bottom up budgeting

What Mar Roxas, et al can learn from Jojo Binay

He must get under their skin. A lot. By them I mean the good governance (GG) club comprised of Mar Roxas, the Liberal Party (LP) headed by Senate President Frank Drilon and Budget Secretary Butch Abad, civil society and Big Business. As to why, after four years under an honest leader like President Noynoy Aquino (PNoy), who has been pushing for institutional reforms in the bureaucracy with some modest gains, the Filipinos seem set to throw their lot with someone in 2016 who does not come from their flock?

By ‘someone’ I mean Vice President Jejomar Binay, whom they regard as an apostate to their gospel of GG. He has the highest approval rating of any public official in the land including that of PNoy. The latest nationwide poll conducted by the reputable Pulse Asia shows him way ahead of rival contenders for the presidency. Even if you grouped together the support for Grace Poe, Mar Roxas, Allan Peter Cayetano, et al, Binay would still come out on top.

And nothing seems to be able to slow him down from claiming the presidency in two years’ time. Not the revival of old corruption charges against his wife, the former mayor Dr. Elenita Binay, nor allegations of misuse of PDAF by his daughter who is in Congress, not even allegations of overspending on a public car park by his son, the current mayor of Makati, seem to break his stride. To top it all off, the three siblings of PNoy have all but come out in support of Binay’s candidacy.

Talks of a merger between the LP and Binay’s party UNA as well as possibly extending PNoy’s term are all aimed at one thing: ensuring the survival of the Liberal Party as a fighting force into the next presidential cycle. But these demonstrate just how desperate the GG crowd is at the moment with elections in 2016 on the horizon.

It’s one big conundrum that bedevils them. If PNoy has proven that the GG works, why do/es his heir/s apparent appear/s to be languishing at the bottom of the presidential derby? And corollary to that, why is Mar Roxas, his partner in arms, not able to gain the support of more people?

It is no secret that Big Business supports the candidacy of ABB (Anyone But Binay). They are represented by Bill Luz, the former executive director of the Makati Business Club, who now heads the National Competitiveness Council, which is geared to lift the country’s competitiveness in the World Bank league tables, by reducing redtape as measured in the Doing Business Survey.

It is Big Business, also going by the moniker “civil society” that have been trying to oust the Binays from their perch as rulers of the Central Business District of Makati since the people power revolution ensconced them in city hall back in 1986. It is no secret that it is this group that Secretary Mar Roxas associates with, given his own family’s commercial background as owners of the Araneta Centre in Cubao.

Ironically, the way the Binays have fought off the pressure from the business community has been through an inclusive growth and development agenda in the city, something that the GG club have yet to implement elsewhere. The Binays have made sure that the business community paid their fair dues in the form of city and real property taxes to ensure that the lower income classes benefited from the growth of the city.

The problem for the GG crowd is that the Binays, despite being considered ‘stationary bandits’, have proven to be benign autocrats of Makati, fostering an effective program of human development among the poorest in the city that has become the envy of the rest of the nation, without sacrificing the growth and competitiveness of the city.

Indeed, in Bill Luz’s most recent competitiveness rankings for cities and municipalities in the country, Makati has come out on top. Now how can a city which is supposedly run by a corrupt, dynastic, autocratic family remain on top of competitiveness surveys and produce human development indicators that are the ‘best in class’?

The answer is not good governance, but ‘good enough’ governance.

Wait. Hold-on, you might say. The economic vibrancy of Makati comes from its business community. They are the ones who make Makati great. You would only be half right in thinking that. What makes a city competitive is the regime of taxes and regulations, as well as the quality of services offered to residents and businesses. The economic vibrancy of a city can be attributed to the business sector, and for that Makati only comes in second in Luz’s study.

At the national level, we have seen the limits of GG in formulating what Chalmers Johnson called a “plan rational” for the country to govern and expand the economic spheres of activity through robust, coherent policy and regulation.

If you look at the national economic agencies of government, they are in total disarray. The country is heading for, or perhaps already is in, an energy crisis, with rotating brownouts now a reality in several parts of the country (coming to your neighborhood soon, unless PNoy invokes emergency powers, says Energy Secretary Petilla). Power rates are the highest in the region and yet regular power outages may be in the offing in Metro Manila next year. This will severely impact the country’s competitiveness.

Then there is the so-called “ports crisis” as the logistics industry is up in arms with cargo unable to leave Manila’s ports due to no integrated master plan for Manila and the surrounding regions. The LTFRB has been in conflict with the MMDA, unable to process applications for truckers on time, which has led to the prevalence of unlicensed operators. Provincial buses are another cause of paralysis.

