More than P13-B needed for shift to federalism: ConCom

by Ripples, Aug 31, 2018

MANILA – A member of the Consultative Committee (ConCom) that drafted the proposed Federal Constitution said Friday the shift to a federal system of government will only cost about PHP13.29 billion.

ConCom member, Prof. Edmund Tayao, made this remark a day after the meeting between members of the expert panel and the Duterte administration’s economic team on Wednesday night.

“The incremental cost, as far as our numbers are concerned, would not reach 20 billion. In fact, all those costs, which are directly because of the shift from unitary to federal, would amount only to a little over PHP13 billion,” Tayao said in a press briefing in Malacañang.

Department of the Interior and Local Government (DILG) Assistant Secretary Jonathan Malaya said the government can afford the proposed shift to federalism by tapping its unused funds, savings, and other appropriations.

Malaya said the government can afford the shift to federalism because there is an existing PHP600-billion worth of unutilized funds that have returned to the Department of Budget and Management (DBM).

“Let me say, either it’s PHP20 billion or PHP243 billion or PHP320 billion, I think we can afford it. Why? In the last budget hearing that I attended, the entire returned, unutilized money by the national government, which all of the government agencies returned to DBM because it was not utilized, PHP600 billion unutilized, returned,” he said.

“The national government returns PHP600 billion unutilized funds. That means we have the money for federalism,” he added.

Tayao noted that the annual budget increases by about 25 percent on average, year on year, also showed that government could easily afford the shift to federalism.

“Tingnan niyo lang yung increase ng (Look at the increase in) budget, 2014-2018, we’ve increased budget by 25.07 percent, which means on average, year on year, we’re increasing budget by PHP350 to PHP500 billion,” he said. “Does it not fall well within the PHP350 to PHP500 billion increase in the total budget of the government?”

Tayao said this computation does not factor in savings from the rationalization of the national bureaucracy. In the long run, he said, government can expect more savings than expenditures.

Wrong assumptions

Malaya said economic managers made wrong assumptions about the cost of the shift to federalism because they did not refer to the ConCom’s figures.

“There was [sic] wrong assumptions made when the costs was made by NEDA (National Economic and Development Authority) and DOF (Department of Finance) because they never even came to the ConCom and asked the ConCom about the details of the Constitution,” he added.

He emphasized that not all details are placed in the proposed federal Constitution and there are underlying studies and discussion papers that come with the Constitution.

The DILG executive said some critics made the wrong assumption that under a federal system, the bureaucracy of the national government will be duplicated in the regional government.

“When you compute that, talagang malaki yun (that’s really huge). When in fact what’s going to happen is, you have to look at the expenditure assignments, what goes to which region,” Malaya said.

“The assumptions which they made we feel are mistaken because it bloated the costs,” he added, stressing that there should be more “technical discussions” between economic managers and ConCom to further clarify their varying figures.

Malaya pointed out that economic managers should refer to the ConCom’s figures simply because they prepared the proposed Federal Constitution.

“It’s the ConCom that should be listened to because it’s them who prepared the draft Federal Constitution and the DOF and NEDA are simply commenting on the draft of the ConCom,” Malaya said.

“There will be more technical discussions so that we can come to agreement on the actual cost of Bayanihan Federalism,” he added.

Malaya said it was also wrong to assume that the cost will be needed immediately since the transition to federalism would take as long as 10 years.

“There’s going to be a transition plan, a clear road map across several years — could be 10 years — and we can spread out the cost in those years. That will negate whatever fiscal deficit we may have, that will negate whatever concerns that we have that there will be mass layoffs,” Malaya said.

Earlier, the NEDA said the estimated cost of implementing federalism next year is PHP253.5 billion, which will be on top of the current cost of running the government.

Tayao said there should be further discussions between ConCom and economic managers on the technical aspect of federalism before coming up with estimated costs.

“So if you look at the presentation of DOF and NEDA, we even need to reconcile it and so I don’t see any radical difference. The difference really is with the assumption. Ano bang kasama sa computation nung mga ahensiyang yun (What is included in the computation of that particular agency)?” he said. (PNA)