Sunday, July 26, 2015

Aquino’s Legacy: Exclusive Growth, Ineffectual Bureaucracy

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An Assessment of the Aquino III government (2010-2016)

James Matthew Miraflor
Vice President, Freedom from Debt Coalition
The verdict is in.

If there is one catch-phrase that can summarize the legacy of President Benigno Simeon Aquino III in his half-a-decade rule, it is this: “exclusive growth via an ineffectual bureaucracy”. A growth dictated by the moods of global market amid worsening poverty and stagnating inequality levels, and the failure of the bureaucracy to even spend the money it was able to collect to arrest poverty – these cap the legacy of who was once touted as a savior of Philippine democracy and commonweal from the dark years of President Gloria Macapagal-Arroyo.

Did Aquino III measure up?
We argue that this is not just an accident of history that Aquino III failed to fulfill his mantra of “kung walang korap, walang mahirap”. Granting that we have made strides in the fight against corruption – a statement that is made with some reservation given the proliferation of patrimonialism in Congress and the national government agencies – it would have been simply illogical to assume that those strides alone will translate to better welfare for the rest of the Filipino people. Rather, we insist that the failures of Aquino III are deeply rooted to its philosophy of government – the vision it constructed when it translated its “social contract” into the 2010-2016 Philippine Development Plan (PDP).

Progressive groups such as the Freedom from Debt Coalition (FDC) already criticized the 2010-2016 PDP from its inception, saying that it is weak on asset reform and fails to construct the economic underpinnings of a true “straight path” and “inclusive growth”. NEDA, under the neoliberal Director-General Cayetano Paderanga, basically ripped-off the agenda of Arangkada Philippines, a document prepared by the Joint Foreign Chambers of the Philippines (see letter from JFC to Paderanga here). This meant that the resulting PDP basically champions the interest of big capital over the interest of the Filipino masses. That the Aquino administration would end its term with increasing number of poor citizens in a growing economy demonstrates the bias it has set for itself when it began.

Consider the National Economic and Development Authority (NEDA). We know that NEDA recently fell flat on its face after its much touted economic miracle of 7.8% growth – exceeding that of China in the 1st quarter of 2013 – has been reduced to uninspiring 5.2% growth last quarter, dragged by lackluster government consumption, infrastructure underspending, and declining export earnings. It seems that our model of “development” cannot withstand the changing mood of the global markets, much less deliver a robust domestic market that can grow at a consistent pace – a key feature of the South East Asian miracle economies we are trying to emulate. So much for “rebalancing”.

Growth slows down. From here.

But even if we grant that it was NEDA who has been able to set a regime of stable growth as Aquino spokespersons imply, for the majority of the Filipino people, there is not much to celebrate. Poverty incidence rose to 25.8% in 2014 from 24.6% in 2013[1]. This quashes any dream that the Aquino administration will still be able to reach its target of 18%[2]. That poverty increases in a period of consistent growth should not surprise us – the Philippines leads Southeast Asia in inequality, with our country’s Gini coefficient of 44% trumping Thailand’s 42.5%, Indonesia’s 39.4%, Malaysia’s 37.9% and Vietnam’s 37.8% (see this article too).

In short, the growth NEDA was working on was growth of, by, and for the elite.

But even as policy is biased for the elite, the bureaucracy may have been able to counteract the impoverishing force of oligopolistic markets in the Philippines had it been more effective in fulfilling its mandate to deliver basic services, provide adequate social protection, and facilitate asset reform. Sadly, it was bogged down by its own sclerosis, its own leaders implicated in corrupt practices and/or immersed in politicking. The result is a mismanaged Philippine state that failed in most of its targets, so much so that it lost all claim even to half a decade of consistent growth that transpired in Aquino’s rule.

Let us begin with Department of Budget and Management (DBM).

Fiscal Policy

Whatever early credibility DBM gained on its push for transparency and systems improvement in the country’s fiscal system, its lasting legacy would be the sinister Disbursement Acceleration Program (DAP) which inverted the logic of its reforms and ensured the continuity of “fiscal dictatorshippracticed under Arroyo. It also ensured the perpetuity of patronage that serves as a nexus linking a politicking executive punishing its political opponents and a sycophantic Congress committed to secure funds after the Supreme Court abolished the Priority Development Assistance Fund (PDAF).

