Real reforms needed to fight poverty

Editor’s note: The fifth part of this series discussed how direct subsidy programs of the government for the poor may be flawed, and how the implementation of the PhilHealth program is lagging because of lack of funds on the part of local governments, among others.

Last of six parts

Last year, the National Economic and Development Authority (NEDA) also reported in its Updated Medium-Term Philippine Development Plan 2004 to 2010 that PhilHealth’s sponsored program has been largely dependent on “the willingness of [local governments] to enroll their constituents.”

NEDA Social Development Staff Assistant Director Cleofe Pastrana said as well that in the past, many local governments were unable to sustain their part of the premium payments for PhilHealth’s indigent program.

“That’s why the money at [the budget department] cannot move,” said Pastrana, “because without the [local government] counterpart, the money for health insurance wouldn’t be provided.”

The recalcitrance—and sometimes sheer unwillingness—of local governments to support national health programs or follow suggestions by the Health department has left the likes of former Health Secretary Esperanza Cabral exasperated.

Devolving health service

The way Cabral sees it, the most important reform that the health system needs is in the area of devolution. “We need to make up our minds whether the devolution of health services is good or not,” she said.

To which Local Government Secretary Jesse Robredo retorted: “It’s not a question of devolution, it’s getting the right people for [the task].”

He admitted, however, that local governments seem to be out of the loop regarding national health priorities. He cites the case of the Millennium
Development Goals (MDGs), among which the health-related ones focus on prevention.

“It’s not sexy at the local level,” said Robredo of the Millenium Development Goal [MDG] thrust. “The issue there is ‘how many have I provided health assistance to.’”

But he argued that local governments would be encouraged to prioritize MDG-related programs if achieving the targets resulted in tangible rewards for the towns and cities, such as more funds. The MDG was set by United Member nations in 2000.

Yet additional monies may not be enough to encourage local government executives to, say, allocate the necessary budget to keep their health centers stocked with contraceptives.

That would, after all, mean, going head to head with religious leaders who wield great influence especially over rural communities.

Wanted: Direction

In 2004, then Health Secretary Manuel Dayrit issued Administrative Order 158, or the Contraceptive Reliance Strategy that gave local governments the task of providing contraceptives to their constituents—either for free or at cost.

The strategy’s failure can be seen in the lack of free contraceptives in public health facilities, which NEDA’s Pastrana said caused the very slow progress in contraceptive use rate. In 2003, the rate was 49 percent. Today the comparative figure is 51 percent—quite a long way still from the MDG target of 80 percent.

Some observers are optimistic that with the Aquino administration’s stance on reproductive health, local governments may give Administrative Order 158 a chance.

But there are those like Donato Macasaet, executive director of CODE NGO or the Caucus of Development NGO Networks, who said that they would be surprised if President Benigo Aquino 3rd would be able to achieve the health targets—particularly the one on maternal health—that the Arroyo administration had missed miserably.

Macasaet, though, said that he would be content if the Aquino government provides even just the direction so that the MDGs would be attained “if not in 2015, at least soon after.”

Bold blows vs. corruption,

President Aquino’s winning the May 2010 polls triggered a contagion of hopefulness among Filipinos. He wooed and won votes with a slogan that was simple, yet catchy: ”Kung walang corrupt, walang mahirap,” or without corruption, there’d be no poverty.

The second Aquino presidency has spread a virus of hope that finds sole parallel in the tide of goodwill that Filipinos bestowed on his late mother and democracy icon Corazon “Cory” Aquino after the 1986 EDSA People Power revolt.

Indeed, President Aquino’s campaign equation of “no corruption = no poverty” has animated Filipinos so much that the expectations are great that he will deliver results soon.

But while his first two months in office marked vigorous efforts to address the first part—filing suit against alleged tax evaders nearly weekly, creating a “Truth Commission” to hound crooks of the old regime, and firing midnight appointees of his predecessor, Rep. Gloria Arroyo of Pampanga—he has announced only tentative and inchoate initiatives to address the second part.

Thus far, President Aquino’s economic team has launched an “inclusive growth framework” for tackling poverty. It is a framework lifted—up to the level of many specific recommendations—from the World Bank Country Assistance Strategy for the Philippines titled “Fostering More Inclusive Growth,” which was released on August 19.