We turn to rail policy and here, it was not too long ago the manager in charge of maintaining the Metro Rail Transit came under fire for favoring bidders with close relations to his family. Frequent breakdowns and accidents have resulted causing the riding public to suffer delays and lower productivity due to inefficient public transport.

The PPPs that came into effect this year were improperly co-ordinated causing great aggravation to the motoring public as roads and elevated skyway projects have simultaneous commenced, almost in a mad rush to leave a physical legacy after PNoy steps down from office.

The airports have notoriously been a source of shame for the country being labelled the worst in the world. With the NAIA-3 becoming fully operational, some of the congestion will be eased, but only slightly. To cope up with increased demand, another runway at Sangley Point needs to be rushed. It took a decade to get NAIA-3 finally running, how long will it take for Sangley to come on stream?

Shifting to telecommunications and internet policy, we have one of the slowest, if not the slowest internet speeds in the region. Congestion experienced by networks has been the subject of much investigation in the senate as complaints of bad service permeate. It seems that the regulatory body in charge has failed to set the proper framework to ensure that services offered by private providers was adequate to meet the needs of an increasingly technology-connected population. The high cost and poor quality of service again affects our global competitiveness.

Transportation, information technology, communications, and energy policies all play a significant part in expanding the economic activity of a nation and are a major input to the cost of basic goods. Without robust regulatory agencies staffed with people who have not worked for the big players or are in cahoots with them, supported by a good attraction and retention policy, the result is what we see.

Secretary Mar Roxas was in charge of the Department of Transport and Communication for a good period of time. The policy frameworks in the areas of air, port, rail, logistics, information and communication were within the scope of his portfolio. The current secretary was apparently hand-picked by him. The GG agenda seems to have stalled if not utterly failed to set the right framework for future growth. Electricity, transport and communications policies are all in shambles.

Yet, PNoy’s presidency has almost solely been devoted to improving the expenditure side of government through reforms in the Department of Budget and Management. For an administration to be so focused on the efficiency of government expenditure means it concerns itself with only one fifth of our economy (which is what the national budget represents). The economic regulations, however, affect the whole economy because of their impact on both the public and private sectors.

The reason why PNoy was so focused on reforming the budget process? He wanted to prove that his GG mantra works. And yet, all that happened was a slowdown of expenditure in the first two years of his presidency, leading to a halving of economic growth. His budget department tried to fix this with the Disbursement Acceleration Program, which has now gone down in flames.

The LP through Sec Abad is now pushing for bottom-up or participatory budgeting through local government units with Mar Roxas, now secretary for the interior and local government in charge of handing out grants to them. Can the GG club redeem itself, following the DAP debacle in the lead up to the elections?

The problem with this scheme is that expenditure is only one side of local government success. You need a proper taxation regime in place. When Jejomar Binay spoke before the influential Centre for Strategic and International Studies in Washington, D. C., he narrated the challenge he faced when he first became mayor of Makati. The city’s finances were in disarray, experiencing chronic deficits. He needed to fix it through proper revenue measures to improve the quality and availability of services.

PNoy entered Malacanang Palace with a “no new taxes” pledge, which has resulted in no new revenue measures being passed except for the sin tax law, which Frank Drilon championed in the senate. Unfortunately, this pledge has limited his ability to fulfill his social contract with the Filipino people.

Meanwhile his acolytes in the senate keep proposing measures to erode the tax base by increasing exemptions, or reducing tax rates. They also want to increase the salaries and benefits of government employees, en masse, thereby putting upward pressure on spending. These senators, who have not had a day of executive experience in their political lives, would not know how to balance a budget if they were to succeed PNoy in 2016. And yet each of them would vie for the mantle of GG.

The social contract came with the age of enlightenment in Europe. The covenant entered into by the state and industry was one whereby taxes would be imposed on businesses; and in return, the state would provide basic public education and sanitation to provide a healthy, literate workforce for the factories being built during the Industrial Revolution. Here we are in the 21st Century and the proponents of our social contract do not understand the essential bargain required to educate masses with the skills needed for the Information/Digital Age.

The GG club’s approach to higher education is to shut down erring schools. PNoy said he charged CHED Chair Licuanan with closing the nursing schools who were producing graduates that did not pass the nursing board exams. She then proceeded to form “commandos” to do just that. Three years later, and according to the government’s own statistical report card, the proportion of board passers has actually declined, not risen. What happened here? Did they really go after erring schools, or just the ones that posed a threat to the big universities?

