What the Sona should say

The President’s team will be preparing for the State-of-the-Nation Address right about now. So let me give a little unsolicited advice: Be truthful. The President will be much better appreciated if he is truthful. Sugar-coating was the last administration’s forte (unemployment is bad, change the definition; not enough classroom, go two shifts and pretend there is) it fools no one who matters.

The President has achieved quite a lot, but he’s missed out on some things, too. He should point out that he has, but that he has learned from those mistakes so they would not happen in the future. Or that they were unavoidable in the current system so changes are going to be made to fix them.

Let me list some of the achievements. He’s brought personal honesty back into government and brought in a team that supports that. But he’s failed to take it much further—through no fault of his own. He’s been stymied by the system. Justices who deny creation of a truth commission, and for a reason that defies logic. An ombudsman who refused to cooperate—so had to be kicked out (a success of sheer determination by the President). And numerous officials who just take bribes now as a part of life. They’ll take time to stop. He has started, the Bureau of Internal Revenue has so far filed more than 40 major tax evasion cases with tax liabilities amounting to some P17 billion, while the Bureau of Customs, through its Run After The Smugglers program has filed 33 cases with liabilities totaling P53 billion. But will the Judiciary support these efforts by acting forthrightly and swiftly and dismissing frivolous defense arguments?

He’s initiated the public-private partnership program as a top priority, as it should be, but the bureaucracy is slowing him down. The systems are too convoluted and mired in legal red tape. You can’t just go ahead and do it. In this regard, waiting for the justice system to decide on Piatco is, I think, a mistake. As I’ve said endlessly, the government should get an independent valuation, and pay it. Just get it over and done with. A resolution of the matter before the 2011 Sona would send a marvelous signal that this is a government that sees a problem, finds a solution, and applies it—with dispatch. This government was not responsible for this mess, but it is becoming responsible for extending it. By the way, referring the court’s decision to Palace lawyers to determine a fair value for the terminal misses the issue entirely. The issue is: What is a fair value? That is not a legal assessment— it’s a technical one. One that can only be done by professional evaluators.

The President has shown fiscal responsibility by bringing the budget deficit back under control—after the blow-out by Arroyo in her last months. But in doing so, he has underspent on much–needed stimuli to the economy. What he needs to show is that he’s got government finances back under control while still spending to meet societies’ needs. Getting money more rapidly into government projects (particularly infrastructure) and programs (the success of the conditional cash transfer program can well be mentioned) should be highlighted. But there should be sufficient money so as to not go into higher debt to invest in growing the economy needs greater revenues. Cleaning up the tax and duty systems, as has been started, will help, but they won’t be enough and it will take too long. Additional revenues are needed. The easiest is to bring sin taxes into the modern world, set the excise tax rates based on current prices of cigarettes, not on prices years ago. This could add P50 billion-P60 billion to government income if the law is properly re-designed.

Aquino can also announce that he’s asked Congress to rationalize tax incentives, where too much is lost to government through unnecessary incentives. But, importantly, research must be done to ensure the incentives left are sufficient as to make the Philippines competitive with its neighbors. A higher road users tax also makes sense to fund much needed improvement in the roads. But it must be spent on that improvement.

Other good things he’s done so far:

Adopted a zero-based budgeting approach in drafting the national budget which effectively terminated funding for ineffective programs and expanded funds for those critical for development;

Suspended bonuses, allowances and other perks of the board members of various government-owned and -controlled corporations and government financial institutions and staunchly supported the passage of the GOCC Governance Act (expected to be signed mid-June)

Reviewed negotiated contracts of government agencies (the Department of Public Works and Highways and Department of Transportation and Communications saved P577 million and P1billion, respectively from projects); and

Allowed journalists to monitor the military procurement process.

Emphasis throughout the Sona should be on job creation. To create jobs, the focus should be on creating a stable, predictable environment with a truly level playing field in an open economy. The president has identified seven priority sectors, I’d put all attention and effort into four of those: agriculture/agribusiness; tourism; information technology/business process outsourcing; mining. These are the ones that can create jobs, and three of them do so where they are most needed: in the rural areas. Economic growth is fine, but job growth is what is needed.

In agriculture, the Comprehensive Agrarian Reform Program has not worked. You can’t make money on five hectares. It’s nice to own your own land, but nicer still to feed your own children. Tourism needs quick, easy, comfortable access to tourist destinations and good food and accommodation at those destinations. The IT/BPO industry needs educated people (the schooling system needs massive improvement and massive funding to achieve it). Mining needs the Church to recognize that its role should be to help government by monitoring mining operations, and blowing the whistle when it’s not done responsibly. Not by banning mining in its totality. You can’t ban something you must have.

Don’t spread yourself too thin, do these four well and all else will follow.

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For the past 30 years I’ve been on the Board of the Australian New Zealand Chamber of Commerce and was one of its founding governors, mainly because no one else wanted to be, I suspect. I think I was President for about 10 years of those 30, so I have an understandable bias to looking after it.

But even without the bias I think it’s doing a good thing: Bringing Filipinos, Kiwis and Aussies together to grow business. The name “Kiwi” comes from the unique, wonderful and rare bind that is found only in New Zealand. “Aussie” is because “Australian” is just too long to say, spell or write down. Filipino is, well, just Filipino.

Anyway on July 12-14 they’ll have their first triumvirate business forum to try and drum up business among the three countries. The relationship between the three has always been close but business has been too slow. This conference is designed to speed it up.

If you want to do business with Australia and New Zealand, this will be the place to get started. If you’d like to attend, call ANZCHAM on 7558840.

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The Philippines is now the only country in the world that doesn’t allow divorce, that includes all other highly Catholic countries. Here, again, the Philippine Bishops are out of step with their Catholic brethren elsewhere. Why?

Surely God meant you to enjoy your brief sojourn on earth before going to heaven. Why suffer a lifetime of misery because of one mistake (the wrong choice of partner)? The only reason I can think of is protection of the children. A good reason, but that can be addressed through compulsory alimony. Children of a single parent may not be ideally situated but, I’d postulate, would be far happier than in a home of fighting, hateful parents.

I divorced. I’ve had a wonderfully happy life with a marvelous woman, and two great (we used contraceptives) kids. My first wife also married again and led a happy life until she died some years ago. –Peter Wallace, Manila Standard Today