Out of the Woodwork

As PNoy approached the third month of his presidency, two major events unfolded. The first was the bus crisis on August 23; the second, and until recently overlooked, was the release of his first budget statement on the following day signaling the priorities of his government.

After dealing with the firestorm that engulfed his administration as a result of the mishandling of the hostage incident, PNoy has had to again ward off criticism this time regarding his budget statement for what are perceived to be serious gaps between what he promised during the campaign and what is now being programmed for delivery.

On the one hand, PNoy has been accused by the PCIJ (Philippine Center for Investigative Journalism) of acting vigorously against corruption while timidly addressing poverty reduction; on the other, he is berated by CenPEG (Center for People Empowerment in Governance) for reneging on his “rule of law” platform by focusing more on conditional cash transfers for the poor and maintaining congressional earmarks in the budget.

In Missing the Point, I previously scored the PCIJ for thinking incorrectly about poverty alleviation. Rather than one “big push” what is needed are multiple, incremental steps, to avoid the grand mistakes associated with extravagant social experiments (ie The New Society) which are often “branded” and connected with the cult of personality of some charismatic leader.

This time around, I believe what CenPEG has done is to mischaracterize several elements of the budget statement by focusing only on certain aspects while conveniently disregarding the rest to frame it in a way that suits their narrative. The narrative is one where the protagonist PNoy campaigned as a reformer, but in office became an all too eager pragmatist by prioritizing pork and patronage. Here they use the “ballooning” congressional earmarks (PDAF) and the conditional cash transfers program (CCT) to the poor as prime examples of this “dole out” mentality.

Unfortunately, this simply is not the case. What the budget did was to identify all previously “hidden” aspects of congressional pork in line agencies such as the DPWH under the appropriate heading of PDAF. It is not that such spending increased, but rather that it was made more transparent.

Congressmen, particularly in the ways and means committee and Commission on Appointments often withhold approval of appointments and proposed line agency budgets until they are able to secure funds for their pet projects. These were previously not classified as pork but inserted within line agency appropriations.

One might counter, why hasn’t PNoy put a stop to that? Well, in response perhaps two things need to be considered. First, the Liberal Party only holds a minority of seats in the house, thus in order to rule by coalition, certain forms of back scratching have to be maintained. Second, the presence of Mrs Arroyo in the house means that politically, the coalition remains quite vulnerable to an alternate power base.

Of course if he were to leave it there, it would provide some credence to the narrative about him being an eager pragmatist. But instead, the administration has allowed certain “sunshine” provisions in including the full accessibility to the public of information regarding all such projects under PDAF including detailed costings and awardees of contracts. This will allow unprecedented scrutiny of such spending.

Finally, with respect to the CCT being a form of patronage, this line of attack is being waged not only by civil society groups such as CenPEG and certain quarters within the Catholic Church (who probably see potential competition for their charities), but also by “deficit hawks” such as Sen Ralph Recto. The charge is that not only is this program not proven to be effective in combating poverty, it is also prone to politicization.

Again, this just doesn’t hold water.

The emergence of the CCT as the lead program in breaking the intergenerational cycle of poverty came about as a result of a tournament among many small social experiments conducted by the Arroyo administration. Like Pres Inacio “Lula” da Silva of Brazil of the center-left who maintained the “Bolsa Familia” program (CCT as it is known there) initiated by his predecessor from the center-right, PNoy has not discarded the evidence supporting the continuance and expansion of the CCT.

From a budget perspective, it has been shown to produce better results than other social experiments such as agrarian reform and the rice subsidy program. What PNoy in fact did was to channel funds away from the latter to fund the expansion of the CCT.

As Prof Winnie Monsod has said, it shouldn’t end there. The CCT will only be successful if the poor have better access to schools and health centers in order to fulfill their end of the bargain to immunize their children and send them to school. Perhaps what the church also finds objectionable is the fact that mothers who receive the monthly stipend conditional on the performance of these duties have to undergo reproductive health classes as part of the program.

As Flow Galindez pointed out, the target to lift people out of poverty involves them earning as much as $1.25 or 50 pesos a day for a family of four to five. That’s a little over 18,000 pesos a year. The CCT will go a great deal towards meeting that requirement as it provides as much as 15,000 for a family with three children under 15. There are 4.7 million indigent families who have been identified by the DSWD. The current budget would reach about 2 million of those or close to half (in line with the Millennium Development Goal to halve poverty).

One would conclude that while PNoy has acted boldly (contrary to the PCIJ op-ed piece) by more than doubling the scope of CCT from under a million to two million families, he will have to do much more to fully realize his campaign slogan “kung walang corrupt, walang mahirap.”

And while he is being accused of abandoning his “rule of law” platform (as what CenPEG alleges), nothing could be farther from the truth. The flow of causality actually runs counter to what advocates project. Growth is actually what leads to the emergence of Western institutions of capitalism/rule of law, not the other way around. It took the West more than 200 years to produce the kinds of rules based governance we see today and East Asia did it within 50 because they prioritized fast growth.

In the Philippines, one of the greatest hindrances to growth among other things is the gaping divide between socio-economic groups. We are actually latecomers to the game. Most of Latin America has implemented some form of CCT to great success. It has been dubbed “the closest thing to a silver bullet” in the fight against poverty because it targets so many aspects of human capital deficiency. Perhaps the critics should try and find some other line of attack because this one simply does not work.

Doy Santos aka The Cusp

Doy Santos is an international development consultant who shuttles between Australia and the Philippines. He maintains a blog called The Cusp: A discussion of new thinking, new schools of thought and fresh ideas on public policy (www.thecusponline.org) and tweets as @thecusponline. He holds a Master in Development Economics from the University of the Philippines and an MS in Public Policy from Carnegie Mellon University.

  • Spot on, Doy.

  • UP nn grad

    There is a third event that has arisen — jueteng by Noynoy administration people.

    And now there is this : … whistle-blower Sandra Cam recalled a Senate testimony in 2005 that detailed the new PNP chief’s alleged involvement in the protection of jueteng in exchange for huge amounts of money.

    Bacalzo has denied the allegation and Malacañang has expressed its support for President Benigno Aquino’s first appointee to the PNP’s highest post.

  • Indeed, a reformer who makes speeches is not as useful as a reformer who, when handed the reins of power, opts for getting done what can practically be done to push the country along in the right direction. We don’t need no stinking upheavals, just progress.

    There is no doubt that a free country allows all kinds of voices to shout, but sometimes they are best ignored in favor of holding one’s nose firmly to the grindstone. Though that may hurt a bit, it is better than tilting at windmills which act much as guillotines do.