Meanwhile there is still not an adequate level of financing for higher education in place that would make tertiary education an entitlement, and lift the quality of the sector. Our universities continue to slide down the global league tables.

In each of these policy spheres, the responsible agencies have been susceptible, if not downright captured by large industry players whom they were meant to regulate. Policies are not being developed by independent agencies. As a result, the needs of clients and the nation at large have not been looked after. There is no long-term view to policy. In addition, the technical and leadership capacities of people running these agencies is severely hampered by a lack of proper resourcing.

For the economy to expand rapidly, it requires rational players in economic agencies who come from the best and brightest. These individuals need to be selected on the basis of merit. They need to have the resources to be able to fulfill their mandate. Our competitiveness and future economic vibrancy depend on that happening.

Coming back to Jojo Binay. If you look at the performance of his own housing portfolio through the government’s own statistical scorecard, his agencies look like they are hitting their targets. This is again another feather in his cap—unlike the GG scorecard, which shows PNoy’s government failing in all but one indicator of the World Governance Indicators, the one for political stability, which has come about through his popularity and taking care of the military and police through the budget.

As we come to the final third of PNoy’s presidency, it does not look like the GG goals are going to be met, nor do we find a rational set of policies being laid down to govern the economy’s expansion. For investments and jobs to be created, we need to have a high performing economic bureaucracy taking charge of all these policy areas. Unfortunately, so far we have not built that capacity and the results speak for themselves.

What Mar Roxas, et al from the GG club can learn from Jojo Binay is the following:

  1. Governance is in the doing, not the talking.
  2. Governance is about developing rational, long range policy, independent of vested interests, i.e. the major players in industry.
  3. Governance needs to be felt on the ground for it to be sustainable.

The Binays represent a formula of benign, “good enough” governance that has worked at the local level for over two decades. For Mar and the rest to offer a viable alternative to him, they will need to provide us with concrete evidence that their formula for GG has done what Binay and Makati has been able to achieve. Sans that documentary proof, they might as well throw in the towel.

Our experience with PNoy has exposed the limits of GG. The thesis that kung walap corrupt, walang mahirap. Binay on the other hand has proven the success of “good enough” governance. It has proven to be more appropriate given our stage in development to be content with setting the framework for business to thrive and expand, while ensuring that they pay their fair share to make this growth inclusive.

It doesn’t matter that he has acted like a “stationary bandit” preying on the rich to give to the poor, while ensuring that the rich still get to keep their wealth and build their empires. It doesn’t matter that the Binays have amassed wealth in the process and have turned into a formidable political dynasty. This has allowed them to take a long-term view of development and govern the city without being beholden to the big end of town.

If the GG club want leaders who are honest, yet able to win elections without becoming beholden to vested interests, they need to initiate campaign finance reform and provide state funding for political parties. The only other option is what the Binays are doing in Makati.

Economic agencies are a rich source of campaign finance through the licenses, franchises and policies they craft that can easily be made to favor the big players. The reason they are weak in a developing and emerging country context is precisely to allow political bosses to use them as a source of campaign donations. You see the system is not dysfunctional. It is purposefully built to serve their needs. The only way to fix corruption and incompetence in these agencies is to finance political parties so that they do not have to depend on them as a source of funding. Then invest in their capacity and upkeep.

If we don’t fix this, then we should not complain that our choices come election time are so limited.

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.

Can pork really be abolished, legally or otherwise?

Whether pork should be abolished is a different question from can it be abolished.

Following the successful Rizal Park protests on August 26 spontaneously organised by netizens through social media against the abuse of pork barrel, the question now has to do with next steps. The president sought to pre-empt the rally on Friday, the 23rd by abolishing the Priority Development Assistance Fund, only to reinstate with the same breath congressional earmarks through a different mechanism.

It became apparent from his remarks that pork barrelling would remain, albeit with more stringent constraints placed on the identification of projects and awarding of contracts to suppliers. With three years remaining in the presidency of Mr Aquino, doubts regarding the effectiveness and durability of his reforms began to sink in.

Twitter hashtags #ScrapPork and #MillionPeopleMarch were soon brimming with suggestions on how to name pork’s new incarnation. Interesting acronyms such as BABOY, LIEMPO, NACAW and KUPIT bubbled up across the ether, expressing the cynicism people felt towards the president’s determined effort to re-insert pork in line agency budgets. Many were calling for the abolition of the president’s special purpose and discretionary funds, which are seen as no different from congressional pork.