From PCIJ, as of June 2014.
DAP has also exposed the unsustainability of DBM's technical reforms. Without DAP’s shortcut, for instance, we are now facing the huge problem of under-spending due to the executive’s deep distrust of its own implementing agencies coupled with bureaucratic sclerosis. While the causes are primarily structural – the “absorptive capacity” issue merely reflecting how ill-equipped our state apparatus has become after decades of exposure to the neoliberal mantra of shrinking government (see counterpoint here) – the Aquino admin cannot wash its hands entirely: the failure of Aquino to fire ineffectual Cabinet officials forced DBM to impose heavy technical requirements in the special provisions to prevent budgetary abuse. Since the leadership of the agencies are ineffectual to begin with, of course these requirements won’t be met and the budget won’t be released. But for programs with budgets released, there is the Commission on Audit (CoA) breathing down on the neck of the middle management and rank-and-file. Thus the “chilling effect”: for fear of misinterpreting CoA rules, government officials used to a culture of bureaucratic adhocracy would rather underspend than risk going to jail.

The result is staggering: DBM’s own data alone point to P302.68 billion of its budget unspent for 2014 (the figure is P103.70 billion for 2013) – which would have been a huge help in rehabilitating Yolanda-ruined Tacloban City. For the first quarter of 2015, the budget deficit fell below 66% of the target (P33.5 billion actual versus P98.1 billion target). This uneven pace of reform amid weak, post-DAP fiscal leadership of Aquino wreaked havoc on the economy – 2014’s public spending for infrastructure fell 24.4% short of theprogram. Consequently, government consumption on that year went down 2.6% while public administration services fell 2.9%. We already mentioned the final result: GDP growth shrank from 7.1% in 2013 to 5.2% in 2014.

One thing that the Aquino administration probably likes about under-spending is that it hides the failure of the Department of Finance (DoF) with respect to revenue effort. While improving, DoF’s 15.1% revenue effort still fell short of Arroyo’s peak at 16.49%. With its current trend of deceleration[3], DoF may be hard-pressed to reach the administration’s target of 16.5% in 2016. Despite repressive tax policies of the Bureau of Internal Revenue (BIR), tax revenues fell short of target in 2014 (short by 159.78 billion) and 2013 (72.2 billion). This is despite the imposition of revised sin taxes, which contribution turned out to be measly 0.4% of GDP.

Development and Investment

The industrial policy that was touted by Department of Trade and Industry (DTI) as early as 2011 has proven to be nothing but huff and puff. That it is not yet completed is not surprising – the “industrial roadmap” is at the onset dependent on submissions by big businesses and industry players torn between the camps of local producers and importers. DTI has nothing to show despite half a decade of “drafting” the manufacturing development plan, nor did it have consequential impact on the “missing middle” of Philippine industry – the Medium, Small and Micro Enterprises (MSME) which comprise 99.58% of our businesses but contribute only 35.7% of value-added as of 2012.

Meager attempts of DTI to tap into this huge reservoir of potential are relegated to toothless One-Town-One-Product (OTOP) and National Industry Cluster Capacity Enhancement Project (NICCEP). At its current state, it can’t.  The size of the DTI – a mere shadow of its former self, the Ministry of Trade and Industry, which can marshal state resources for industrial protection (to the tune of 10% of GDP, see page 117) – pales in comparison to its counterparts in Southeast Asia. Aquino’s decision to lodge an important project which should have been under DTI – the Sustainable Livelihood Program (SLP) – to its favorite agency, the DSWD, only demonstrates the administration's commitment to clip DTI’s wings, and its contentment with our import-dependent, low-value added exporter status[4].

Philippine Exports in 2013

Philippine imports in 2013. Notice that our primary export is import-dependent.

