In view of the above, the following organisms are granted certain attributions in this area:
a. Regional Assembly: it is vested with the power to approve, on the proposal of the Regional Governor and after ratification by the Territorial Council, the creation of regional public companies or participation in regional companies.
b. Regional Government: it is empowered to propose to the Regional Assembly the creation of regional public companies or the participation in regional companies for the management and services under its competence.
c. Autonomous Communes: they are vested with the power, subject to authorization by general or special law, to establish or participate in companies, either individually or in association with other public or private entities, in order to fulfil the functions and exercise the powers assigned to them by the Constitution and the law. The municipal public companies will have legal personality, their own assets and will be governed by the rules of ordinary law.
Regarding public services, the proposed Constitution states: “it is the duty of the State to provide universal and quality public services to all persons living in its territory, which will be adequately financed. The State must plan and coordinate the provision, delivery and coverage of these services in an inter-sectoral manner, under the principles of generality, uniformity, regularity and territorial relevance“.
Principle of economic efficiency, economic role of the state and public economic initiatives
a. Principle of economic efficiency: as prescribed in the draft of the new Constitution, this principle implies “that territorial entities must use their resources in an economically reasonable, optimal and efficient manner, for the benefit of their inhabitants and in accordance with the objectives imposed by the Constitution and the laws“.
b. Economic role of the State: the constitutional proposal establishes that the State must participate in the economy to fulfil the objectives set out in the Constitution. Accordingly, the economic role of the State is based on the economic principles and objectives of solidarity, productive diversification, social and solidarity-based economy, and economic pluralism. Furthermore, the State must regulate, supervise, promote and develop economic activities, using all its public authorities. Finally, it specifically establishes the State’s promotion of innovation, local markets, short circuits, and the circular economy.
c. Public economic initiatives: the proposed Constitution provides that the State will have public initiative in economic activity, and will therefore be able to develop business activities, which may take various forms of ownership, management, and organization.
Public companies must be created through a law and will be governed by the legal regime determined by the law. Notwithstanding the above, the rules of public law on probity and accountability will apply to them.
Main differences between the current Constitution and the proposed Constitution in the regulation of state participation in the economy
✓ The current Constitution, in Article 19 number 21, provides that the State and its agencies may engage in entrepreneurial activities or participate in them only if authorized by a law with a qualified quorum.
The proposed Constitution only requires prior authorization by a general or special law in the case of municipal public companies and, in the case of public companies, they must be created by law. However, the proposed Constitution does not specify the differences between a special and a general law, nor does it make specific mention of the quorums for laws approving the creation of public companies.
✓ The current Constitution, in article 19 number 21, provides that, in the event that the State and its bodies carry out business activities or participate in them, they must be subject to the ordinary legislation applicable to private individuals, without prejudice to the exceptions that for justified reasons are established by a law with a qualified quorum.
In contrast, the proposed Constitution does not explicitly stipulate that public companies should be subject to the ordinary law applicable to private individuals, but that the law will determine their legal regime, which could be different from that of private companies.
Conclusions
The main novelties of the proposed Constitution in the area of public companies and services are: (i) greater powers for state organisms to create public companies with fewer requirements than in the current Constitution; and (ii) the consecration of an active participation of the state in economic matters, based on various principles.
However, some aspects of the proposed Constitution in this area have been subject to reservations or questioning, namely:
✓ Unlike the current constitution, the draft proposes that public companies can be created through a simple law and will no longer require the approval of a law with a qualified quorum. Therefore, state participation in economic activity could cease to be something eventual, in view of the greater ease with which public companies and services can be created.
✓ It omits the existing principle in the current Constitution that state companies are subject to the same rules as private individuals when they compete in the market, which could imply competitive advantages for public companies and disadvantages for private individuals.
✓ The principles governing state participation in economic activity, such as economic efficiency, solidarity, productive diversification, social and solidarity-based economy, economic pluralism, generality, uniformity, regularity, and territorial belonging are not specifically defined in the proposed Constitution, making them rather vague concepts without greater certainty as to their application and scope.
✓ Regarding the creation of “universal and quality” public services, it is not entirely clear how the state will contribute to the sufficient funding required by the law, nor whether this will represent a constraint on private providers of public services, nor what effect it will have on those who currently provide such services.
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