Like the EDSA uprisings which relied on mass media as in 1986 and SMS text as in 2001, this uprising relied heavily on social media, which is how the original idea was conceived and spread. Unlike the EDSA revolts, this one does not seem to be calling for regime change but instead seeks changes in policy to be made.

It can be characterised as a taxpayer’s revolt against the politics of patronage and privilege that the country is so prone to. Although leaderless and inchoate, the message from the masses seemed clear: (1) they want pork abusers to be investigated and prosecuted, (2) they want greater transparency and accountability in the use of their taxes from their leaders, and (3) they are for the total abolition of pork, including the president’s own special purpose and lump sum funds,

With regards to the first point, the investigations into abuse are nearing completion. The Department of Justice will be filing cases soon, Sec De Lima says, although the prosecution of cases will take some time to culminate (Clarification: this refers to the Janet Napoles scandal; the Interagency Anti-Graft Coordinating Council is about to commence a separate investigation into the anomalies uncovered by the COA special audit of PDAF from 2007-09). On the second point, the administration has already been providing information regarding PDAF releases on the Department of Budget and Management’s website.

With these funds being abolished and new pork being reinserted into line agency budgets, a freedom of information law will be needed to facilitate greater access to information, and a whistle blower protection law would encourage whistle blowers to come forward without fear. The third and final point on the abolition of pork is perhaps the stickiest of them all. Let me explain…

Policy questions crystallised

What to do with pork?

There are several policy questions, which the PDAF scam has crystalised. The main policy question is: what to do with pork? The palace wants to keep it. Legislators sensing the changing political winds are saying they are willing to give it up, so long as the president does the same. A principled few point out that pork does have its uses in a representative democracy. The people on the street, as previously mentioned, want it abolished completely.

To be legally enforceable, however, the abolition of pork would have to be enshrined in law. The enabling legislation would have to prohibit congressmen and senators from lobbying for certain projects. This might be deemed unconstitutional by the Supreme Court given the powers of congress, the lower house in particular, over the budget. Abolishing the president’s slush fund on the other hand can be done legally by amending the charters of the PCSO and PAGCOR and overriding EO 683 covering Malampaya royalties.

The abolition of congressional pork can only be achieved if congressmen, senators and the president voluntarily abstain from it. That is the crux of the problem. Those who want to abolish pork would either have to create a radical, moral transformation in our leaders. Barring that they will have to call for constitutional change, and that is probably not in the offing.

But with proper prudential measures in place, pork can at least be scrutinised and evaluated more closely. The only problem is that without a legal mandate to bind successive administrations, such measures could be easily reversed. And even if such procedures were codified in law, nothing prevents the next congress from relaxing them later on when public anger has subsided.

This leads us to two supplementary policy questions. The first one has to do with how to improve the calibre of politicians running for public office. The second question has to do with development planning, on how it should proceed so that local needs are appropriately identified, prioritised and met.

How do we improve the calibre of our politicians?

The abuse of pork is really a symptom of a much deeper problem in our state: the weakness of our political parties, making elected members of congress extremely vulnerable to the patronage of Malacañang and consequently more compliant to its wishes. Conceptually, pork was a way for congress to exert the power of the purse through the budget. It has not worked out that way in practice. The palace still has a way of withholding pork from specific congressmen unless they kowtow to its preferred line.

A weak president suffering from illegitimacy can use pork to stave off an impeachment complaint and other embarrassing congressional investigations. The executive then becomes hostage to the whims of a rent-seeking congress. A strong president on the other hand can use pork to railroad legislation through congress and produce poor public policy, as a result. Congress becomes compliant, addicted to Malacañang’s patronage in that situation.

The question on how to maintain the integrity of both branches in the face of patronage from Malacañang and rent-seeking from congress can be answered if we were to look at electoral campaign finance and political party reform measures as well as compensation for elected officials. I have written extensively on this already.

If we were to follow the pattern set by many modern democracies, the Commission on Elections would be given the task of administering election campaign funds. The distribution of these funds could be based on a prescribed formula, for example, pro-rata based on the votes received by each accredited party at the last election. This would mean that if an elected official switches parties, the funds that his party is entitled to at the next election would not transfer to the new party. They would remain with the former party.

This reduces the incentives for turncoats. It also prevents the administration from withholding the funding of opposition parties, since the budget of Comelec would include the state subsidies for all political parties, which would guarantee that all of them receive the state funds that they are entitled to based on law. The compliance unit of Comelec would need to be beefed up to conduct proper audits of election campaigns.