Even with the World Bank-financed, debt-creating[5] Philippine Rural Development Project (PRDP), Department of Agriculture never achieved its irrigation and FMR (Farm-to-Market Road) construction targets. CoA itself reports that of the P7.8 billion allocated for 1,070.2 kilometers of FMR in 2013, DA only completed 270.4 kilometers worth P1.7 billion. Irrigation projects remained stalled because of anomalies. Northern Samar Rep. Emil L. Ong, for instance, revealed that P140 million funds earmarked for irrigation projects by NIA was used instead to pay for projects linked to the controversial Help Catubig Agricultural Project (HCAP).

DA’s rice self-sufficiency policy, because it was not augmented by an effective effort to stem smuggling, break up rice cartels, or improve farmer’s productivity – only led to food inflation that wiped out whatever meager income gains the impoverished experienced (see DA's opinion here). Moreover, Secretary Prosy Alcala’s irrational, patron-like management of DA led its lack of clear direction, incompetency, and proliferation of internal corruption (also here), so much so that the President (who is a dear friend of Alcala and thus unwilling to fire him) split the agency into two, with the Office of the Presidential Assistant for Food Security and Agriculture Modernization (OPAFSAM) tasked to clean and rationalize the National Food Authority (NFA), the National Irrigation Authority (NIA), the Philippine Coconut Authority (PCA), among other sub-agencies. This was at a cost of policy and jurisdiction confusion, even among the cabinet-at-large. Ironically, Aquino appointed not a trained technocrat to OPAFSAM but a Liberal party loyalist and politician former Senator Francis Pangilinan, who is gunning for Senate in 2016.

We did not expect much from the Bangko Sentral ng Pilipinas (BSP), as it was long divorced from the country’s development apparatus due to the New Central Bank Act of 1993 (RA 7653). The ugly face of BSP’s autonomy, however, reared itself under Aquino, when it decided to lend a sum of $1 billion (P50 billion) to the International Monetary Fund’s Financial Transaction Plan (IMF-FTP)  from our international reserves to supposedly help European nations struggling against the debt crisis. This move not only legitimizes the IMF, which in fact responsible for earlier crisis that hit Asia in the late 1990s, but also contributes to the bailing-out the irresponsible European bankers and financial marketers which brought the European nations to itscurrent crisis state in the first place. But BSP’s friendly gesture to the global 1% would not have been possible without Aquino. Aquino used DAP money to “pay” our supposed “capitalization” debt to the BSP to the tune of P50 billion, exactly the same amount BSP lent to the IMF. This is P50 billion that BSP could have lent to struggling but deserving MSMEs.

FDC hits BSP for being a "show-off".
Energy and Infrastructure

The Department of Energy (DoE) has nothing to show in improving the country’s energy situation, crippled as it is by the Electric Power Industry Reform Act (EPIRA) under the leadership of a campaign-money-chaser Ikot Petilla who coddled with the power lobby (though there were reports that Petilla was actually guarding against PNoy's appointment of an Aboitiz man). Under Petilla’s watch, oligopolists manipulated the WESM and jacked up the price so much that even PEMC, the manager of WESM itself, can no longer rationalize it. The continuing regime of high power prices (still among the highest in Asia) has been an important constraint for other development initiatives; even DTI admits that it is a strategic constraint to investment in the industrial sector (see slide 9 of this). Unaffordable power ensures that 15 million Filipinos remain literally “powerless”. Finally, Petilla has led our transition away from renewable energy and towards coal dependence, in effect reversing the half of century drive towards energy sovereignty started by Energy Minister Geronimo Velasco. Now, our country is setting an atavistic example to a world already transitioning to photovoltaic technologies to respond to dangers of climate change and rising hydrocarbon costs.

The much touted Public-Private Partnership (PPP) has been, at most, lackadaisical. Half a decade since it was launched, only 5 PPPs are targeted for completion by mid-2016 – the largest of which is DepEd’s P16.43 billion Phase 1 PPP school construction which included Megawide Construction Corporation in the list of its partners, even as Megawide is embroiled in a conflict-of-interest complaint against Filinvest for the Mactan airport PPP. Another 5 PPPs had been awarded (the largest of which is the P64.9 billion LRT1 Cavite expansion), but none has seen completion. These 10 PPP projects did not make much of a dent compared to the 60 PPP deals that remain in the pipeline.Right-of-way problems and delays in tariff adjustments are among the chief complaints of big capital players involved, despite the concession given to them by the government in the form of regulatory guarantees.