The concept was first enrolled in the Bank’s Country Assistance Strategy for 2010 to 2012 titled “Making Growth Work for the Poor” and dated April 2009.

And yet it was only on Monday, September 6, that President Aquino issued a directive for the NEDA to formally start the crafting of the new Medium-Term Philippine Development Program for 2011 to 2016. It is a document that should serve as his program of action but which officials said may take until yearend to finish.

On slow mode

It’s a slow-motion executive performance that has political and economic observers alike taking a second, hard look at President Aquino, who was a trailblazer in the last elections.

In fact, he is the first presidential candidate to beat a former president, Joseph Estrada, who until then held the record of securing the largest margin of victory in Philippine elections.

The country’s first bachelor president is also the first to be thrust to power via a national automated elections, the nation’s first. Those polls turned out to be the first fiercely contested in both old and online media as well; President Aquino won a crowded nine-candidate race in a balloting that saw a fourth “G” defining RP-style elections—gigabytes—aside from the guns, goons and gold of old.

By most accounts, however, President Aquino has remained true to his roots. It is in the image and likeness—and the same starting premises—of the mother’s presidency that the son has advanced to Malacañang.

Like Cory, President Aquino ran and won on the same franchise of integrity, or campaigning against both “material corruption” and “moral/spiritual corruption,” according to University of the Philippines political science Professor Felipe “Pepe” Miranda.

This was captured in his campaign slogan. Yet, in reality, the catchphrase might be too simplistic.

Miranda, for one, does not think that by curbing corruption, a president could also automatically stomp out poverty, or that with corruption put in check, poverty will, on its own, work its way out of the system.

“The probability is that without corruption, you may not do away completely with poverty but you will do away with it, significantly,” Miranda said.

Lofty visions

The battery of economic technocrats in government knows this full well. The problem is that what they have spewed out so far seems to be long on lofty visions but short on concrete goals.

On August 18, at a midyear economic briefing, Socioeconomic Planning Secretary Cayetano Paderanga Jr., said: “The Aquino Administration aims to create adequate employment opportunities for many more Filipinos in order to significantly reduce poverty.”

Among the “strategies for inclusive growth,” Paderanga said the Aquino administration will launch the following programs: “better education, primary health care and nutrition, and other basic social services; equal access to infrastructure, credit, land, technology, and other productive inputs; improve governance and strengthen institutions to promote competition.”

In addition, he said: “we will equalize access to development opportunities across geographic areas and across different income and social spectra” and “among others, we will try to better education, primary health care and nutrition, and other basic social services.”

Finally, according to Paderanga, “we need to formulate and implement effective and responsive social safety nets to catch those who are left behind by the character of a high sustained growth.”

“Likewise,” he said, “in recognizing the devastating effects of climate change in the future, social safety nets that support and capacitate vulnerable sectors are necessary to address poverty.”

Critical gaps

The “Reform Budget” for 2011 that the administration submitted to Congress on August 25 does not really help much in making its targets on poverty alleviation clearer to discern.

President Aquino’s accompanying message to the “Reform Budget” said only that it “mirrors our commitment to lift the nation from poverty through honest and effective governance” and reflects the Cabinet’s consensus on “priorities to address critical gaps in social services for the poorest.”

The message added that these “basic governance principles” drive the 2011 budget—transparency and accountability to make government productive; bias in allocating resources for the poor and the vulnerable; fiscal responsibility to reduce debt; public-private partnerships to spur growth despite lack of funds; and zero-based budgeting to prioritize activities with impact.”

“Through the zero-based budgeting system, we were able to focus allocations on programs that are really intended to lift the lives and empower the poor,” explained Budget Secretary Florencio Abad.

“We are trimming the fat by phasing down programs where we think government has no business in doing or is bad at doing, including subsidy programs which apparently benefited the rich instead of the poor,” he added.

But while some subsidy programs will go, a few others will continue on, and with bigger scope and budgets yet, in the Aquino administration. Abad cited the budget items that he said demonstrate the administration’s zeal to quell poverty:

• “The budget of the Department of Education [DepEd], which continues to receive the highest budgetary allocation among all agencies, increases by
18.4 percent, or P32.3 billion to P207.3 billion [12.6 percent of total budget], the largest in over a decade. This is attributed to the construction of 13,147 classrooms and the creation of 10,000 teaching positions, among others.”

