campaign finance reform

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.

Outliers

Outliers

Why do we keep criticising our politicos for “failures” but avoid reforming the system that produces them?

We Filipinos love to complain about our politicians. We expect them to achieve herculean tasks and solve wicked problems, and to do so honestly while being paid a pittance. We complain when politicians don’t show compassion or make their presence felt. And yet when they do, we accuse them of engaging in opportunistic premature electioneering (epal, being the derogative term in the vernacular used to describe it).

On the other hand, we Filipinos are also a very patient lot, willing to tolerate the inadequate levels of service from our government, willing to accept the way the system fails to provide for our needs, and willing to tolerate the corruption that goes on with our tacit approval. We love to complain about these problems, but then are often unwilling to consider systemic ways to improve the situation.

One reason for this is that we can sometimes point to exemplary politicians who are honest, decent, hard working and conscientious. Many Filipinos feel that these exemplary individuals demonstrate that it is possible for the system to work, if only the right people are elected or appointed. What they fail to consider is that among the elite, these individuals are outliers. They don’t represent the average politician or the political class from which they spring.

The Philippine condition can be summarised in a few sentences. When America annexed the Philippines from Spain, it introduced representative government without building up a competent, well-functioning bureaucracy, something which the latter had failed to do in over three hundred years. The civil administration that was eventually set-up was populated not on the basis of merit, but with appointees of local bosses who were now occupying national posts. The political elite took advantage of an ill-equipped bureaucracy to extract rents from public institutions, contracts and projects. These rents enabled them to retain power.

The average politician therefore seeks to maximise rents in between elections either legitimately or illegitimately because that is how they are able to compete in the political arena. Very few elected officials ever attract media attention for their work. By and large, the media darlings (or media whores depending on how you view them) who campaign based on their popularity or celebrity are the exception rather than the rule. Your garden variety politician has to rely on other means to gain the support of constituents. This is done by catering to the particularistic needs of clients through patronage.

Clientelism is embedded in our political structure through patron-client networks that emanate from the executive and work their way through senators, congressmen, local government units, down to the baranggay level. Political agents who are unable to dispense patronage are seen as weak and ineffective, while those that bring tangible, concrete projects are well-regarded for their ability to bend the national government’s will to suit their interests.

These networks do not come without inherent costs. To grease the wheels of the system, a lot of deals with corresponding payoffs have to occur, not least of which goes to the political patrons themselves. All this involves high political and economic stakes. It is a high risk, high reward venture that involves a lot of largesse being poured on and spread around to ensure mutual self-destruction, if the whole set-up is exposed.

The priority development assistance fund (PDAF) scam is just the latest in a long string uncovered by whistleblowers. Each time this occurs, the noisy middle class screams for their pound of flesh to be extracted from operators behind the scene. The focus is on getting prominent figures hauled into jail. Certain groups have also sought to ban PDAF or political pork barrel, which in the context of the debate has been framed as lump sums allocated to members of congress or the president, which give these individuals the discretionary decision-making rights to identify projects and implementing agencies or recipient NGOs.

The recent ruling of the Supreme Court has laid down the law in terms of the separation of powers between the executive and legislative branches. Legislators are not meant to have a hand in implementing any item of the budget, save for conducting congressional oversight in the way it is spent. If members of congress wish to fund projects in the future within their districts, they will have to propose and have them approved through the budget process. This is the way congressional earmarks operate in the United States and other advanced economies.

Many commentators have said that this spells the end of congressional pork. A caveat has to be attached to that. It is the end of Congress’ pork as we know it. In the future, the art of political dealing will have to occur prior to budget approval, not after. There will still be pork. This is because the same incentive structure is still in place. The same imperative to cater to clientelistic needs and the same problem of political campaign fundraising remains.

Campaign finance regulation is lax. There are no limits on the amount of political donations a candidate can receive from individuals or corporations permitted to give under the election code. The only statutory obligation candidates have is to report these contributions and to limit campaign spending and political advertising. Implementation by the Comelec of these regulations is weak given the meagre resources they have at their disposal. As a result compliance is spotty and slow at best.

Due to the weakness of the system and a lack of state contribution to campaign expenditures, political parties are paper entities. The average candidate for political office does not pass through a merit-based system of primaries or pre-selections at the local level. Candidates are not drafted by their parties, they are its patrons. As a result the pool from which political leaders are drawn is highly constricted.

Once in a while, an outlier will come along and challenge conventions. But we have to remind ourselves, these are often the product of random chance, flukes of history. If we want our political system and culture to change, we will have to deal with the incentive problem and the candidate selection pool in a structured way.

I have written in the past what this would entail: campaign finance reform, empowering agencies to implement election regulations, higher pay for elected officials, state contributions to political parties with conditionalities relating to the process of candidate selection, i.e. having a cap on political dynasties. For these reforms to work, they have to be systematically adopted because they are mutually reinforcing.