There isn’t just a lack in new infrastructures – even the existing ones severely deteriorated under the Aquino administration. Nobody living in Metro Manila should be unaware of what is happening with its main transport backbone – the MRT3. The two years from 2014 at the helm of Department of Transportation and Communication (DOTC) Secretary Jun Abaya, grandson of Emilio Aguinaldo, we saw a rapid decline in the quality of MRT3 services due to sheer incompetence[6] and skimping of parts necessary to maintain the decade-old tracks, even as we paid for 1.2 billion for maintenance contractors. As a result, only 50 out of73 original Light Rail Vehicles (LRV) were left running, with the contractors cannibalizing the decommissioned ones for spare parts.

The picture speaks for itself.
With failing transportation infrastructure, commuters are exposed to peril, inconvenience, and indignity. On August 13, 2014, one of the defective trains overshot the platform at the Taft Station, injuring 36 passengers. MRT3 and LRTA Operations Director Renato San Jose admitted during a recent Senate hearing that MRT commuters endure 30 to 45 minutes of queuing from the ground level up to the boarding platform. Abaya revealed that MRT carry 600,000 passengers a day, beyond its design capacity of 350,000 and its“crush capacity” of 500,000.

Social Welfare and Inequality

The Pantawid Pamilyang Pilipino Program (4Ps) of the Department of Social Welfare and Development (DSWD) – spearheaded by its flagship Pantawid Pamilyang Pilipino Program (4Ps) program and its primary instrument, the Conditional Cash Transfer (CCT) – did have some impact on poverty alleviation and food consumption. This impact, however, was reversed by poor disaster readiness – as exemplified by Yolanda and Pablo’s aftermath – and lack of regulatory teeth in the food sector, which suffered from high price spikes due to rampant smuggling[7]. It did not help that DSWD itself failed in its disaster response mandate, with multiple anomalies in disbursement and procurement. CoA itself revealed in 2014 that DSWD failed to build 30,438 housing units for tens of thousands of storm victims, despite receiving P2.57 billion for that purpose. The same CoA report mentioned DSWD also used a portion of Sendong cash assistance in 2013 for other purposes not directly related to the disaster.

The Department of Agrarian Reform (DAR), led by weak-willed Virgilio Delos Reyes, floundered under the Haciendero president. When the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) expired June last year, DAR had a balance of 41,583 hectares or 4,665 landholdings still not under the agrarian reform program, with 726,421 hectares of agricultural land yet to beawarded to farmer-beneficiaries. And even with the 1 million to 1.5 million hectares DAR claimed to have distributed, several peasant groups and church activists insisted that they are not actually in the hands of farmer-beneficiaries. What is Delos Reyes’ plan to address this? DAR released a memorandum that it will ease requirements for land use conversion from rural to industrial,in order to accommodate new power plants. In effect, land stolen from farmers will house the coal plants built by DoE.

As for the Department of Labor and Employment (DOLE), the Kentex tragedy is merely a proverbial cherry on top of a cake of disappointments. In 2012, Asian Development Bank (ADB) Senior Economist Norio Usui reported that the Philippines had the worst underemployment rate since 2006, at 22.7%. This was followed by an International Labor Organization (ILO) report in 2014 that the Philippines’ unemployment rate of 7.3% as of 2013 is the worst in the ASEAN. Then the International Trade Union Confederation (ITUC) chimed in, saying that the country is among the worst in the world foremployees. These reports are not surprising as the situation of labor on the Philippines remain as stark as it was decades ago: 70% of workers are non-regulars and contractual according to NAGKAISA, over 80 Filipinos facing death penalty abroad, and 5.5 million children engaged in child labor (according to EU Ambassador Guy Ledoux). Moreover, with DOLE Secretary Rosalinda Baldoz’s behavior during the PALEA-PAL dispute, threatening PALEA strikers and attempting to stop them from conducting a nationwide strike, we might as well rename DOLE as the Department of Capital and Management.

The Kentex Tragedy.

