Palace justifies hike in GOCC subsidies

MANILA, Philippines – Malacañang justified yesterday a higher government subsidy for government-owned and controlled corporations, saying the administration of President Aquino needs the technical expertise of these firms.

“Not all GOCCs are the same as MWSS (Metropolitan Waterworks and Sewerage System). These are all competent people, that’s why we have to increase their budget,” presidential spokesman Edwin Lacierda said.

Sen. Franklin Drilon, Mr. Aquino’s colleague in the Liberal Party and head of the Senate finance committee, had questioned the additional P1.1 billion subsidy to GOCCs, despite their excessive bonuses and fat allowances.

Lacierda said the Department of Budget and Management under Secretary Florencio Abad and Department of Finance under Secretary Cesar Purisima are studying the possibility of imposing a cap on the salaries of GOCC executives.

The DBM has also asked Congress for a law that would give it oversight power over the corporate operating budgets (COB) of all GOCCs and government financial institutions or GFIs.

Some of the GOCCs were handing out millions in salaries and perks to its top officials every year even though they were losing money.

Several of these GOCCs approve their own compensation packages and do not seek any clearance from the executive branch.

“We have not been getting any information from them. They’ve withheld their financial reports from us,” Abad said.

“In the past they always pointed to their special charters as authority for which they draw their power to restructure their budgets,” Abad said.

“The legislation aims to correct that so notwithstanding the special charters, the Office of the President through the DBM will still have power to review compensation and position classification and as well as the operating budgets of the GOCCs and GFIs,” he added.

Drilon has pointed out that some GOCCs are convinced that their COBs do not have to go through the DBM for review because they do not ask for any financial assistance from the national government in the first place.

“These are not excuses for them not to be subjected to the scrutiny of Congress because these are public funds, government funds that they utilize,” Drilon said.

Drilon said that he would also include in the proposed legislation a provision creating a GOCC reorganization committee that would review the charters of the 157 GOCCs.

He said that the committee, which would include a representative from the DBM, would be given the authority to abolish the GOCCs that are “losing money and whose mandates are long gone but are still existing because there is a law.”

“So we do not have to pass individual laws but we will just delegate that authority to the DBM or the committee through a proper legislative delegation of that authority to abolish,” Drilon said.

The committee on finance has been conducting hearings on the alleged excessive salaries and perks of officials of GOCCs and GFIs.

He said 14 GOCCs are being closely monitored by the DOF. These are the Philippine Economic Zone Authority, Local Water Utilities Administration, Light Rail Transit Authority, Metropolitan Waterworks and Sewerage System, National Development Corp., National Electrification Administration, National Food Authority, National Housing Authority, National Irrigation Administration, National Power Corp., Philippine National Oil Co., Philippine National Railways, Philippine Ports Authority and the Home Guaranty Corp.

Purisima said that the Social Security System and the Government Service Insurance System are also being monitored by the DOF.

NFA reorganization

Meanwhile, Sen. Loren Legarda — through Senate Bill 2347 — has called for the reorganization of the National Food Authority as part of addressing the alleged anomalies in the agency.

“Many of the anomalies associated with the NFA operations may be traced to its charter which mandates it to exercise both proprietary and regulatory roles. The NFA is participating in a market that it also regulates,” Legarda said.

She said the NFA should be reorganized into the National Strategic Food Reserve Corp., which would provide the government with a service arm for maintaining strategic reserves of basic food commodities.

She said the regulatory functions of the NFA should be reverted to the Department of Agriculture, while management of food subsidies for the poor shall be transferred to the Department of Social Welfare and Development.

“These changes shall minimize the redundancies prevalent in the previous NFA administration, heighten the focus of government efforts on essential public services, and reduce opportunities for graft and corruption,” Legarda said.

“The present rice policy is potentially very lucrative for well-connected rice traders and political insiders, creating opportunities for graft and corruption,” she said.

A recent World Bank survey showed it was taking NFA P5 to deliver a single peso of cheap rice, while only 27 percent of the poor were actually benefiting from the subsidies.

Abad said “there’s a lot of leakage and inefficiency” in the NFA’s handling of rice subsidies.  —-Delon Porcalla (The Philippine Star) with Marvin Sy, Amanda Fisher