Making the provision of taxpayer funds to accredited parties conditional on their adherence to equal opportunity in the selection of candidates, as evidenced by a low threshold for political dynasties would also promote a merit-based selection of candidates for public office. Political dynasties will not be sanctioned through state funding. If political dynasties want to compete in elections, they would have to do so outside the state funded system. This would provide the electorate with a real choice through viable alternatives. Raising their pay and providing allowances to deal with their work in their electorates would keep them honest.

How do we improve the identification and prioritisation of development projects?

If the calibre of our politicians is improved and their integrity protected through campaign finance, political party reform and better pay, it follows that the formulation of public policy would be improved. Consequently, the identification and prioritisation of development projects would have a better chance of following a more rational process. This is essentially what taxpayers get in return for supporting their politicians and their parties adequately. In a representative democracy such as ours, it is the right of congresspersons to press for the interest of their constituents. Whether local projects can then be characterised as pork depends on the basis for their approval.

If funded by the administration to buy votes, with less of a consideration for economic and social benefits relative to other alternatives, then yes, they could be considered pork. If on the other hand, these projects are properly scrutinised for their economic and social returns and productivity dividends, then they would be considered good public policy. The bottom-up budgeting approach which the administration is currently pursuing may lend itself to both pork barreling and rational planning.

In the end, no system however well-designed will withstand the pressure to conform to established norms of behaviour unless the people that manage it are of exceptional character and skill. To promote an inclusive, participative budget process when our political process is exclusive and favours only the connected and powerful few would simply guarantee that the process is rigged from within.

Policy tools need sharpening

In the final analysis, both the government and the people it represents and hopes to govern will have to come to some kind of new arrangement. The August 26 movement has signalled that the old status quo cannot hold. The question now on everyone’s minds is what the new state of affairs will look like. What policy tools are best suited to address the problem presenting itself through the PDAF scam?

The measures announced by the president last Friday fell short of the mark. They failed to measure up to the expectations that the public rightly held regarding what to do with PDAF in the first instance, and with pork more broadly. Prosecuting abusers and increasing transparency, two of the demands of protesters are arguably happening, but abolishing pork altogether is a bit more challenging.

For one, the constitution gives congress the power of the purse. Within a representative democracy, this gives legislators the right to pursue the interests of their constituents in setting the budget. They might voluntarily abstain from pork, but they cannot be prohibited from it. The abolition of the president’s discretionary funds on the other hand can be achieved legally. New legislation could require the proceeds of gambling revenues and mining royalties to go to the national treasury to fund general appropriations submitted to Congress for approval.

An alternative I would suggest is to create two trust funds: one from the Malampaya account of the Department of Energy to pay for climate change mitigation and adaptation programs in the island of Palawan and other vulnerable communities, and another from the president’s social and charity fund from the PAGCOR and PCSO respectively to provide deferred loans to tertiary students and fund universal health care through the National Health Insurance Fund.

With regard to congressional pork, the measures announced by the president last Friday need augmentation. An FOI law will equip the citizenry with the necessary tools to examine the way their taxes are spent. Beefing up the capacity of the Commission on Audit, Department of Justice and Ombudsman to undertake forensic accounting and electronic surveillance will help preserve the integrity of the system. Codifying the new administrative budget measures in law will tie the hands of successive administrations to conduct budget processes above board.

Finally, to transform our politics, we need campaign finance and political party reform measures. You can keep fiddling with the system. But if the people running it are selected and then compensated in such a way that makes them susceptible to rigging the system, all this reform will come to nothing in the end. To improve the process, one needs to improve the people, through better selection and compensation.

To use an analogy in business. You hire someone to run the shop for you, but you don’t really monitor that person’s performance properly, you don’t pay him adequately, and you give him unlimited discretion to make decisions. After a while you suspect that person of robbing the firm, blind. You conduct an audit and find out that he has been charging his personal expenses to the firm.

You are upset, you withdraw all his expense accounts and limit discretion. Do you really think that having had a taste for easy living, this will stop the shenanigans? The answer, is no, so you fire him. But replacing the person won’t deal with the problem unless you change the way the firm handles employee selection, pay, performance and decision rights. The government is currently focused on improving performance monitoring and limiting discretion, but it also needs to address the way we select and elect our politicians and the way we pay them.

Abolishing all forms of pork through legal mandate is close to impossible, but improving our political system to prevent the abuse and misuse of pork is actually quite do-able.

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.