A Big, Fumbling, Cacique Government

At this point, one may get the idea that our hard working bureaucrats and technocrats are at fault. Indeed, there are some bad apples we already exposed earlier, and most of them are in the leadership. The problem though is more complicated than that. The cause of our woes is not just one individual within the cabinet or within the government’s rank and file. It traces back to Aquino III himself.

To understand why, let us observe an important structural change under Aquino III’s term, a change that has certainly been a factor for its failure to disburse P302.68 billion from its budget.  Looking at historical values of the share of government expenditures with total expenditures in the economy[8], we come at an interesting observation: Aquino III’s ratio of 10.84% in 2013 and 2014 already surpassed 10.36% in 1976 – the height of Marcos’s Martial Law rule. Government expenditures per capita will give us the same picture: The value hovers around P6,400.00 per capita in 2000 prices from 1975 to 1982[9], the highest since 1967. This record will only be broken by Aquino III in 2012, when it posted government consumption per capita at P6,964.77. The figure even increased to P7,198.56 by 2014.

We used to think that during the dictatorship, the government is omnipresent. The Marcos dictatorship is everywhere; its decisions are felt and influence all domestic markets simultaneously, especially as its foreign loan-funded, crony-controlled conglomerates dominate the economy in an oligarchic fashion. It turns out that after a long post-EDSA I lull, big government is back. The Aquino III’s administration has surpassed Marcos in terms of influence in the economy. The dynamics of its politics now strongly determines the dynamics of the markets. In fact, its bureaucratic underspending booboo was enough to pull back economic growth by 2.6% of GDP – a feat simply impossible if the government is small. It appears that underspending is simply a manifestation that the growth in the size of the state has outstripped the capacity of Aquino’s leadership to govern that state.

For truth is, Aquino’s personalistic brand of leadership he inherited from his cacique lineage is simply unfit for steering a growing state with increasing complexity. This type of leadership – branded by some as KKK (Kaklase, Kabarilan, Kabarkada), “student council” government (by former Sen. Joker Arroyo), Noynoying, etc. – is incompatible with political modernity. This is obvious when he bypassed all bureaucratic protocols in the handling of the Mamasapano operations, keeping in the dark his interior secretary and chief peacenegotiator in the most sensitive counterterrorism initiative of his presidency, and asking his corruption-implicated, suspended police chief Alan Purisima (who happens to be a highly trusted buddy) to commandeer an excursion into the heart of a rebel area to snatch a person of interest when he was at the brink of sealing the most successful peace deal with those rebels.

It is also obvious when he refused to fire Abad, Abaya, Alcala, Purisina, Delos Reyes, Baldoz and all of his people whose heads the people have long demanded[10], even if by doing so he can defuse public anger over the incompetence and corruption of these officials and gain a more solid political footing for his other reform agenda. It demonstrated political immaturity. Unfortunately, our large, complex state cannot operate much less endure with such immaturity and unprofessionalism.

Former Akbayan Rep. Walden Bello asks for the head of Alcala, Delos Reyes, Purisima and Abad.
A number of public servants and officials (some of which appointed by Aquino) are not only righteous but also highly competent managers exercising scientific and evidence-based methods. The morale and logic of professionalism, however, necessarily emanates from the leadership. In more ways than one, Aquino III is an archaic remnant of old, feudal politics, good-intentioned as he was. This is very unfortunate since the bureaucratic ship[11] that the Aquino III is steering has to be modernized as well. Our elite democracy simply failed to produce modern leadership even under the presence of the modern (albeit maldeveloped) institution of elections.

Uneven Infusion of Participatory Politics

Another danger with a big government, highly competent and professional it may be, is that it may be too big to sense its extremities. People’s real needs maybe lost in the hierarchy or intricate inter-webbing of agency chatter and paper-pushing. Consider the budget process. Without deliberative mechanisms that allow for people to directly report their social woes, we are faced with a well-developed budget agency that is susceptible to bureaucratic inertia and technocratic myopia. Eventually, political dissociation of budget mechanisms may result in ineffective institutional responses, as the statistical inequities that can be detected by technocratic instruments doesn’t necessary reflect the structural inequalities that can only be known through direct political processes.