Once upon a time, the nobility were singled out for political office because it was only they who could afford to serve the community without much compensation. The Philippines at its inception was a cacique democracy. With the high cost of vying for political power and the weak institutions of the state, even the landed aristocracy and their political heirs have succumbed to the temptations of competitive kleptocracy.

To reverse this dynamic, we would have to adapt our political institutions. Of course some might say that we are over-thinking the problem. Fickle minded voters simply want the current scandals to be dealt with by putting some prominent figures in jail and imposing a ban on pork. Once that occurs, people will turn their attention elsewhere having felt that the issue has been dealt with. The problem is we could simply be scratching the surface not knowing the full-extent of corruption.

Even with a handful of senators and over thirty congressmen both incumbent and past being identified as having something to answer for in relation to the PDAF scam, we are forgetting that the audit report on which this is based was not exhaustive. We really won’t have a comprehensive picture of how pervasive corruption is. The only surefire way to ensure that it does not happen again is to deal with the underlying issues that plague our system.

If we don’t then we will simply be narrowly focused on the outliers on the opposite extremes of the spectrum of political behaviour that attract our attention, without really improving the norms within the institutions which we rely on to govern our state and address the collective needs of our society. If we want a professional political class in our country, we need to get past observing these outliers and concentrate on improving the normal operator who moves in our political space.

If people want pork, should we let them have it?

The jury is literally still out, but the poll results are in, and they look ominous for those who want to abolish pork.

As the Supreme Court deliberates on the legalities surrounding the Priority Development Assistance Fund, a people’s initiative was being organised to propose the scrapping of pork outright. The protest movement swiftly adopted the idea posed by an ex-Supreme Court Chief Justice, and began calling for volunteers to collect the required number of signatures to put their proposal to a referendum.

Meanwhile Pulse Asia released the results of a nationwide poll conducted from September 24-27. Apparently, despite 90 per cent of respondents saying they were aware of PDAF (up from 66 per cent a decade ago) with news of wholesale plunder of such funds allegedly funnelled to ghost NGOs percolating in the media, a clear majority or 55 per cent still want to retain pork as it is, or with stricter guidelines or in a diminished form. Only 45 per cent wanted to do away with the practice altogether.

This is unwelcome news for the Scrap Pork Network behind the Million People March. It means that they have their job cut out for them. Not only will they have to collect millions of signatures from a minimum of 10 per cent of registered voters nationwide and at least 3 per cent from each electoral district, in accordance with the law on people’s initiatives, they will now have to convince a large chunk of voters to change their mind and support their proposition. If the wretched conduct of congress over the PDAF scam has not convinced them to support the scrapping of pork, it is hard to imagine what will.

It is clear that in a country with a culture of patronage, people want their pork. The question now is whether we should let them have it.

From a strictly moral sense, some idealists might argue along the lines (to quote the scriptures) “if your hand causes you to sin, cut it off.” Applying this to the situation, if pork causes our politicians to steal, shouldn’t we cut it off from them? That’s the basic rationale of abolitionists.

It is clear that a majority of Filipinos don’t see things this way. For them, there might be competing moral standards at play. To use a passage from Joel Migdal’s book State in Society: Studying How States and Societies Transform and Constitute One Another:

What may be easily labeled as corruption or criminality, such as nepotism or smuggling, can also be looked at, for instance, as a morality favoring kinship ties over meritocracy or one expressing the right of movement of people and goods across the boundaries arbitrarily imposed by state law.

Given the deep-seated attitudes of Filipinos favoring the pork barrel system, and their penchant to rely on personal ties based on kinship to get the resources that they need and want at the local level, legislating new moral codes won’t necessarily lead to behaviour change.

What is needed is a more systemic way of dealing with the structural bottlenecks in government that allow politicians to use pork barrel as a way to address unmet needs in the community, at large, and profit from it along the way, both politically and economically. To use an analogy from the drug enforcement field, the only way to lower the people’s addiction to pork, would be to address both supply and demand channels. What are these channels and how do we address them?

Allow me to propose six ways to deal with the demand and supply of pork. These are outlined below:

Reducing the supply of pork

When talking about the supply of pork, I am talking about where pork comes from, or how it gets doled out. I am talking about the budget process, and how both congressional and presidential pork get inserted into the general appropriations or retro-fitted into national expenditure accounts. So the question here is, how do we reduce the supply of pork at its sources? The following measures should therefore be considered:

  1. Pass a Budget Impoundment Control Act (BICA). To prevent the president from impounding budget savings and using them for unauthorised expenditures.
  2. Invest all GOCC profits, including the proceeds of PCSO and PAGCOR into a Sovereign Wealth Fund (SWF). To be governed by a board of directors and staffed with professional managers. The principal of the fund is to remain untouched, and only returns from investing it in safe, risk free assets are to be used for development purposes. This is to prevent profits from being used for political purposes. Incidentally, this is how the Malampaya Fund should operate as well.
  3. Pass Freedom of Information (FOI) and Whistleblower Protection (WBP) legislation. This would allow the sunshine principle to come into play that would increase the likelihood of scams to be caught and reduce the risk of pork abuse by legislators and the president.

