Pushing for 2011 reform budget

THE WAY we in the Department of Budget and Management (DBM) will fulfill our mandate in public-expenditure management will help make or break the Aquino administration’s vision for the country.

Our starting point: Public-expenditure management deals not only with administrative or technical matters but also with political issues. It is in the exercise of power that decides who gets what, when, where, how and, most especially, why.

Government is constantly walking on a tightrope in managing finite resources vis-à-vis the infinite needs and desires of various sectors and interest groups. As we have seen through the years, when a few control the wealth and power of the country, there is a bigger section of our society that is deprived.

In the process of planning, legislating and disbursing the national budget, the government is faced with two choices. The default choice is to accede to the interests of the status quo and play the game of patronage. A subset of this is incrementalism or conveniently putting a little bit of public funds everywhere in an attempt to appease everybody.

Empowerment

If we want to be able to address the urgent needs of the poor and vulnerable, if we want to level the playing field, if we want to bring our country to new heights, this means playing the game of empowerment. In other words, kung walang corrupt, walang mahirap.

This requires designing the first financial blueprint of the administration in a way that reflects, in peso terms, this social contract President Aquino has made with the Filipino people.

Zero-based approach

In crafting the reform budget of 2011, we started with a thorough review of the past use of the people’s money. Through the zero-based budgeting approach, we reduced or terminated funding for programs found to be suffering from irrelevance, ineffectiveness, leakages and political interference, and freed up allocations for critical and effective programs.

We then made sure that there was an unabashed bias for the poor and vulnerable in allocating the P1.645-trillion budget, up 6.8 percent from P1.541 trillion. Social services received the lion’s share of 34.1 percent of the budget and the highest increase of 16.8 percent among the sectors.

This is one concrete, direct and substantial way of making the dividends of good governance benefit the poor.

Cash transfer

One key allocation that has caught the public eye is the P21 billion for the expanded conditional cash-transfer (CCT) program to benefit 2.3 million household-beneficiaries by the end of 2011.

However, we do not consider this the “end-all, be-all” poverty-alleviation program, for we are investing in a whole package of social services to address the pressing needs of the poor, in line with our Millennium Development Goal commitments.

More classrooms

For instance, the Department of Education is set to receive its biggest budgetary increase in a decade, by P32.3 billion to P207.3 billion. This increase will be invested in closing critical resource gaps in education, such as in the construction of 18,169 more classrooms, creation of 10,000 more teaching positions and production of 32.3 million quality textbooks.

On health, we are investing massively in the health facilities enhancement program of the Department of Health, increasing it by more than twice to P7.1 billion in 2011, to support the upgrading of 1,278 rural health facilities, especially for pregnant women and mothers. We expanded the immunization program, increasing its funding by almost 300 percent to P2.5 billion to benefit 2.5 million children and almost 1 million senior citizens.

We are also engaging in creative means to push economic growth and jobs creation, despite the tightness of funds, by engaging in private-public partnerships (PPPs). We are looking forward to generating as much as P200 billion in PPP investments in 2011. On November 18 and 19, we will be presenting to investors the first 10 projects during a PPP conference.

To support this program, we proposed a total of P12.5 billion for strategic-support projects for right-of-way purchases and other investments needed for private money
to come in.

Pork

What about “pork?”

I fully agree that pork barrel is considered a key source of corruption and patronage. However, it is a reality that cannot be immediately removed. What is important in the immediate is to mitigate the sources of leakages and political interference.

Let me also clarify impressions that the pork has been increased. The Priority Development Assistance Fund (PDAF) allocation is still P70 million per member of the House of Representatives and P200 million per senator. The difference now is that we designated the total allocation per legislator as PDAF.

The practice before was less transparent, as legislators inserted their “hard” allocations in the budgets of agencies like the Department of Public Works and Highways (DPWH).

I also note that the executive has proposed a limited menu of projects for the PDAF, in line with the Aquino administration’s investment priorities. However, the menu was expanded by the House, considering that other local priorities have to be funded, such as investments in tourism and environmental protection.

PDAF online disclosure

Furthermore, we subjected the PDAF to a special provision requiring online disclosure of information on fund releases and project information. This will allow citizens to constantly monitor where their legislators are putting their PDAF allocations.