On this we come on the positive side of Aquino III’s legacy – the experiment on participatory budgeting (PB)[12] via Bottom-Up Budgeting (BuB) and the continuation and expansion of Community Driven Development (CDD) via the the Kapit-Bisig Laban sa Kahirapan (Linking Arms against Poverty)–Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDDS). Together with the educational Family Development Sessions (FDS) of the 4Ps, “people empowerment” objectives had been intricately linked with poverty reduction objectives. Aquino III’s administration saw a glimpse of deliberative and participatory democracy.

This legacy did not spring from the bowels of the elite cabal in the Liberal Party. It has to be imported from its allies. The ascension of Jesse Robredo to the DILG allowed the proliferation of his progressive theory and praxis he developed when he was the Mayor of Naga, praxis that include direct people’s participation on government programs and precise measures of good governance. The National Anti-Poverty Commission (NAPC) which proposed and championed the BuB had been steered by the leadership of the activist Institute for Popular Democracy (IPD), including Joel Rocamora and Jude Esguerra which are both linked to socialist Akbayan. 4Ps and the KALAHI-CIDDS are basically the handiwork of DSWD Secretary Dinky Soliman who, while controversial to a fault and legitimately accused of politicking, came from the sector of Non-Government Organizations (NGO) directly working in the grassroots.

This brings us back to our problematique. If Aquino III ushered experiments on participation via BuB and KALAHI-CIDDS, what explains the relative exclusivity of his growth? We trace it back to our earlier analysis on the bauplan of Aquino III’s regime – the 2010-2016 PDP. Remember that the PDP was drafted not by the President’s more progressive allies but by the technocratic elite in NEDA, translating and encoding the interest of the business elite which they have been trained to understand and protect. But the most important fault is that the PDP itself was written by an elite minority; save for a few consultations with NGOs in a posh hotel near Robinsons, Ortigas, the people have not been directly asked on the blueprint of “daang matuwid”.

In a sense, Aquino III’s big government is out of touch of the people it serves. Most of its actuations can only be considered manhid. Consider Abaya’s handling of MRT woes – letting commuters suffer peril and indignity while he tackles the more technical problem of a ticketing system and sealing PPPs. Consider that the solution of MMDA for traffic has a bias towards private vehicle owners rather than the vast majority of public transport users and commuters. Observe the demolition of pockets of informal settlement in Quezon City to pave the way for the creation of a Central Business, the bias of DOLE for PAL, Petilla’s acquiescence to WESM manipulators even as the public suffers from price hikes – all of these point to the utter lack of democracy within the operations of the Aquino III government, even as we have the BuB and KALAHI-CIDDS.

The Liberal Party of Aquino III, while taking its roots from the plantation-based rural elite, had its time with the people. At the height of the martial law, the LP and the Left stood side-by-side to challenge the dictatorship, with Aquino III’s father, former Senator Benigno Aquino, Jr., waging hunger strikes in jail and collaborating with democratic forces to facilitate the overthrow of Marcos. But it turns out that the Liberal Party via Aquino III has ushered another form of dictatorship, albeit a less lethal type: an insidious dictatorship of the business elite garbed by populist rhetoric and token participatory politics. Sans the latter and the blatant corruption, Aquino III will be hard to distinguish from her jailed predecessor (ironically also his economics professor).

Challenge to the Next Administration: Democratic Modernity

Both Arroyo and the Aquino III administration can be said to be at the crossroads of a historical drama. Under Arroyo, we witnessed the transformation of corruption from that controlled by feudal sensibilities (represented by the likes of former Speaker Jose De Venecia) to one that blatantly promotes winner-take-all primitive capital accumulation – wherein it is already impossible to “moderate their greed”, to borrow from ZTE-NBN Whistleblower Jun Lozada. The reaction under Aquino III was to reconsolidate elite consensus under the mantle of “good governance” while cracking down on corruption. The irony is that the forces of reform right now are commandeered by a member of the class of politicians – dynastic ones with a feudal past – that has not imbibed the spirit of reform in their cultural DNA. The result is Mamasapano-style, barkadahan decision-making.