Reducing the demand for pork

It is not sufficient to reduce the supply of pork, we also need to address the needs of the people in a more systemic way, to lessen their dependence on pork. As a start to this exercise, we need to ask, what were the most common uses and abuses of pork in the past? We have seen that the most abused element of pork has been the ‘soft’ projects, consisting of services such as livelihood training, medical kits and agricultural aid, as opposed to the ‘hard’ projects which are attended to by the government’s public works department. The following are some remedies to the demand for “soft” pork:

  1. Use the earnings from the Sovereign Wealth Fund (no. 2 above) to:
    • provide scholarships and income contingent loans to tertiary students and out of school youths. This would eliminate the need for congressmen and senators to fund scholarships through pork
    • invest in the Philippine Health Insurance Fund. This would support universal healthcare for indigent patients.
    • invest in social welfare projects. To expand the coverage of the conditional cash transfers and other community based projects.
    • invest in agriculture and agrarian reform projects. To fund the CARPeR and modernisation of our agricultural sector.
  2. Adopt recommendations by the Philippine Institute for Development Studies endorsed by the Leagues of Provincial Governors and Mayors to reform the Local Government Code to allow LGUs to raise revenues on their own by about an estimated third of their existing funds reducing their dependence on internal revenue allotments from the national government and on congress for aid. This will allow local governments to have fiscal capacity to address local needs.
  3. Provide state funds to political parties. To lower the demand for pork from politicians who need it to get re-elected.

If we could pass these measures, their combined effect would be to channel more resources to systemic and programmatic approaches to tackle poverty and underdevelopment and have less resources available for patronage based approaches. This is not to say that pork will be legislated out of existence, but what it will do is lower the incentives in the system that drive it. There will be less avenues for patronage and better safeguards to limit the abuse of privilege.

I know this is not the policy solution that abolitionists want. They would rather have what seems to be a more direct route to their goal. The problem is that by seeking to legislate against certain behaviour, without addressing the incentive matrix that fosters it, they are really conjuring up a whole heap of unintended consequences. Illicit drugs do not disappear simply because we have made them illegal, or because we catch a few drug dealers and send them to prison.

Rather than expending all that effort in finding a silver bullet through a people’s initiative, the reform movement should actually be putting its weight behind a reform agenda that would wean both patrons and clients off of pork, so that they may find healthier ways of conducting their business. The answer to the question, should we let the people have pork, if that is what they want, ultimately lies in changing the tastes and habits of both the public and those in power, through shoves and nudges rather than mandating them to change their “wayward ways”.

Going legit

cross-roads

How Philippine politics needs to move on from its shady past.

In 2016, the Philippines will be commemorating the 30th anniversary of the EDSA people power revolt that toppled Ferdinand Marcos who ruled the country for twenty years. These three decades will be book-ended by two Aquino presidencies: the first representing a transition from dictatorship to democracy, and the second which was billed a transition from impunity to legitimacy.

For many, the period in between the two Aquinos demonstrates the fragility of our democratic institutions under conditions less than ideal. The fragility is owed in large part to the concentration of power in the hands of the ruling elites whose dynastic families pre-date the Martial Law period.

By declaring martial law in 1972, Marcos claimed he wanted to uproot the old order (that these landed elites represented), only to replace them later on with his own cronies and acolytes. Under the first Aquino presidency, many elements of the ancien régime were restored. New and old dynasties were rehabilitated although greater democratic “space” was afforded the media and cause oriented groups to engage in dissent.

This so-called space has not always been free and open. Forced disappearances and extrajudicial killings have been committed with impunity, undeterred by the existence of a Commission on Human Rights whose investigative powers are weak.

Fraud and corruption at a grand scale have persisted, making life difficult for those dependent on government services. The completion of land reform, the centerpiece program of the first Aquino president has still not been achieved, and remains a promise under the second Aquino. Communist insurgents and Muslim separatists have survived despite intermittent efforts to wage an all out war and negotiate a permanent peace settlement. Poverty and unemployment rates refuse to fall substantially despite the country’s new-found economic wings.

Three years ago, the second coming of the Aquinos enamored the country, but with three years remaining in its “second term” of office, many are saying that time is insufficient to finish the job. Indeed, many are seeing this term of office as a brief respite before the same old system of patrimonial plunder and corruption pervades.

The persistence of pork barrel as a vehicle for self-aggrandizement under the nose of the present administration and the long process for prosecuting cases against the senators, congressmen and other people involved in the PDAF scam uncovered by the Commission on Audit and exposed by whistleblowers puts into doubt the durability of changes initiated by it.

The Aquinos have always sought to restore the Philippine house in order after a long period of serious erosion. They have always tried to reinforce it by proving that the Philippine brand of democracy could work, if managed with integrity. They represent the best and most noble elements of the political elite, a throwback to an era which, as sociology professor Randy David suggests, was governed by a gentleman’s code consisting of “moral restraints (e.g., delicadeza and sense of honor) that used to bind rulers.”

