Constitutional reform

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

Trapo Alert! Detecting political pandering, part 5

Panderometer

Featuring Teddy Casiño, Democratic Party of the Philippines and Ang Kapitiran candidates.

This is the fifth part in a series on the candidates for the senate in 2013. Just a recap: I am attempting through this series to have a serious discussion of the aspirants and their political platforms (or lack thereof). These are put through what I call the pander-o-meter to determine whether the policy detail they have released so far places them in either the reformist or populist columns. The following table details the range of possible scores a candidate can get and the equivalent meaning of each reading:

Introducing: the ‘Pander-o-meter’ or Trapo Scale

A reading of… …is equivalent to…

1-2

Low levels of pandering detected, generally reformist in nature

3

A mixed bag of proposals aimed at both pandering and reforming

4

Trapo alert! Approaching dangerous levels of pandering

5

Could be likened to a vote buying trapo

In part 1, I covered Juan Edgardo Angara, JrBenigno Aquino IV and Alan Peter Cayetano. In part 2, I covered Francis Escudero, Risa Hontiveros and Loren Legarda. In part 3, I covered Aquilino Pimentel III,Joseph Victor Ejercito and Juan Ponce Enrile, Jr. In part 4, I covered Gregorio Honasan, Ernesto Maceda and Juan Miguel Zubiri.

In this edition, I will be covering Teodoro Casiño, the candidates of the Democratic Party of the Philippines and the Ang Kapatiran Party.

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Teodoro “Teddy” Casiño (Makabayan) is the lone candidate of his party which has adopted a “ten point agenda”. This agenda reads more like a vision statement, similar to the Liberal Party’s social contract formulated for the 2010 elections.

The party-list representative is seeking to offer an alternative to the two main coalitions whom he portrays as being cut from the same cloth, but his stand on issues tends to reflect what he is opposed to rather than what he would affirm as a senator. Perhaps this is the luxury of being in the minority—you don’t need to present a detailed policy position, just simply oppose things.  I will highlight a few of these positions below:

  • His opposition for instance to the Pantawid Pamilya or 4P’s program, deriding it as a “dole out” is surprising, given that it was patterned after reforms developed in Mexico and Brazil and supported by left-leaning governments. He asserts that providing employment or teaching people to fish rather than giving them fish should be the priority. The problem is that people who are locked in a poverty trap aren’t able to earn enough to sustain their families due to low educational attainment. This leads their children to have low levels of health and education which perpetuates the cycle. The 4P’s helps break people out of that trap.
  • His opposition to the sin taxes bill, which he characterises as simply revenue generating, not a real solution to the health problems associated with vices, is also quite puzzling given that part of the revenues raised will be used to support disease prevention and treatment. I suppose he would also oppose my proposal of imposing a “fat tax” on unhealthy food and drinks on the same grounds, despite the evidence which shows that it influences eating behaviour.
  • He opposes the kindergarten to Year 12 or K+12 reforms, saying it is an added burden to families. He wants the government to focus on addressing the classroom deficit instead (which by the way, the government is saying will be addressed by the time K+12 is fully implemented). Unfortunately, he fails to realise that part of the reason employers demand at least two years of college these days for entry level positions is because a Year 10 secondary qualification simply is not enough.
  • It actually costs less to deliver two extra years of secondary education than two years of university. What in fact we ought to do is extend the 4P’s program so that youths stay in school and finish high school as was the findings of a recent review of the program. Our unemployment problem is largely due to the fact that youths are forced to work at age 15 or even younger. Very little in terms of future career opportunities arise for them if they do.
  • He wants to put a cap on fees charged by higher education institutions to prevent “excessive profiteering” and seeks to uphold student’s rights to free education (translation: no tuition fees should be charged by state universities and colleges or SUCs). The country’s high participation rate in tertiary education relative to other lower middle income countries reveals we are already punching above our weight.
  • We don’t need to incentivise this further by offering tuition free studies. What we need to do is help families finance the cost of it (through 4P’s and student loans), improve quality and ensure that people are equipped with the right skills that are in demand by industry, and that could mean encouraging vocational education and training, which is what the K+12 reform seeks to do. If the country is to rapidly industrialise as per Makabayan’s platform, greater focus needs to be placed on technical training and vocational education.
  • Makabayan supports the growth of small and medium sized enterprise, and yet it would raise minimum wages to levels which would put many of them out of business. These are contradictory statements. The way Mr Casiño would solve this problem is to have government subsidise electricity and other costs of business. He hasn’t specified at what cost to the government and taxpayer, though. This reflects policy thinking that is disjointed and not well-thought through.

Overall comments:

Some of the positions that Mr Casiño holds are quite surprising. Motherhood statements and muddled policy prescriptions that seek to please different sectors while at the same time undermining them.

In addition, Makabayan fails to provide us with an alternative program of government. They say they want to promote the growth of industry through a kind of state sponsored capitalism. Their platform however fails to specify how that will come about. What will be the framework for promoting industry in the country? Which industries will they target? How will they steer investments that way? What kind of economic bureaucracy will they foster? These are questions that remain unanswered.

This demonstrates that Makabayan is perhaps not quite ready to rule the country yet. Sometimes I wish they would be given a chance to do so, so that they could then realise just how untenable their positions are.

Pander-o-meter: 4 out 5

Note: while drafting this piece, Makabayan’s webpages that contained their 10 point agenda and stand on issues was replaced with two infographics presentations. The simplification of their message has softened the tone. The commentary provided above reflects the detailed policy statements present in the previous versions of the web pages.

