2016 elections

The President’s speech

Image credit: Eaglenews.ph
Image credit: Eaglenews.ph

In his new year’s address, President Aquino spoke of the urgency to complete his administration’s good governance agenda alluding to the remainder of his term as the “last two minutes”.

Several challenges faced this year were mentioned including the PDAF scandal, severe weather events and the continuing task of providing employment for our people. Achievements to date were the prosecution of cases against corrupt officials implicated in the PDAF scam, signing of the annex to the framework agreement to end conflict in the South, resilient growth in the face of a regional slowdown, and the granting of investment grade status to the Philippines.

The president mentioned the ongoing tasks needing completion before the end of his term, which are eradicating corruption, solving the skills mismatch in labour markets and providing enough employment opportunities, and bringing about a final peace settlement in Mindanao.

Unfortunately, in seeking to play up the positive achievements under his administration, the president may have undermined his own credibility. The president intoned, “because of good governance, we are destroying the last bastions of corruption, and at the same time, creating more opportunities for our countrymen.”

The last bastions of corruption? As evidence of this, the president cited our improvement in Transparency International’s (TI) Corruption Perception Index moving 29 places up from 134th to 105th place out of 177 countries in the ranking. Actually, TI’s 2013 report shows us at equal 94th place along with countries like Djibouti, India, Suriname and Ecuador (see below).


Of course one can argue that the methodology used by TI necessarily makes it vulnerable to criticism based as it is on perceptions of the country, which can be influenced by the “halo effect”. The real proof of the pudding is  in the actual experience of investors when they try to do business in the country. And here a better yardstick comes from the World Bank’s Worldwide Governance Indicators.

Although the World Bank’s findings show the country’s Control of Corruption score in 2012 recovered from its recent lows, it was still at 33 with 100 being the highest possible. This puts us slightly below what we attained in 2005. I doubt that anyone would regard that as a banner year for beating corruption. It doesn’t suggest that we have limited corruption past the historical mean if you look back at the WB’s time series. We are way below our highest score of 55 attained back in 1998.

WB CoC

As far as providing jobs, the president said, “Through the cooperation of DOLE, TESDA, DepEd, CHED, and the private sector, we are finding solutions to the job-skills mismatch. Therefore, it is not surprising that the unemployment rate decreased this year.” This statement can be questioned. While the unemployment rate recorded for October 2013 was 6.5 per cent, lower than the 6.8 per cent in the same month of 2012, the average for 2013 was 7.1 per cent compared to 7.0 per cent in 2012. Also, it is worth noting that the October estimates excluded the province of Leyte.

It is standard practice in dealing with employment figures to use full year averages to smoothen out the volatility of results. While average total employment rose 0.8 per cent to 37.9 million in 2013 up from 37.6 million in 2012, the number of unemployed people also rose by 2.5 per cent to 2.9 million from 2.8 million during this period. This does not suggest that employment conditions improved much in the last year.

It is likewise hard to know what to make of the administrative statistics the president cites with respect to TESDA’s performance. He compares a study performed by the Department of Budget and Management showing that only 28.5 per cent of graduates between 2006 and 2008 found employment after training to a study performed by TESDA in 2012 that showed that this had increased to 62.4 per cent.

We are not told whether the methodologies used by the two agencies in deriving these results were consistent with each other. Was the length of time the same for both studies (the former was for three years, what about the latter)? How long since graduating were the former pupils surveyed in each study? How were respondents sampled? The seemingly vague language used in the president’s statement does not really help clarify the issue.

The seeming lack of rigour in subjecting the president’s statements to analytical scrutiny opens up his message to criticism. If the premise of his argument appears faulty, then the conclusions and policy direction he derives from them could be discredited as well.

For me, the cherry picking of statistics that favours his arguments simply undermines the very thesis that good governance reforms are in fact working to improve things and are close to their culmination. In our pursuit of the straight path, there ought to be no hint of deception or bias in our analysis of the situation. To be fair, I don’t think it is their intention to deceive us. Perhaps it is a case of the spin meisters not seeking help from technical analysts in proofreading the speech.

Finally, what was sorely lacking in the president’s narrative was a cogent strategy and clear policy direction for the remainder of his term. The president again seemed to resort to rhetorical flourishes, rather than spelling out his roadmap. He has left it to commentators to fill in the blanks for him. This is not what we would expect from a president at this stage of his term. Worryingly, the president’s speech has left us with more questions than answers.

Skewering the Pork Barrel

The system known as pork barrel was first introduced to Filipinos nearly a century ago by the American colonial “tutelage” in the ways of democratic representation. Needless to say, in all this time that pork has been on the table for our legislators, the pendulum has simply swung from one way of treating it to another: from it being proposed individually and inserted in line agency budgets to it being listed as a separate item with fixed allocated amounts per house and per member.