To a certain extent the administration has succeeded in returning us to that imagined mythical chivalrous era, which is why the Aquino brand still defies gravity. Unfortunately, by virtue of this conservative inclination, President Aquino has resisted the urge to weaken the structural foundations of cacique democracy and construct a new modern political architecture.

Earlier in his term, he tried creating a Truth Commission to go after his predecessor Mrs Arroyo, only to have it struck down by the Supreme Court. He then proceeded to go after Ombudsman Gutierrez and Chief Justice Corona using all the powers of influence over congress which eventually caused the former to abdicate and the latter to be removed from office.

His appointees to the Commission on Audit and Office of the Ombudsman have helped to uncover anomalous transactions, which have sparked outrage among the urban chattering classes and led to widespread protests. It is becoming quite clear that the moral restraints that Prof David spoke of have long since ceased to bind the behavior of our “honorable” representatives. And yet as David states we are still stuck with a “ a premodern political system that is basically unchecked by the rule of law.”

So far the Aquino government has focused on improving the managerial aspects of governance–by instituting operational reforms in the way public works, public finance and administration is conducted. He has done so while working within the current framework, which suffers from serious legal and statutory constraints.

He has so far shied away from substantive reforms to the legal and political architecture which would mean adopting executive and congressional compensation programs that address the incentive problem in elected and senior public officials (past reforms have focused on raising the pay of rank and file public employees creating pay compression with that of middle to senior level officers). It would include strengthening the power of agencies whose job it is to police public officials and guarantee transparency and accountability, and would mean enacting safeguards to the freedom of information and providing protection to whistleblowers.

President Aquino has found himself at the helm of this giant enterprise known as the national government, wielding the levers of power that dispense political patronage. He has sought to show us what it would look like to have an honest person pulling on these levers. By lifting the veil on the inner workings of the state, the public who delight in receiving gifts from pandering politicians, now stand aghast as they view the actual process behind the facade. They now see just how messy and dirty it is, and want it fixed.

The problem now confounding our political operators is just how much of their demands to take on board. Just like a family crime syndicate that has prospered so much that it can now opt to turn a new leaf and become legit, the nation now finds itself at a crossroads. It has to decide where to go. Channeling state funds to political parties to support a new breed of politicians and professionally run national campaigns, with strong mechanisms to enforce limits on political spending and restrictions on sources of campaign donations is the way modern political systems work. The old way is to use patronage and plunder to amass resources to retain high office.

The choice could not be clearer. We either stick with the old ways and try to make the best of it by harking back to a chivalrous code, that no longer binds people’s behavior, or we adopt new ways of doing things based on a new legal framework and policy settings that promote a culture of meritocracy in our public and political institutions.

This limbo that the Philippines finds itself in, stuck in between a feudal past and a modern future is nowhere to be for a country with the skills, talents and resources that it has. It is now time for the second Aquino to complete the process of going legit, which is now nearly thirty years in the making.

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.

Getting the Philippine house in order

Now that all sides of politics have been tarnished with the same PDAF scam brush, it is time to lay the foundation for a new political order.

Another week, another scandal. The controversy that originally involved but a handful of senators and congressmen over the rorting of their Priority Development Assistance Funds, otherwise known as pork barrel, has now engulfed 180 of the 264 members of the house of representatives and twelve of the 23 senators that served in the 14th Congress from 2007-09.

The Commission on Audit’s (COA) findings are that of the Php 8 billion worth of PDAF allotments covered by its report, Php 6.156 billion was released to dubious non-government organisations, and that Php 2.157 billion was cornered by Janet Lim-Napoles’s ten allegedly fake NGOs.

This means that 77 per cent of the audited PDAF allotments in those three years associated with two thirds or 192 of the 287 members of the 14th Congress have been identified as anomalous by the COA. It involves congressmen and senators of all political stripes, including members of the ruling Liberal Party.

This can no longer be considered a set of isolated occurrences involving a small minority. It is a systemic problem that needs to be addressed with systemic and structural reform. The full investigation and resolution of this case could easily take the next three years and beyond. We cannot wait that long to methodically deal with the weaknesses of our political system. The very edifice representing our political order has been infested by termites and is at risk of crumbling to the ground unless serious measures are taken to fix it.

Diagnosing the problem

The first step in renovating our state towards a new political order requires us to diagnose what the source of the problem is. Most people reading about the PDAF scam would probably come to the conclusion that pork barrel is the root cause of the problem without considering why PDAF became necessary in the first place – for the Palace to secure votes for its legislative agenda, particularly the budget.

In defence of the practice some solons claim that it is a way of equitably distributing infrastructure and other forms of development spending across the Philippines, and that abuses can be stopped through reforms in the way the funds are allocated and spent. The Palace has trained its sights on the approval of NGOs as the key to ridding PDAF of anomalies.