• “The budget of the Department of Social Welfare [DSWD] and Development increases by 122.7 percent to P34.3 billion, primarily due to the increased provision for Conditional Cash Transfer [CCT] to benefit 2.3 million households by the end of 2011.”

• “Reforms in other subsidies were made: the DepEd food-for-school program was transferred to DSWD as it can better target beneficiaries; the Department of Agriculture’s input subsidies was reduced as it was found to have benefited the rich; and the Kalayaan Barangay Program was eliminated as it is no longer effective. Savings were instead directed to the CCT, the DepEd scholarship program and the National Health Insurance Program.”

Not clear, not out

University of the Philippines Professor Karina Constantino-David, who had served as housing czar under President Joseph Estrada and later Civil Service Commission chairman, acknowledges that the poverty alleviation platform of the Aquino administration needs better and fuller articulation.
“We also talked about it, it’s not coming out, and it’s not being conveyed clearly by the Communications Group,” she said.

The President has named three secretaries and an undersecretary to share artificially divided roles in press and media relations. They have been precisely invited to meetings on these anti-poverty initiatives, said David, who has helped review nominees to government positions for the Aquino administration.

“The conceptualization of how to put things together, that’s supposed to be their job, pinaupo na sila [they’re already there],” she added.

Much like Cory, President Aquino came to power backed by a company of similarly reform-minded if variously motivated political allies with consensus on general policy themes, but not on concrete programs or policies.

But while Cory’s presidency was described as being given to “Kamag-Anak Inc.,” President Aquino’s is said to be evolving into a “Ka-Vibes” or “Kabarkada Inc.”

His multiple-head Communications Group is evidence of President Aquino’s dangerous tendency to accommodate all the factions that fathered his presidency, prompting a media analyst to ask: “If he cannot manage his friends, how can he manage his enemies?”

It is clear the Filipinos did not get “an Aquino solo presidency,” said public-relations consultant Aurelio German, a long-time personal friend of the President.

German, who had worked for defeated candidate and Aquino cousin Gilbert Teodoro Jr., added: “The way I see it, this looks like an oido presidency, one driven by gut-feel. But that won’t suffice. You have to put science into it.”

He said that President Aquino’s advisers and Cabinet appointees would do well to give him more substantial advice and staff work.
Miranda shared the observation. President Aquino might be better assisted, he said, by “Cabinet members cutting their teeth on the job exercising a lot more restraint in the way they make public pronouncements.”

To be fair, German said: “There is no question about his honesty but what is coming to the fore right now is his ability. The determination is there but apparently not enough to push through campaign line, to craft a master plan beyond the sloganeering.”

Big burden

Fortunately, the government’s old-hand economists are around to spell out what the Aquino administration has to do for the Philippines to meet its commitment to reduce poverty incidence by half, within the deadline of the United Nations’ MDGs.

That would be a poverty incidence of 23 percent by 2015, from the base figure of 45.3 percent as of 1991. Right now the figure stands at 33 percent.

According to Ramon Paul Falcon of the NEDA’s Social Development Staff (NEDA-SDS), that translates to a “medium probability” of attaining the poverty MDG. In other words, reaching the goal isn’t all that impossible; all the Philippines needs to do, said Falcon, is to increase its pace of reducing poverty by more than two percent annually—and to sustain this until 2015.

And if he so intends to do right by the MDGs, the big burden on President Aquino is this: In absolute numbers, rescue from poverty at least 278,852 Filipino families every year in the next five years. These are the families who survive on less than $1, or P45 a day—the poverty threshold income that the United Nations says should be increased by now to $1.50 at least.

Yet Falcon said that the NEDA’s “inclusive growth framework” highlights recommendations based on a comprehensive analysis of the poverty situation in the country, which economists said has been worsening in recent years. This is despite former President Arroyo’s pronouncement that her administration achieved a 7.3-percent growth in the first quarter of 2010, which was even supposedly the highest posted by the country in the last three decades.

Falcon does not refute this, but explains it was a “jobless growth . . . buoyed up by the services sector”—mainly business process outsourcing, retail trade, real estate, as well as remittances from overseas Filipino workers.

