Government corporate reform: All for show?

WHEN THE LATE President Cory Aquino took power in 1986, she was shocked by the sheer number of government-owned and -controlled corporations (GOCCs). If my memory serves me right (sorry, but it’s been a quarter of a century), Mrs. Aquino succeeded in cutting the number of GOCCs significantly as part of her overall public sector reform.

The rationale for reducing government corporations and reducing budget support to them is fairly straightforward. The more government corporations there are, the lesser public resources that could go to essential public services. Government corporations sap the finite public funds that otherwise would go to essential public services such as education, health and public infrastructure.

This is especially true when officers and staff of government corporations are paid many times over compared to their counterparts in regular government agencies. And since salaries, wages and bonuses are often more attractive in GOCCs, they naturally attract more workers. As a result, GOCCs are almost always overstaffed.

As a strategy for rationalizing government corporations, Mrs. Aquino adopted the “shape up or ship out” policy. Government corporations that regularly ask for budgetary support became candidates for regularization, merger, privatization or abolition.

Again, if my memory serves me right, Mrs. Aquino successfully reduced the number of GOCCs from about 600 to less than 200, and she succeeded in slashing budgetary support to government corporations.

Now, fast forward. President Aquino III, the son of the late President Cory Aquino, was supposed to reduce budgetary support to government corporations. In fact, he even asked Congress, and the latter dutifully obliged, to create the Governance Commission for Government-Owned and -Controlled Corporations (GCG).

The mission of the GCG is to serve as “an efficient and effective central advisory, oversight, and monitoring body with authority to formulate and implement policies in the active exercise of the State’s ownership rights over GOCCs, thereby ensuring their financial viability and fiscal discipline through adherence in the highest standards of corporate governance.”

Sadly, there was a wide gap between the promise and the reality. The promise to streamline, rationalize and reduce government corporations remains illusive. To date, there exists 596 GOCCs, according to the Commission on Audit’s 2013 report.

Worse, during the past three fiscal years, Mr. Aquino deviated viciously from what Congress has authorized him to spend for government corporations.

In 2011, Congress authorized the President to spend P1.8 billion in equity and P20.5 billion in subsidy to GOCCs. Instead, he spent P12.9 billion and P45.8 billion, respectively.

In 2012, Congress authorized the President to spend P2.1 billion in equity and P31.8 billion in subsidy to GOCCs; instead, he spent 21.3 billion and P42.1 billion, respectively.

In 2013, Congress authorized the President to spend P1.3 billion for equity and P45 billion for subsidy to government corporations. Instead, he spent P11.5 billion for equity and P66.3 billion for subsidy, respectively.

Such large deviations are highly irregular. But how were the large deviations financed? Elementary. They came from the ill-conceived and unconstitutional Disbursement Acceleration Program (DAP).

In the midst of massive poverty, here’s a revolting finding by the Commission on Audit: executives of GOCCs continue to enjoy high salaries and numerous perks. Even lower-ranking executives and staff receive benefits that are not expressly authorized by law.

I don’t see any fiscal discipline when heads of favored government corporations continue to receive obscenely high salaries, allowances and other perks.

The 2012 Family Income and Expenditures Survey (FIES) survey results show that one in four Filipinos is poor — surviving on less than P51.88 per day or P18,935 per year, the official annual poverty threshold. Today, with some 100 Filipinos, some 25 million of them have daily incomes lower than P51.88.

By contrast, the highest-paid government corporate executive received P12,088,476.14 in salaries and allowances in 2013, or about P33,119.13 per day. His total compensation package was 638 times — repeat, 638 times — that of the annual poverty threshold!

In its 2012 report, the COA noted that GOCCs still paid “bonus[es] and allowances and benefits to the board of directors and employees without or in excess of legal basis or proper authority.” The amount involved was P2.31 billion. Last week, it was again reported that the COA had ordered more than 30 GOCCs to return to the Bureau of the Treasury some P1.6 billion in allowances, retirement pay and other fringe benefits unlawfully given to their employees.

The COA discovered that 10 GOCCs have used agency funds to pay for the health insurance of their employees who were already covered by the state-owned Philippine Health Insurance Corp. Six other government-owned and -controlled corporations were found to have paid “unauthorized consultancy fees, honoraria, representation allowance, clothing allowance, bonus and incentives and other reimbursable expenses” to their consultants, lawyers and regional officers.

Here’s another revolting fact: some of the government corporations (in agriculture, natural resource, housing, trade and industry, for example) have been the parade ground of corrupt politicians, civil servants and civil society officials. If they are abolished, will the legal accountabilities of their former executives stay or will they be extinguished?

No doubt, more needs to be done before the GCG can meet its lofty objectives, especially when the President and his budget chief continue to fatten GOCCs with additional funds.

Benjamin E. Diokno is a former secretary of Budget and Management. –Benjamin E. Diokno

bediokno@gmail.com