The problem with these views is that they do not go to the heart of the issue, which is why solons need to rort the system in the first place. Given the high cost of running an election campaign, the only way for them to recover their campaign expenses and to seek re-election is by accessing public funds.

PDAF is simply a means to an end. Doing away with PDAF will simply mean that other shadier forms of raising money will arise. Other options include narcopolitics, gunrunning and smuggling. To get the Philippine house in order means providing an alternative means of financing political parties so their candidates have a way of preserving their integrity once elected.

Laying a new foundation

We have seen how relying on the ruling elite’s sense of noblesse oblige has turned out. Asking our politicians to refrain from pork barrel much less rorting it is like asking prostitutes to abstain from sexual intercourse to prevent the spread of AIDS. It simply won’t work.

Providing extra checks and balances is like providing contraceptives to sex workers. It helps to a certain extent, as a risk mitigation procedure. Removing the need for that sex worker to enter the flesh trade in the first place would be more effective. Extending the analogy to our legislators that would mean lowering the private costs of electoral contests.

In a previous post, I identified three pillars to support a new political order in the country. They are:

1. State subsidy of political parties

2. Adequate compensation and allowances for elected officials

3. Meritocratic selection of candidates as a condition for public funding of parties

These three pillars would be built on the foundation of greater transparency and accountability. Strengthening the powers and capabilities of the Commission on Audit, Commission on Elections, Ombudsman, National Bureau of Investigation and Bureau of Internal Revenue to engage in forensic accounting and electronic surveillance in investigating corrupt activities of public officials is required.

This new foundation would include having a whistleblower protection program and freedom of information act. Any candidate found to have abused his or her allowances would have to be cast out of the system of campaign finance. Political parties would have to expel or dis-endorse them at the next election for that party to have access to public campaign finance.

If we wanted to take things a step further, we could even enact a charter of budget honesty and sustainability. This would require political parties to submit their policies to the Congressional Budget Office, which would cost them prior to elections and release their findings. This is so that parties that promise the sun, moon and stars would be forced to come clean regarding their policies and show how they would pay for them through new taxes or savings.

We have already seen how that a considerable proportion of PDAF spending is being wasted. If we spent that much money on laying the new foundation and three pillars of a new political order, we would have a safer, sound structure on which to renovate our political system.

The time to do this is before the 2016 elections. We need at least two years’ lead time to allow the new foundation to settle and for the pillars to be erected. If we wait too long or get fixated on catching the criminals of yesterday, we will simply allow new criminals to breed in their place. We cannot let this infestation of termites eat us out of house and home.

The Philippines needs a new political order, and the time for it is NOW!

 

A new Philippine political architecture

Fed up with political dynasties and pork barrel scams? There is a better way for the Philippines, and it does not require a constitutional overhaul.

The political-electoral system in our country today has followed the same dynamic since the founding of our republic. At the heart of this dynamic lies the family institution or political dynasties comprised of wealthy local elites, the landed class, or caciques as Benedict Anderson put it, some of whom trace their lineage back to the late-Spanish and early American colonial periods.

In order to win at elections, they have needed to dispense patronage to their local constituents. Winning gives the elected official access to the resources of government to recoup the initial investment in political capital and continue providing patronage with abandon. In a symbiotic, co-dependent relationship, the president who needs to win cooperation from congress for his or her legislative agenda, and to gain approval for annual budgets, uses pork as the means to secure it.

The patron in this arrangement is the president; the rent-seeking clients are members of congress and local government. The clients direct pork to their pet projects through line agencies or NGOs. Despite previous attempts at tightening the system to prevent the funds from being diverted back to the project sponsor by way of commissions and kickbacks, allegations of corruption still abound.

The money siphoned off keeps the elected official in power perpetuating his or her clan in politics. Political parties are paper entities, controlled as they are by an alliance of political families, headed by the dominant patron. Term limits have not solved the problem as Pablo Querubin found, only made it necessary for dynasties to be more entrenched (they have expanded their reach and become “fatter” as Ronald Mendoza has put it in order to guarantee succession when term limits expire).

Underdevelopment can be traced back to this cycle of “patrimonial plunder” as Paul Hutchcroft put it. Jurisdictions in the country that are dominated by political clans have been found by Mendoza to suffer greater poverty and lack of development compared to those that are not. Although the caveat, as Solon, et al point out, is that some development oriented spending can occur, especially following local government devolution, when there are rival clans vying for positions, which may lead to some form of oligopolistic competition as each clan seeks to outbid the other.

This dynamic is no longer confined to local politics or the house of representatives. National elections for the upper house are dominated by dynasties as well. There will be the occasional interloper: a celebrity or media personality who might get in the game, and once in office, will begin to exhibit the same habits as the “insiders”. There will be the occasional grandstanding politician who will denounce the system, but by and large, everyone lends their tacit approval to what goes on.

Filipinos who put so much faith in personalities due to their preference for ” relational contracts” or dealing through close associates, kith and kin, often fail to see that having a few reform-minded politicians whom they trust enter a den of dynasties simply won’t cure the situation. There needs to be a more drastic overhaul.