On the one hand, Aquino’s barkadahan governance is unfit for political modernity; but on the other, the force backing the reforms of political modernity are undemocratic ones – the business elite backed by a neoliberal technocracy. The result is lack of professionalism and lack of democratic participation in the management of growing government – a recipe that can only lead to a crooked path.

The challenge to the next administration is thus to continue the professionalization of civil service and establishment of modern political institutions, all while promoting deeper and more meaningful people’s participation in the running of the state machinery. We simply cannot return to the rapacious, albeit cutting-edge corruption of Arroyo, or the relatively clean but fumbling cacique democracy under Cory Aquino, or the Almonte-engineered technocracy of Ramos, or the cosa nostra governance of Estrada. All of these features persisted to some extent under the Aquino III’s administration, no matter how hard it was resisted by the reform-oriented side of Aquino III and his progressive allies.

The challenge is a baby step towards full transformation in the next six years, paving the way for superior forms of democracy and governance – a more democratic form of political modernity. We can start with the following proposals:
  • Encourage participation in the drafting of the 2016-2022 Philippine Development Plan (PDP). The plan should be deliberated via municipal assemblies, using the methods of BuB.
  • Encourage participation in the drafting of the proposed National Expenditure Plan (NEP), again using the mechanisms of the BuB. Instead of the people merely proposing local budgets, they should be made to deliberate the budget levels on major socio-economic expenditures. Budget experts should be deployed on the ground to inform the people of the budget process and generate fiscal legitimacy from below, not just impose it by fiat from above.
  • Use FDS to get a “pulse” of the people on major national decisions.
  • End the corporate capture of our regulatory bodies such as the Energy Regulatory Commission (ERC) by including a substantial number of consumer representatives in their respective bodies. Regulatory Impact Assessment (RIA) has to be a key feature in all regulatory policies, considering all socio-economic effects of imposing rules and policies.
  • The autonomy of the BSP should be changed via legislation. Government’s role has to be strengthened, especially that of the trade secretary. The presence of capital via members from the banking sector should be matched by representatives from the labor sector and consumers, which are also affected by monetary policy.
  • BuB and KALAHI-CIDDS should be expanded and institutionalized.
  • Incorporate CCT as a regular feature of the budget for the next six years, and fixing the amount as a percentage of GDP (say 2%) or until appropriate poverty targets are met (say poverty incidence not exceeding 10% of population, and other poverty severity and gap measures).
  • DTI’s national industrial roadmap should be determined not just by industrial representatives, but labor representatives too of the respective industries.
  • In cases of property disputes, such as that in rural land occupation or informal urban settlements, police forces must be reoriented towards protecting individual people from danger (some of which may opt to protest), rather than solely enforcing property rights.
The Logic of Reform

The question is whether the candidates from the same elite class will be able to deliver these changes. Answering this is a bit complicated, as it would force us to consider to if candidates from another class can be elected in the 2016 elections. If they can’t, then the question becomes – how urgent are the reforms are, or who are the persons/parties in the best position to accomplish such?

The urgency is almost out of the question. There is always a continuing need to raise the political maturity of the masses, and one of the more effective and feasible means is participation in public affairs. The completion of the project of political democracy has to be completed as early as possible, for any form of delay can only amplify the difficulties of a reform project that is to begin with already dependent on the political maturity of an active citizenry. It is a self-amplifying cycle – demobilization begets more demobilization, politicization begets more politicization.

As for the person/party in the best strategic position, we can take a look at how reforms had been delivered in the current administration. The ascension of Aquino III did produce limited reforms in terms of legislating key laws such as those in reproductive health, sin tax reform, and fair competition. But the probability of those reforms happening would have been less without a strong push of progressive allies within the ruling party. Those reforms may have happened anyway, but regressive political forces (such us, arguably, the Catholic Church in the Philippines, in the case of RH) remain to have bargaining chips that can compel the ruling party to trade away those reforms for short-term gains, especially capitalizing on the fact that Aquino IIII is of the same cut as other traditional politicians. The reforms could have been bargained away without the threat of internal instability in the ruling coalition, something which even the business elite, with its reforms tucked in the PDP and dependent on the President’s capacity to see through the changes they want, cannot tolerate.