With the present move to abolish Priority Development Assistance Fund by President Aquino and his allies in Congress, pork has merely caused the pendulum to swing back to where it was originally. The institution of pork remains, it is just the institutional arrangements to skewer it that have changed. The same arguments favouring the preservation of the pork barrel that have been there since the 1920’s have also been put forward by the present regime. In light of this one could say, “The more things change, the more they stay the same.”

If I were to assess the chances of us abolishing pork permanently, I would place the odds of that happening at a million to one, perhaps a billion. Even after the #MillionPeopleMarch and the congressional hearings over the misuse of pork in both houses, it does not seem likely that we can do away with this institution for very long. A momentary cessation to placate the public’s revulsion and to allow patron-client networks to reconfigure is possible, but eventually the practice of pork barrelling will re-emerge in some shape or form.

When you scan democratic countries around the world, you will find that the system of allowing local concerns to trump national interests emerges everywhere. In Australia, you will find inordinate amounts of public money being spent in marginal seats in the lower house which could swing the outcome of an election one way or another. In the US, congressional earmarks will be incorporated in specific pieces of legislation to win support from legislators whose votes are needed to get it to pass.

Even in relatively corruption-free Norway, the disproportionate number of regional country seats allows them to get a larger proportion of public investment even though they account for a much smaller share of the population. But on the flip side, the existence of pork or patronage in these countries, does not lead to a total breakdown of accountability and honesty that we see in the Philippine setting.

It is in this context that many are now asking what is the proper way forward for the administration given the rubric of daang matuwid (righteous path) that it has constructed for itself. Many are wondering whether in its haste to prosecute Mrs Arroyo for corruption, it used pork to gain support in Congress and whether it allowed some of the worst forms of abuse to persist under its watch.

If this is the most honest administration that the Philippines can produce in a generation, imagine what will happen when it steps down from office in 2016?

Many see the abandonment of pork as a litmus test which this administration needs to pass. The question is for how long it can afford to do this. By 2016, the Liberal Party will be facing an uphill battle to prevent the seeming juggernaut of Vice President Jejomar Binay from claiming the presidency.

Given Mr Binay’s expansive control of the central business district of Makati including the Fort Global City that formerly was under Taguig, his ability to raise a rich war chest for his candidacy with which to rain down patronage on supporters from the masses is formidable.

For the LP to remain competitive in that race, it will have to match the campaign spend that Mr Binay is sure to unleash. The only way it can do that without reinstating pork or plundering the national coffers would be to enact some form of campaign finance reform that would allow state funding of political parties based on their share of votes cast at the last election.

Given the advantage of incumbency, the LP will be in a better position given the turncoats that have sided with it since the 2010 presidential elections which it won. The 2013 elections could well be the high water mark of its membership at the local level if it gets thrown out of the Palace in 2016.

Although I have couched this policy proposal in terms of the politics of 2016 and the interests of the incumbents, I believe that such a reform will provide a more permanent solution to the abuse of pork than existing proposals out there. Introducing bottom-up budgeting using central authority and central funds goes against the very principle of BUB.

Having a Freedom of Information law will help enhance accountability, but is very much reliant on a post-audit and ad hoc investigative process than a systemic one. The longevity of pork abolition can be called into question simply because it is based on the voluntary restraint exercised by politicians.

In the long-run, what will allow legislators to refrain from the abuse of pork is if they have the support of strong political parties that are able to deliver platforms and programs of government rather than promises, and are able to finance their local campaigns with money sourced in a transparent manner from taxpayers. If by abusing their privileges, they would risk losing such support, then a powerful incentive would be in place to keep them on the straight and narrow.

The threat of prosecution might not be enough to deter politicians from engaging in the worst forms of corruption. If caught, they would simply use their power, influence and money to avoid a jail sentence.

In the short run, it will pay for the administration and its allies in congress to propose the abolition of pork. In the medium to long run however, they will have to phase in reforms that address the root cause of the problem. Pork in and of itself is not it.

It is just a manifestation of a much deeper problem–the costliness of elections and the absence of strong political parties, which reduces our politics into a semi-feudal state comprised of political dynasties which do not distinguish personal from public resources, and as such engage in plunder to dole out patronage during elections to perpetuate themselves in power.

PDAF, BUB, August 26 and 2016

President Benigno S. Aquino III calls for the abolition of the Priority Development Assistance Fund at the President’s Hall of Malacanang Palace on Friday, (August 23). The announcement was made in the aftermath of the alleged Php10B pork barrel scam. (Photo by Gil Nartea/ Lauro Montellano Jr./ Malacanang Photo Bureau)

Just as he did with the RH Bill, the president came late to the party and led from behind in the scandal  involving the Priority Development Assistance Fund (PDAF) of Congress by belatedly bowing to public calls for its abolition.  Although as Winnie Monsod noted he did not indicate this meant the abolition of all forms of pork barrel. With nationwide protests slated for August 26, his administration could not afford to be seen on the wrong side of history, not after mouthing anti-corruption slogans like Daang Matuwid and Kung Walang Kurap, Walang Mahirap in the 2010 and 2013 elections.