The big “game changer” has been the revelations courtesy of a whistle blower of corruption at a grand scale allegedly involving an ever growing list of senators and congressmen complicit in fraudulent use of their congressional pork barrel. Fraudulent NGOs are supposed to have been used as fronts to certify the completion of ghost projects. This has sparked a debate over the very legitimacy of pork and calls for its abolition have been raised.

The Palace has responded by simply window dressing the situation, declaring that NGOs must seek certification with the Department of Social Welfare and Development. Benjamin Diokno has serious doubts that this solution will work. He claims the cure is worse than the disease. It is also important to note that some of the allegedly fraudulent deals involve proceeds of the Palace’s “shadowy funds” as Diokno describes them from gambling and oil revenues. So it would be unseemly for a member of the executive to be charged with essentially policing its head.

Aside from calls to abolish pork, the elections of 2013 sparked a separate debate over whether to abolish political dynasties. These seem unlikely to happen. The reason is simple: congressmen and senators for the most part won’t commit an act of political suicide, which is what the abolition of pork and dynasties will mean for them given the dynamic I have summarised above.

Others have called for constitutional change that would convert our system to a parliamentary, Westminster style democracy. This will bring about stronger political parties which they claim will spring into life simply because of the change despite the absence of a strong tradition and set of incentives supporting it. This will definitely not happen. Not under the watch of the current president, anyway, who ironically, is the only one since Cory Aquino to have the numbers in both houses of congress to do so. Such a super majority is hard to come by.

Reforming the political system will require a different set of tools that are less absolute or fundamental on the one hand, but more structural on the other than what the Palace has produced so far. In simple terms, it will involve moves that do not require constitutional amendments or absolute bans, but are more systemic than just tightening the paper trail of pork barrel audits.

What changes am I talking about?

We often think that since poverty is an economic problem it requires an economic solution. So we think that the solution in this case is to fund local projects. Pork barrel or Priority Development Assistance Funds as they are officially named is seen as essential to spread these projects equitably.

But the slow rate of poverty reduction can be empirically connected to the lack of political contestability at the local level.

It is a political problem that requires a political solution. The solution would be to strengthen political parties and decouple them from political dynasties. The policy tools required for this involve a combination of measures.The first pillar involves state funding of political parties, the second pillar involves increasing the salaries of elected officials, the third pillar involves providing equal opportunity for non-dynastic candidates to run for public office under accredited political parties. Pork barrel funds would play a significant role in providing the money to finance these reforms in a budget neutral manner.

The first pillar: funding political parties

The House passed in the 15th Congress a bill called the Political Party Reform Bill. It was a consolidated bill whose sponsors spanned the political spectrum. Had it been acted on by the Senate it would have delivered a significant reform to our political system. Given that one of its principal sponsors is now in the Senate, we should see some progress on this front.

One problem with the current bill, which the senate can refine, is that it is patterned too much after the American system in which state subsidies only become available when the party has raised counterpart funds through contributions from party members and donations from individuals and organisations. This simply is not appropriate for the Philippines at this stage of its political development.

The final bill should simply provide parties access to the pork barrel funds and direct 90-95 per cent of the Php 27 billion in the 2014 or any succeeding budget on a pro-rata basis based on the seats held in both houses. This would mean directing 95 per cent of each senator’s Php 200 million and 90 per cent of each congressperson’s Php 70 million pork barrel allotment to the political party he or she is a member of.

The parties can still engage in development assistance, outreach and projects as prescribed in the draft bill, but it will have to follow a clear set of guidelines and reporting procedures in acquitting these expenses. Centralising pork to the parties would provide an incentive to tow the party line and prevent turncoats by giving the party financial leverage over the local member.

If parties abuse their allocated funds, they can lose their accreditation and the allotments to them will cease. This makes it much easier to discipline offenders and would create a powerful incentive to maintain above board transactions.

The second pillar: increasing salaries of elected officials

The first pillar would aid political parties, but what is in it for the elected official? Why should he or she go along with it if it goes against his or her interests?

As compensation for giving up 90-95 per cent of their pork, the legislator should be given the remaining 5-10 per cent in the form of salaries and other perks. That would mean Php 10 million a year for each senator and Php 7 million for each congressman. The president should receive in my view Php15 million a year for managing a Php2.7 trillion budget.

To lend some perspective to this whole thing, let me benchmark with Australia where each MP receives AU$127,000 (Php 5.3M) a year before allowances. The Prime Minister who is the highest elected official gets AU$330,000 (Php 13.85 million) a year. Each representative also gets an additional AU$100,000 (Php 4.2 million) a year for printing costs as well as $32,000 (Php 1.3 million) in electorate allowance to handle costs incurred in relation to their constituency work.