In the case that the next set of elite rulers are incapable of pushing for the aforementioned reforms – either because of the configuration of interests surrounding them or because of the distinct trait of the elected President – then the challenge is how to ideologically and politically attack the next administration but still be able to influence its agencies. Again, allies within the administration itself have to be won even if progressive forces will align themselves in the opposition. The challenge here is how to keep reformers within the government in the government, even after a period of expected bureaucratic and technocratic purge, and how to organize within the government from without.

The current administration can also get the upper hand in dictating the logic of reform by laying the groundwork for PDP 2017-2022. It can start the process and make sure that the next development blueprint went through not just scientific rigor but meaningful participation of sectors and the grassroots. Instead of being the vanguard of the business elite, NEDA can instead opt to partner with NAPC sectors and the civil society at large, including people’s organizations and even known critiques of Aquino’s development policy. The resulting blueprint can also be further screened through province-wide consultations – in effect setting both the national discourse and the provincial development discourse in time for 2016 elections.-30-

[3] The increases, starting from 2010-2011 up to 2013-2014, are: 0.59%, 0.53%, 0.33%, 0.23%.
[4] Consider that in 2012, Electronic Integrated Circuits corner 23.43% of our exports (the largest in the pie), 31.57% of which went to China. But looking at our imports, electronic ICs corner 12.88%, 30.49% of which came from the United States. In short, our primary export is electronics imported from the US exported to China. See more data here.
[5] PRDP costs P27.5 billion, consisting of a P20.5-billion ($500 million) loan from the World Bank, P3.58-billion counterpart funding from the national government, P3.112-billion equity of local government units, and P287-million ($7 million) grant from WB’s Global Environment Facility (GEF). Alcala indicated that they may request for funds from the World Bank to the tune of $500 million, as P5.3 billion worth of projects was already approved.
[6] MRT3 authorities reported an increase of average service interruptions per month from 1.83/month in 2008 to 2.42/month in 2011 to 4 a month during the first 7 months of 2014. By May 2015, there are days when the number of operational trains drops to 8, even during rush hours.  In a report to Congress on the state of MRT-1, LRTA administrator Honorito Chaneco reported that the station computer system was available only 53% of the time. The escalators, already obsolete (with spare parts needed for its repair no longer available), malfunctioned an average of 204 times a month. The elevators were available for use only 66% of the time because it was defective for an average of 342 times in a month. Ticket issuing/dispenser machines were hardly used at all since 2011, with its availability going down from 5% in 2013 to 0% in 2014.
[7] This is despite the administration’s claim of low and stable inflation under its rule.
[8] If we divide the Government Consumption Expenditure (GCE) – the total portion of the economy that has been “consumed” by the government, bought by the state from the rest of the economy – with the Gross Domestic Product (GDP), we get an idea of the size of the government. If the share of government expenditure over the total expenditure (total expenditure = total income) is high, it is likely that the government is big.
[9] This was to be followed by a precipitous drop after Marcos faced the biggest fiscal crisis of his presidency in 1983 onwards. At that time, we were forced to default on some of our debts.
[10] It may have been a reaction to Arroyo’s “revolving door policy”, wherein cabinet officials sometimes stay as brief as three months. It appears that positions are not just hold-overs, but political favours given to loyalists (just as well, her Congress had not been confirming her officials anyway). This may have demonstrated Arroyo’s political savvy, but it severely compromised the integrity of the bureaucratic institutions and held hostage strategic programs and reform agenda to political considerations.
[11] There are several things that keep our bureaucracy pre-modern: inefficiency in processes, incompetence of some appointed officials, general lack of skills in the rank and file, general lack of motivation and morale due to failed incentive structures, low investment in innovative and efficiency-increasing reforms at the bottom, patrimonialism and transactional corruption, among other things.
[12] The coming to power in 1988 of a left-wing coalition led the Workers’ Party (Partidos los Trabajores) in Porto Alegre, Brazil marked an important development in the theory and practice of budgeting and public finance. They invented what is to be known as “Participatory Budgeting (PB)” – a system wherein “citizens present their demands and priorities for civic improvement, and influence through discussions and negotiations the budget allocations made by their municipalities”.

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