The P21-billion question

There were many blasts from the past last week in the first budget interpellation by Congress-woman Gloria Arroyo (Pampanga, second district) since she moved from the Palace to the House of Representatives. The last time she raised questions on the national budget was in the Senate in 1997, before she won the vice presidency the next year. A leading newspaper also headlined that it was Arroyo’s first public criticism of her successor’s programs, having issued only congratulations and calls for national unity behind Benigno Aquino 3rd since his proclamation as president.

The subject of Arroyo’s interpellation was the conditional cash transfer program begun in her presidency. She raised doubts about the capacity of government to fully utilize the proposed CCT outlay of P21 billion and its target to more than double beneficiaries to 2.3 million poor families, from 1 million today. CCT offers monthly stipends on condition that beneficiaries keep their children in school and have regular check-ups at health centers.

Lastly, the head of its implementing agency, Department of Social Welfare and Development Secretary Corazon Juliano Soli-man, served in that capacity in the first five years of the Arroyo Administration. “Dinky” quit during the Hello Garci controversy in July 2005, along with the rest of the Hyatt 10 senior officials, and became one of her former boss’s staunchest and most prominent critics.

However, one echo from the past escaped the highly politicized frontpage and primetime stories of Cong. Arroyo’s misgivings over the CCT’s rapid expansion and hefty budget. In December 2008, senior National Economic and Development Authority official Gilbert Llanto released a paper on CCT under NEDA’s Philippine Institute for Development Studies.

Citing the experience of many nations, Llanto’s PIDS paper, “Make ‘deliberate’ haste in rolling out the 4Ps,” praised the long-term poverty-reducing impact of CCT, dubbed Pantawid Pamilyang Pilipino Program, or 4Ps, in the Philippines. The scheme has lifted the poor in Africa, Asia and Latin America, where it is most famously known as Brazil’s Bolsa Familia.

But while lauding the Philippines’ adoption of CCT with international funding, Llanto urged a well-coordinated implementation to ensure that classrooms, teachers, health clinics and workers, and other facilities needed for the poor to comply with CCT conditions are in place before ramping up transfers.
Education and medical care are woefully inadequate in poor municipalities, the very places where many of CCT’s target beneficiaries live.

That was precisely Rep. Arroyo’s point, though interestingly, there was no mention whatsoever of her budget interpellation in the article citing Llanto’s study, not even as a news peg to lend timeliness to the two-year-old PIDS Policy Note report. Arroyo had argued that it would be “irresponsible, ambitious and untimely” to expand a project and its funding beyond what the government is realistically prepared to handle.

For one thing, an over-expanded CCT would generate high expectations among the poor, only to create bottlenecks during implementation because households hoping to get money cannot find school places or clinic slots to fulfill stipend conditions. And worse: if a big chunk of the 2011 CCT outlay is unspent next year, that would be billions of pesos denied to other urgent programs.

Hence, on the CCT’s hefty funds, Arroyo wondered: “Is that the reason there is a reduction in farm-to-market roads and state universities and colleges, there is a small allocation for the Visayas and Mindanao, and the budget for the judiciary was decreased?” Put simply, argued the lawmaker with a PhD in economics, funds with little chance of being utilized should be reallocated to other needs and programs.

Another issue raised by both Arroyo and Llanto is the “absorptive capacity” of DSWD itself to more than double the scope and size of the program in one year. The PIDS paper cited “readiness of management, administrative, and delivery structures” as a concern even when the program was just beginning with just one-fifth or fewer than the targeted number of beneficiaries for 2011.

“The government,” says Llanto, “has to admit that a program of the scale and scope of the 4Ps may strain the present capacity of agencies that also have other programs to implement and services to deliver . . . There is really no need to expand sooner when the management, administrative, and delivery structures are not really prepared for a full-scale implementation of this innovative subsidy program.”

Rep. Arroyo knows very well the capabilities and resources of DSWD, having headed it from 1998 to 2000 and followed it closely as a key agency implementing her anti-poverty programs. At the budget interpellation, she asked if the department can hire and train enough staff to service 1.3 million more households over one year— more than 100,000 additional families a month. She believes it will take a year just to get the staff ready. DSWD plans to add about 1,900 personnel, to be trained at a reported cost of P1.7 billion, or nearly P900,000 per staffer.

Besides education and health facilities and agency readiness, Llanto noted the importance of “geographic and household targeting” to ensure that aid goes to the truly needy, instead of being misdirected by politicians and corrupt officials. This concern was addressed by DSWD’s P1-billion poverty survey conducted last year, which identified the poorest families and communities in the country. DSWD should now resist the inevitable political pressures and use the billion-peso survey in channeling CCT funds.

Llanto raised three other concerns: the stipend amount, compliance verification and project monitoring, and the graduation of beneficiaries from the program. Every staffer would have to check on almost 700 households each—that each family visits the health center and send kids to school. DSWD must also resist political pressure to increase payments, to give assistance even if beneficiaries fail to fulfill conditions, and to keep families in the program even when they are no longer poor.

In closing, Llanto asked for solid facts before ramping up CCT: “While the political calculus seems to favor a rapid expansion of coverage, this [paper] argues that it is paramount to first establish empirical evidence about the significant role that the 4Ps plays in producing the expected human capital outcomes crucial for growth and poverty reduction before a rapid expansion is even contemplated.”

But then in this P21-billion question, as in countless other policy issues, it is invariably the political calculus that counts.

Ricardo Saludo heads the Center for Strategy, Enterprise & Intelligence ( ric.saludo@censeisolutions.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it ). He was Secretary of the Cabinet in 2002 to 2008 and Chairman of the Civil Service Commission in 2008 to 2009. –RICARDO SALUDO, Manila Times