If we want our elected leaders to walk the narrow path, we should pay them well. The scandal involving paying senators bonuses at the end of the year exposed a serious problem that can be dealt with if we simply paid our elected officials more. Public office is a public trust, but it should not involve living in penury, which then forces public officials to engage in corrupt practices simply to meet the limitless demands of their rent-seeking clients in the community and to recoup their campaign expenditures.

Third pillar: opening access to elective office

The third pillar involves opening access to elective office which means giving equal opportunity for political party members who are not members of political dynasties to be elected into office. If we simply relied on the first two pillars, we would have a weak structure because political dynasties could simply register their own party and get the pork that they would be giving up back by dominating the party with their family members.

The funding of political parties with state funds will only work if political parties are inclusive. In our banking laws and regulations, banks are limited in giving out DOSRI loans, or loans to directors, officers, staff, and related interests of the bank. DOSRI loans are capped at 20 per cent of the bank’s loan portfolio. A bank caught in violation of this rule risks losing its franchise.

We need a similar cap to prohibit spouses and relatives within the 2nd civil degree of consanguinity or affinity from occupying more than a certain ratio of a party’s officially endorsed ticket for a jurisdiction. This would still be in keeping with the Section 26, Article II of the Constitution that says, “The State shall guarantee equal access to opportunities for public service political dynasties as may be defined by law.” A dynasty under this arrangement exists when a certain cap is breached. This is different from the way it is defined under Senator Miriam Santiago’s bill which bans spouses and relatives from running alongside an incumbent.

The reason I am suggesting we impose a cap rather than an outright ban is to address the argument that we would be denying dynastic members their rights to pursue higher office and limiting choice among voters. Providing a quota or a cap allows them that right but regulates it so that political races become more contestable. In the same way that governments can regulate competition among firms and force break-ups of companies to prevent undue market power from being concentrated, this new rule on political dynasties would operate.

A new architecture for the future

With these three pillars in place, our political architecture would be better matched to a more modern, progressive society. It will lead to greater professionalism and integrity in our public institutions and elected officials, limiting nepotism, favouritism and corruption.

Through the three pillars outlined above, we can renovate our political system without resorting to drastic Constitutional reform.These reforms will work within the funding envelope that the state already sets for itself. It will reverse the dynamic that has led us to a downward spiral in our political life as dynasties have consolidated their hold on every level of elective office.

The challenge of governing our nation is not simply about the mechanics of government. By that I mean it is not simply about procuring textbooks for students, guns for policemen, equipment for weathermen, flood control systems for our cities, and the like. It is not simply about administering well and honestly, but setting the long-range plan for our nation. And that involves having a vision as well as a political and economic blueprint to build a modern Philippines. The current structure we inhabit is no longer suited to our needs. We need a new architecture for the future.

UPDATE:

The following table should make it clear why we need electoral campaign finance reform. It is a conservative estimate of the cost of fielding a national and local ticket for a general election from president down to councillor. The amount involved in running a full slate is Php 76 billion, Php 5 billion shy of the PDAF for three years of Php 81 billion. The remainder can be used for wage adjustments of national officials and for strengthening Comelec’s and COA’s monitoring systems.

elections

The next table comes courtesy of IDEA a think tank dedicated to electoral reforms. It shows the year in which various countries in Latin America have adopted some form of public funding of political parties. This should be an indication of just how behind the times we are.

Table 1

Pork to the parties, not the polies!

Why giving money to political parties not politicians is a better idea than scrapping their pork.

It’s been in the headlines for over a week, after the Inquirer broke the story of a scam allegedly involving 23 congressmen and 5 senators and Php10 billion of Philippine Development Assistance funds (aka pork barrel) being siphoned off over more than ten years by a syndicate known as JLN which stands for the initials of the lady accused of heading it.

A member of the syndicate, a close relative, blew the whistle on the boss after a row between them turned ugly. It blew the lid off the issue whether we as a nation still want to maintain the practice of pork barrelling in Congress. If these allegations are proven, it would simply confirm what a lot of Filipinos intuitively know, and that is that these funds or a significant proportion of them, which are meant to benefit local constituents of politicians simply go into their re-election kitty.

Some efforts through the years have been made to make it harder for or limit the amount of corruption or kickbacks from contractors to solons in exchange for awarding projects to them from taking place. The alleged conspirators have been able to defraud Filipino taxpayers by setting up ghost projects involving dummy recipient NGOs issuing fake receipts to help fulfil audit requirements and make everything seem above board with the imprimatur of the legislator who endorses the so-called “development” project.

The Palace, which understandably is concerned, given its reputation for clean and honest government has ordered a full and exhaustive probe through the Department of Justice spearheaded by the National Bureau of Investigation. This would inform and provide evidence to the Ombudsman which has started looking into it. The person accused by the whistle blower appears ready to front the enquiry.

As this developed, public support for abolishing PDAF has mounted. Senator Franklin Drilon, the man expected to assume leadership of the upper house has appeared to welcome the idea. The question will be whether the budget to be approved by Congress will still contain these allotments to its members or not, and whether Malacañang would be able to control the legislative agenda without them.