Next, there is no additional P50-million pork per legislator in the DPWH budget on top of the PDAF. This P50 million is a “floor” amount set for infrastructure projects per district, and those with less than P50 million will have their allocations increased up to that amount.

This is not additional pork, especially for the private benefit of anybody and we in the Aquino administration are committed to ensuring that it remains that way.

We are also hoping that with the complete CCT and social services package we commit to provide through the budget—coupled with the practice of transparency and accountability in all government spending—we should be able to cut the dependence of the people, especially the poor, on their traditional patrons.

Confidential funds

In the case of the so-called President’s “pork” in the confidential and intelligence funds under his office, the DBM has submitted an erratum to Congress which in effect reduces these funds by 38 percent to P400 million, from P650 million.

The P250 million was used to fund the Presidential Communications Development and Strategic Planning Office, the Truth Commission and general administration and support services of the Office of the President.

Transparency

This brings us to another point: As important as reforming the allocation of funds in the 2011 budget is the much-needed reform in the way these funds are disbursed.

We had to ensure that the reform budget of 2011 marks the start of the integration of transparency, accountability and participative governance in the budget process.

Special provisions require the publication of complete information on budgetary allocations and disbursements on the websites of the DBM and the implementing agencies. Section 94 of the proposed 2011 budget requires all departments and agencies, including those enjoying fiscal autonomy, to post their approved budgets and the status of their programs on their websites.

We also included some 30 special provisions under the agencies with key programs and projects to post the details of beneficiaries and locations of projects on their websites. As earlier mentioned, the PDAF is subject to such a special provision.

Lump-sum funds

We are also reforming the way lump-sum funds are being used. Aside from information disclosure requirements, we are also making lump-sum fund releases contingent on master plans or network plans, as in the case of irrigation and farm-to-market road funds.

This effort to institute transparency, accountability and participatory governance is not limited to the provisions integrated in the 2011 reform budget, but also in other initiatives that we in the DBM are pursuing.

We are using new information technology in exercising transparency and accountability. We have already launched a special webpage (http://www.dbm.gov.ph, click on link “Fund Releases” at the left-hand column) that discloses information on lump-sum fund disbursements made in 2009, such as from the PDAF, congressional allocations in the DPWH (“hard” PDAF) and the School Building Fund.

Aside from this, we are strengthening our capability to fully automate budget-release documents to enhance decision-making through timely and accurate management reports.

Procurement

We are also continuing to undertake major expenditure-policy reforms in various areas such as procurement (by next year, our Philippine Government Electronic Procurement System will enable the online bidding of contracts), internal control systems, and predictability of funds and cash releases.

I also note that through our medium-term expenditure framework, we are ensuring that expenditures are indeed driven by strategic priorities.

Last but not the least, we are actively engaging our partners in civil society organizations (CSOs) in budget work. We have created the CSO Desk within the Office of the Secretary, and several consultations with CSOs have been conducted thus far.

The direction we are taking is to institute measures to involve citizens through the CSOs throughout the budget process, from preparation to execution and accountability. Through this effort, we are looking forward to a budget by an empowered citizenry.

The 2011 reform budget and our continuing reform initiatives are designed to send this message: It is not business as usual in our government. Our society needs politics that empowers the majority, starting from the allocation of the nation’s wealth. In other words, kung walang corrupt, walang mahirap.

(Florencio B. Abad is the budget secretary.)

Top 10 budgets by department (in billion pesos)
2010 (GAA) 2011 (NEP*) Change (%)

Department Rank Rank
Education (including
school building program) 175.0 1 207.3 1 18.5
Public Works and Highways 135.6 2 110.6 2 -18.4
National Defense (including
pension and AFPMP) 96.2 3 104.7 3 8.6
Interior and Local Government
(including pension) 78.8 4 88.2 4 11.9
Agriculture 41.2 5 37.7 5 -8.4
Social Welfare and
Development 15.4 9 34.3 6 122.9
Health 29.3 6 33.3 7 13.8
Transportation
and Communication 17.2 8 32.3 8 88.5
Agrarian Reform 21.1 7 16.7 9 -20.7
The Judiciary 13.3 10 14.3 10 7.3

*national expenditure program
–Florencio “Butch” Abad, Philippine Daily Inquirer