The Aquino budget: What’s in, what’s out

New administrations are wise not to make wrenching changes in policies and programs, while still proposing significant changes to put their imprint on governance. So it is with the proposed 2011 budget of President Benigno Aquino 3rd. Major social programs under the past administration would continue, if not dramatically expand. Infrastructure would remain a priority, though with more funding supposed to come from the private sector.

Perhaps most important, fiscal discipline remains a cornerstone of public financial management, to keep interest rates down and exchange rates stable, maintain business confidence, and spur investment and job creation—the proven formula that delivered 38 quarters of unbroken economic expansion since 2001, hitting well over 7 percent in the last semester of President Gloria Arroyo.

The slight 6.8-percent increase in the budget underscores the continued prudent spending, allaying any concerns of deficit blowout to fund populist programs. The aim of sustaining this year’s revenue effort of 15.6 percent is good to hear, though a higher stretch target would have been good to adopt. Still, if collections will be at least as good as this year’s, the deficit will decline just because of economic growth.

While seeking to maintain fiscal discipline, the 2011 budget bill already shows the P-Noy push for social services and good governance. There are welcome boosts to the Pantawid Pamilyang Pilipino conditional cash transfer program, nearly tripled to P29 billion, thanks in part to the $434-million Millennium Challenge Corp. aid obtained from the US after many years of government efforts. Some 2.3 million families, or half of all the poor, will benefit, up from 1 million households this year.

Also up: 57-percent increase in schoolbuilding funds, to triple construction to 6,000 classrooms in 2011. Scholarships, including private high schooling for 1 million students, would also increase by more than one-fifth to P8.6 billion. Immunization funding would nearly triple to P2.5 billion, while upgrading of basic health facilities will more than double to P7.1 billion. Thus, the national government will provide much more of the primary and preventive health services long devolved to, but often neglected by provinces, cities and municipalities under the Local Government Code.

Vice President Jejomar Binay’s housing sector is earmarked to receive a slight increase in funds, but its job seems much increased: resettling more than 37,000 households, including 16,000 families displaced by floods in 2009. The highly effective community mortgage program is to get half a billion pesos, nearly triple the current outlay, to finance 20,000 homes.

True to its avowed governance thrust, the budget bill would require agencies to post not only the bidding and award of projects, as required by the 2003 Procurement Act, but also the status of their implementation. Civil society would then get the legal basis to press agencies for project information online.

The Department of Budget and Management (DBM) should use its clout to enforce the foregoing provision. Plus the proposed requirement for DBM to post online all lump-sum disbursements with no specific programs or projects listed, including the “pork barrel” PDAF of legislators, and the internal revenue allotments of local governments. There is also a provision requiring LGUs to use their IRA only for development priorities listed by the national government. There is as well a Performance Challenge Fund of P500 million as counterpart incentive for LGUs. Let us hope Congress approves these measures.

State corporations will also feel the fiscal ax, with GOCC subsidies would be slashed 40 percent to P23 billion. The National Food Authority is supposed to cut rice imports and stop selling at a loss. How these measures would affect beneficiaries of GOCC activities, should be monitored. But the more frugal policy remains laudable, especially if coupled with resolute efforts, including legislation, to remove excessive pay.

Infrastructure spending remains ample at P148 billion, mostly for road building and maintenance. Other big tickets: Laguindingan airport in Mindanao—and continued MRT subsidies totaling P7.3 billion, or P48 per commuter, despite P-Noy’s criticism of such spending in his State of the Nation Address. There are planned LRT extensions to Cavite and Antipolo. The President said fares would eventually rise to reduce state losses. Time will tell if LRT and MRT will eventually run in the black, unlike virtually all commuter train systems in the world.

After last week’s botched and bloody bus hostage tragedy, budget watchers have also zeroed in on law and order. While the
defense and police budgets would rise, the increases are largely for pensions, which are now part of the DND and PNP budgets.
There is a four-fifths increase in funds for the Witness Protection Program, to P151 million for 640 witnesses. The PNP will hire 3,000 new enforcers, a fraction of its needs. But there seems to be limited funding for military or police upgrading. Even the P1-billion Kalayaan Barangay program to counter the NPA through development, was cut.

Overall, the first PNoy budget is a welcome measure, with fiscal prudence, augmented social programs, with infrastructure and security outlays largely maintained. Congress should endeavor to do its work on the spending plan, then approve it well before January. Then comes the real work: implementing the programs, from tax collection and social welfare, to security and justice. And no more pointing to the past to excuse failings of the present. –RICARDO SALUDO, Manila Times

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