This, he said, is a “very narrow source of growth” since it “doesn’t translate to the greater population who are mostly engaged in agriculture, in manufacturing, and in industry.”

He said that growth should be “inclusive” so that workers in agriculture and manufacturing, as well as the downright impoverished, would also feel its positive effects.

Still, the strategic framework prepared by NEDA recommends that the Aquino government continue certain programs of the previous administration. These include the Basic Education Sector Reform Agenda, which is anchored on the education-for-all goal and improvement in the quality of education. For health, NEDA sees nothing wrong in maintaining the Arroyo administration’s “Fourmula One” program, which focuses on improving health regulation, health financing and delivery of health services.

The framework also recommends the strengthening of conditional cash transfers that used to be under Arroyo’s Pantawid Pamilyang Pilipino Program.

Supply-demand issue

But the verdict is not yet out on how far these cash transfers could go in rescuing the poor. For one, the sums will come from a $400-million loan from the Asian Development Bank that in time will be booked on the budget and paid from taxpayers’ money. For another, the cash transfers may unduly perk up demand for education and health services that remain in short supply in low-income towns and cities populated by the poor.

Another flagship poverty-alleviation project of the Arroyo administration called Kapit-Bisig Laban sa Kahirapan (Kalahi) should also be continued, said NEDA-SDS Assistant Director Cleofe Pastrana.

Kalahi provides community grants to support the building of “low-cost, productive infrastructure such as roads, water systems, clinics, and schools” in poor areas. Residents and local governments provide a cash or in-kind counterpart to the project.

For housing, the framework deems it wise for the focus on slums upgrading to continue.

Falcon, meanwhile, said that several recommendations from the strategic framework plan are actually “in line” with President Aquino’s agenda, based on what he said at his inaugural and in his campaign platform. The NEDA-SDS supervising economic development specialist cited President Aquino’s goal of universal PhilHealth coverage and the strengthening of key institutions like the National Anti-Poverty Commission to better coordinate anti-poverty efforts as among these. But President Aquino’s proposal to have a 12-year basic education cycle remains “under study,” said Falcon.

Pastrana, though, stresses asset reforms as the central “intervention” for the Aquino government’s poverty-reduction efforts. She pointed in particular to the continued implementation of the Comprehensive Agrarian Reform Program Extension with Reforms, and the strengthening of livelihood and microfinance programs. She stressed a need to have more rationalized social protection and safety-net programs “to cushion the impact of shocks and disasters that affect most the poor and the vulnerable,” which government data said are the fishers, farmers, children and disadvantaged women.

Bad, good money

One important concern, of course, is where the money for all these reforms will come from. President Aquino, after all, had made a big to-do over the budget deficit he said his predecessor had left.

Former National Treasurer Leonor Briones, however, said that the budget just needs to be “restructured” for the Aquino administration’s anti-poverty plan to fly. “[President Aquino] has a lot of leeway in restructuring the budget,” she said. “That is, if he wants to, if his advisors want him to.”

The convenor of the advocacy group Alternative Budget Initiative, Briones pointed out that the country’s budget laws concentrate the power of the purse not on the legislature, but on the president. For instance, she said, more than half of the 2010 budget—or about P800 billion—is directly under the president’s control as special purpose funds.

All Philippine presidents from the time of Ferdinand Marcos had enjoyed an intense concentration of budgetary powers, added Briones. While Congress is supposed to pass the Appropriations Law, it is the president who either signs it into law or vetoes it. In case of conflicting versions between the House of Representatives and the Senate, the president can also decide to reenact the budget.

But what really “makes a mockery” of Congress’s supposed grip on the state purse strings, said Briones, is how the president can transfer funds at whim while the enacted budget is already being implemented. She added that this was what happened in 2008, when then President Arroyo transferred no less than P140 billion from different agencies to “overall savings,” which were recorded as “unreleased appropriations.” This included an allocation of P1.2 billion meant for the purchase of contraceptives; the money was never released.

“Congress has not been able to rein in the excessive abuse of the budget by the president,” observed Briones. “As a matter of fact, they were part of the activity itself.”

“They say money is the root of all evil,” she added. “But it can also be the root of all good if you instill value, if you account for it and if you participate in all the decisions.” –Che de los Reyes, Philippine Center for Investigative Journalism