The opposition for its part considers the investigation a political ploy designed to bash it in the lead up to the 2016 elections.  Three of the five senators linked to the scam, Senators Jinggoy Estrada, Bong Bong Marcos and Bong Revilla seem set to run for higher office. Prior to the 2013 midterm elections, a number of senators from the opposition bloc were engulfed in a similar scandal. The results of the elections seem to indicate that the issue swayed voters not to vote for their kin who were running to join them.

To be fair, the issue is not just about Congress and pork. It involves funds from the Malampaya project which along with the proceeds of the PCSO and PAGCOR Prof Benjamin Diokno describes as “shadowy funds” that are not subject to the usual process of budget scrutiny and deliberations by Congress. For as long as they are hidden, Diokno believes they will always be prone to corruption and a source of patronage and rent-seeking.

Here is how Prof Winnie Monsod weighs the pros and the cons behind the issue of pork:

In sum, what are the benefits of the pork barrel system in the Philippines? One, it gives the executive branch tremendous leverage over the legislature, which is supposed to provide checks and balances (the executive branch can withhold the pork). Two, it gives incumbent legislators an unfair advantage over their electoral opponents, because of the projects (if successfully implemented) they bring, or the money (if pocketed) they can use to buy votes. And what are the costs? At least P21 billion a year of taxpayers’ money that arguably could have been more efficiently and equitably used for the welfare of the Filipino people.

The problem with the abolishing pork is that you need the endorsement of the very people who benefit from it to succeed. This is exactly the same impediment to getting Congress to abolish political dynasties. Pork may be seen as the vehicle for the network of patronage emanating from the Palace to Congress to the people. In the past it has been indispensable in getting significant bills involving painful economic reform to pass. Some say even the impeachment of the Chief Justice would not have taken place without it.

Pork is then used to help solons get re-elected either through the projects they fund or through amassing some form of rents that then get used for their campaign. What’s more, this tacit arrangement seems to exist with the grudging consent of the public who don’t believe that public servants can afford to live on their salaries and run for office based on them alone. There is therefore a trade-off or deal with the devil being made here. Economic reforms are not costless to produce–they require some form of corruption in a developing economy.

The problem with that is it perpetuates a system of patrimonialism which many say lies at the heart of our problem of underdevelopment, i.e. we would not have to resort to this form of “transactions costs” if we had a strong party system in which policies mattered, where elected members toed the line or faced the consequences from their own caucus.

The problem with our system is that political dynasties control the parties, or stated in another way, parties are merely a front for the family franchise, and they are financed largely through a system of patronage that emanates from the presidency, who requires their support to push his agenda through. It is a co-dependent arrangement of patronage and rent-seeking that perpetuates itself.

How then do we untangle this web? Do we simply abolish pork? That presents a number of challenges as well. How will Malacañang push its legislative agenda? What forms of illegal activities would congressmen resort to to raise campaign funds?  But we are getting ahead of ourselves here. How would we get congressmen and senators to act against their own self-interest in the first place?

The answer lies in campaign finance reform: by using the PDAF to finance political parties. The amount involved, Php21 billion a year or Php63 billion per term, is a lot of money. With that kind of money parties could become professionally run organisations that would endorse candidates and provide seed money for their campaign. This system would still favour incumbents who presumably would still be high ranking members of their parties. It would still be subject to the audit and accountability rules of the Comelec and the Commission on Audit, since they are public funds.

The good thing about giving money to the political parties not the elected politician to disburse is that it gives their executive committees greater power to influence and discipline their members who will be relying on their endorsement to seek re-election. It will still be rife with influence peddling, factionalism and perhaps patronage, but that is the nature of politics. Some parties will do a better job of managing their affairs and that will be their selling point to the electorate.

The downside of this proposal is that rather than the money or at least a good proportion of it going to fund development projects that benefit constituents, all of it would now go to the political parties. Of course the way in which parties use these funds would be up to them. They could presumably still engage in development projects, but that would be a matter for them to decide. They may decide to keep all of it to manage their affairs and fund election campaigns of their members.

My answer to that objection would be to say that although shifting pork to parties does come with a cost to the constituent community, it does bring some benefits as well in the form of better policies and programs, with less padding for corruption, as parties are strengthened and get weaned off the system of patronage and rent-seeking. This would not happen if we simply abolished pork. These benefits would accrue to society and presumably outweigh the costs.

Some might say this is too risky. Even if we give money to parties, they will still be run by politicians, and every time you hand money to a politician you are courting disaster. Well, perhaps it does involve some risk, but it is a risk we should be prepared to take if we are to develop a different set of political institutions in our country, one that provides incentives to stronger parties, rather than the current arrangement which degrades them.

The next step after that would be to allow equal access to non-dynastic members of the party through legislation that would allow campaign funds to be disbursed by the state to political parties subject to their meeting certain requirements that allow greater access and participation to party members that do not belong to any established political family. That will be the subject of a subsequent post.