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DPPCandidates

The Democratic Party of the Philippines (DPP) has fielded three candidates (from L-R as seen above): Bal Falcone, Christian Señeres and Greco Belgica. On its website, the party has published a 12 point platform. Space does not allow me to cover all of them, but there are a few interesting bits that include.

  • Funding of political parties during elections
  • Moving to a federalist, parliamentary form of government
  • Adopting the jury system

Unfortunately, their website does not provide any policy detail beyond perfunctory statements. In addition, Mr Belgica has a four point plan which is listed on his personal Facebook page, which includes:

  • Imposing a flat tax of “not more than 10% for individuals or corporations.” The current tax system which collects less than 20% of GDP he calls “excessive”.

These proposals from the DPP focus much on the political system. They probably see the design of constitution as problematic. They do have economic policy statements too, but they tend to be quite general in nature. The most specific economic policy they have is to promote the export of halal food.

Overall comments:

The DPP wants to overhaul our political system and one of their candidates wants to overhaul our tax system. These policy positions reflect a kind of high-brow intellectual approach to our country’s development needs. Although they have been supported by academics and policy elites  there really isn’t a strong push either from the business community or civil society for them. They run the risk of becoming locked up in their ivory towers.

There also needs to be more detail. We cannot read their minds or interpret much from the statements they have released so far. Although the major parties are themselves not clear on their agenda, it is incumbent on minor parties to be more forthright and transparent about their policies and programs.

Pander-o-meter: 3 out of 5

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AKPCandidates

Ang Kapatiran Party has fielded three candidates (from L-R as seen above):  John Carlos “JC” delos Reyes, Lito David, and Mars Llasos. It has published a 50-point platform that begins with the “spiritual dimension” which involves “seeking the kingdom of god” as its first point. This party represents the social conservative movement in the Philippines, with its Pro-Life and opposition to violence portrayed in video games and the media. Unlike conservatives in the US however it also supports gun control.

Among its political advocacies are enacting a freedom of information law, the banning of political dynasties and the abolition of pork barrel.

Overall comments: 

The Kapatiran Party raises questions about the role of faith in politics. They should however exercise some caution that in promoting their religious convictions to society through public policy not to infringe on the rights of their fellow citizens in exercising personal choice. According to most religious beliefs, we are endowed with free will. What this party has sought to do is pander to the wishes of those who want to impose religious and moral codes of conduct on others who may not subscribe to them. That is the essence of “brotherhood” or solidarity among men (and women)  in a free and open society.

Pander-o-meter: 4 out of 5

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Up next: Grace Poe-Llamanzares, Eddie Villanueva and Richard Gordon.

Reciprocity: It Should Cut Both Ways

Should we liberalize professional occupations in the country?

I always have to remind freshly arriving compatriots in Australia complaining about certain “discriminating” policies on skills migration of how discriminating the rules are back home in the Philippines.

For instance, if a doctor from the Philippines wishes to practice medicine in Australia, he or she first needs to spend a few years “paying his or her dues” working under the tutelage of a sponsoring hospital and cannot seek employment elsewhere after this period before undergoing certain theoretical and practical tests. Something similar happens for nurses.

These so-called barriers to entry prevent more skilled professionals from coming to countries like Australia. We can call them discriminatory, but consider the rules in the Philippines, where there is an absolute ban on foreign nationals from practicing their profession.

When I gained permanent residency in Australia, I was eligible to work in a state government department although I was not yet a citizen. When I became an Australian citizen, I became eligible to work for the Federal government even though I had maintained my Philippine citizenship. Yet, if I try to work in government in the Philippines, I will first have to renounce my Australian citizenship (which is probably why I have chosen to blog about Philippine affairs instead of actually working in it).

These prohibitions were conceived of by our politicians as a way of protecting and preserving the domestic labour pool from foreign competition because of the large oversupply of skills that existed and still persists today.

Yet these very restrictions might actually prevent many of our countrymen from accessing jobs from abroad being outsourced to the Philippines. When it was written, our present constitution did not take into account the world we would be living in today where technology has allowed business functions such as accounting and law to be practiced across national borders.

The international standards governing these professions make it possible for a lawyer in Delhi to advise clients in New York or for finance professionals in Singapore to do the same. Education and certification of these professionals can also take place across national boundaries now. Ironically, the things that prevent us from signing on to international trade deals to capture a greater chunk of this growing market are the very laws that sought to maximize employment opportunities for our people.

At a time when the pool of college educated unemployed workers is swelling and where the imbalance between graduates supplied by our educational system and the demand for them domestically is rising, our current stock of leaders need to look at re-designing the institutions incorporated in our Constitution. We need as a nation to examine whether they make us well-suited and adapted to the new global environment that we are living in or in fact impede us from excelling.

At the time the nationalist provisions in our Constitution were framed, there was a deep-seated conviction that only an absolute ban would prevent Congress from eroding over time the principles enshrined in it. What we have to realize today is that the very fulfillment of those principles requires us to move away from an absolute ban and towards a regulatory framework that manages the transnational flows of services from human assets just as we have institutions to handle the flow of earnings from financial and intellectual assets.

The very source of our national competitiveness, our human capital, which props up our foreign reserves and domestic economy could become restrained in the future in its ability to compete for thousands of jobs that could be created in the Philippines unless we find a way around such arcane provisions in our legal system.