This is perhaps his only out, after a former treasury chief showed how large his own discretionary funds are, dwarfing that of Congress. His initial tone deaf and dismissive response to public calls for PDAF abolition threatened to turn it into his “Flor Contemplacion moment”. This is a reference to the hanging of a domestic helper in Singapore by that name accused and convicted of killing her ward. The Ramos government’s lethargic response at the time to seek a commutation of her death sentence and vigorously raise a diplomatic protest with the Singaporean government was judged inadequate and subsequently led to virulent protests.

What the angry twittering masses behind the August 26 rally fail to grasp, however, and this I believe should be credited to the president, is that the scale of congressional pork barrel would not have even been known if he had not taken the decision to make it more transparent in the budget. Secondly, the Commission on Audit special report conducted under the tearful eye of Ms Grace Pullido-Tan, its chair, would not have even been possible without President Aquino’s leadership.

The problem was the Palace’s foot-dragging made it seem part of the problem rather than the solution. At first it responded to the concerns of the masses over the alleged Php 10 billion scam involving Janet Napoles’s syndicate of NGOs by window dressing, making the DSWD the accrediting agency for NGOs receiving PDAF allocations. This was wrong since as the COA report revealed, releasing public funds to NGOs without an appropriations law or ordinance violates the government’s own procurement policy.

The COA report, incomplete as it was gave an indication as to the scale and scope of corruption and abuse. About 75 per cent of audited PDAF went to NGOs. Thus, the 192 members of the 14th Congress that were found to have engaged in the practice are in fact liable. The DOJ does not even have to prove that the funds were diverted back to them.

The senators and congressmen who want to wash their hands clean by either saying the money was liquidated appropriately or that monitoring of funds is the sole function of the executive branch don’t have a leg to stand on. The only defence they can mount is that their signatures in authorising the allocation of PDAF to those NGOs were forged as 22 of them have done.

Even assuming their signatures were forged, why would it have taken them so long to protest against it? It stands to reason that anyone who had P70 to P200M allocated to them would be adamant in getting it released for their use. Why has it taken them 3-5 years to denounce the siphoning off of their PDAF? If anything, they would be negligible for allowing it to go on for so long.

So any which way you look at it, the legislators in question have something to answer for. True, the DBM’s record-keeping has been found wanting. In fact the COA report only covered a mere 39 per cent of the total P115 billion worth of PDAF released from 2007 to 2009 because DBM could not even identify correctly the legislators who approved the majority of funds amounting to some P70.4 billion.

Even so, the legislators that have been rightly identified need to apologise to the public for allocating their PDAF to NGOs and take leave from their party if they are currently in public office or loose whatever committee chairmanships and privileges they have enjoyed as such.

British and Canadian examples

In the UK parliamentary allowance scandal of 2009, both PM Gordon Brown and Opposition Leader David Cameron issued apologies to the British public for the excesses committed by members of their parties who used housing allowances to invest in the property market. Subsequently, an independent body was set up to determine the compensation and allowances for MPs, and the disbursement of the same was made more available to the public.

In the current scandal in the Canadian senate, PM Harper’s chief of staff resigned after being implicated, a number of senators were suspended from their party and issued public apologies for their abuse of privileges. In both the UK and Canadian cases, a Freedom of Information request led to uncovering the facts and those that had been found to have abused their privileges were ordered to repay every last penny they had unlawfully charged to the public purse.

The amounts in question ran only in the hundreds of thousands of pounds or dollars per representative or senator. In the Philippine case, the amounts run into the billions of pesos (which amounts to millions of dollars!). And yet the legislators in question do not seem to be ashamed in the least. Some of them in fact have the gall to now champion the scrapping of pork, when they in fact have been identified by the COA for certain anomalies in their use of pork, such as Majority Senate Leader Peter Cayetano whose release of P2.7 million to baranggays in Taguig were found to be deficient, and whose wife exceeded her PDAF by P8.5 million.

BUB, another acronym for pork masquerading as reform

The protesters heading for the Rizal Park on August 26 would probably say that there needs to be an investigation and prosecution of those involved in the PDAF scam. The DOJ has said that it will be issuing indictments soon. The case could easily drag on beyond 2016, after the president steps down. The senate and the house seem poised to investigate their use and abuse of PDAF. Senator Cayetano has endorsed former Senator Panfilo Lacson to head an independent body to investigate it, which found support from the President. This was ridiculed by many including Senator Miriam Santiago who questions Lacson’s ability to impartially run the investigation.

The politicisation of the investigations and reform process is becoming a problem. This is precisely what shouldn’t be happening as abuses cut across party-lines. Take the unveiling of a fund associated with the Department of Budget and Management’s Bottom Up Budgeting approach or BUB. This is a fund amounting to P20 billion to be allocated by Interior and Local Government Secretary Mar Roxas to local governments. It is no secret that Mr Roxas is the Liberal Party’s presidential nominee to succeed Pres Aquino in 2016. Budget Secretary Abad is the party’s chief ideologue.

The fund’s existence was apparently leaked by congressmen from within the LP. It was reported that many of them were dissatisfied with the manner in which this fund has been set up: to give Mr Roxas the role of a padrino in handing it out. This charge was denied of course by Messrs Roxas and Abad who do not deny the existence of BUB funds but instead say that legislators were supportive of it.

If we needed a reminder for why PDAF and its predecessor CDF (countrywide development funds) came into being, this is it. Pork barrel has evolved through the years from a means for the executive to control congress and get it on its side, to a means by which the legislators can wrest control of patronage from Malacañang by limiting its ability to withhold pork to congress. BUB seems like an attempt by the Palace to retake control, at a time when congressional pork has been abolished.

Just as an aside, what the reaction of local LP stalwarts shows is that party discipline is weak. These legislators probably do not plan to endorse Mr Roxas in 2016. They are probably planning to jump ship again just like they did in 2010 when President Aquino’s lead in the polls was evident. Given the lead Vice President Binay now has in public polls, it would seem they might be hedging their bets both ways, or in the very least, they want to hand out the BUB funds themselves to local officials, to be the sole padrinos in their districts.

On the other hand, it can be argued that Mr Binay has been receiving pork with the president’s blessing, worth P200 million a year, so that this is simply a way of evening up the playing field for Mr Roxas and the Liberal Party. Given that the president has abolished pork (which presumably includes the vice president’s), shouldn’t his heir apparent refuse to use it too? By politicising the bottom-up budgeting approach, a key reform of President Aquino’s administration, Abad and Roxas could be tarnishing their reformist credentials and weakening the very institutions they seek to build.

To 2016 and beyond

A number of prospective presidential and vice presidential contenders could be ruined by this scandal. Senators Bong Bong Marcos, Bong Revilla and Jinggoy Estrada all have plans to run for higher office. All were tagged as part of the original PDAF scam. Senator Peter Cayetano may also have plans to run for higher office in 2016 and was also given special mention in the COA report for irregular PDAF releases. Mar Roxas could sully himself if BUB is perceived to be used for political motives.

You might think this is the end of the road for pork, but don’t count pork out, just yet. As Manolo Quezon points out, pork has a funny way of resurfacing under a different guise. Winnie Monsod believes it will revert back to the old way of being hidden, inserted in line agency budgets, as was the practice before President Aquino made it more transparent. This could be an unintended consequence of abolishing PDAF.

What the inchoate masses gathering on August 26 fail to understand is that unless PDAF is replaced with something more suited to a modern democracy, it will be reincarnated in some other shape or form even if the current set of PDAF abusers are put behind bars. The real answer in my view is for the state to provide campaign finance to accredited political parties.

Without such state support, congressmen and senators will find a way to access state funds anyway through some form of pork barrel or worse, they could go underground and raise money through illegal means. Of course they may harass legitimate businesses and rich individuals for donations with adverse consequences for policy making if they win. The piso-piso campaign to raise money has very limited impact in a country with very large disparities in income.

Perhaps the president who until now has been so focused on proving he can make government work, as in he wanted to prove that PDAF could be used properly for good, can now lift his gaze towards undertaking real reform that would not only restore systems to the way they were under some imagined golden age, but transform them above and beyond what they are currently capable of becoming.

To use an automotive analogy, which I am sure the motoring enthusiast in him would appreciate, imagine that you have an old 1950s engine which you have worked so hard to restore, but is still leaking fuel and is inefficient. You can choose to keep fiddling with the old system by adding dashboards with indicators that tell you if fuel is leaking (i.e. making expenditure more transparent) or you might decide to overhaul the engine completely with a new up to date model that injects fuel well and does not leak with indicators that tell you what is happening under the hood.

Having a modern democracy entails campaign finance and political party reform combined with beefed up integrity measures as well as an adequate level of compensation for elective officials to remove the incentive that lead to the plunder of public funds. That is the reality that neither the president, nor the people massing at Rizal park on Monday, have yet realised needs to be confronted if we are to have a sound democracy in the lead up to 2016 and beyond.