corruption

When Good Governance Isn’t “Good Enough”

MRTaccident

Four years under an honest, sincere leader like President Noynoy Aquino (PNoy), and the mood of the nation has palpably shifted, from one of hope and optimism that greeted his election in 2010, to one of fear and loathing at the prospects in 2016 when he is supposed to step down (talks of lifting his term limit notwithstanding).

Four years is a sufficiently long time to take stock of how far down the path of good governance (daang matuwid) PNoy has taken the nation. The opinion polls suggest that while an absolute majority still are satisfied with his performance, fewer and fewer people think he is succeeding or doing a good job. If this trend continues, the people who rate him poorly may become the majority.

In his last State of the Nation Address, PNoy acknowledged that the task of reforming institutions in the country will not be completed by the end of his term. By the government’s own scorecard, the administration is failing in all but one of the Worldwide Governance Indicators of the World Bank, the global benchmark for good governance, nor is it expecting to achieve its governance goals by the end of PNoy’s term in office.

When it comes to achieving inclusive growth and development, regarded by many as the holy grail of good governance, for which it is just a means (kung walang corrupt, walang mahirap), slow progress indicates the intransigence of the situation. Poverty incidence and unemployment rates remain stubbornly high, despite the uptick of our GDP growth figures for over a decade now.

In this context, where does blame lie? Were the actions taken by the administration towards implementing good governance the right ones? To answer these questions, we will need to retrace its steps. But before that, let us first lay the foundation for the analysis.

The role of any government is always two-fold: to expand the productive sectors of its economy, and to invest in human capital while providing social and environmental safety nets for those who slip between the cracks.

A government cannot raise enough revenue to perform the latter, unless it performs the former really well. Inclusive development is premised on rapid, robust, and sustained growth taking place. The benefits of growth are often distributed unevenly though, so governments often need to step in to spread them more equitably across society.

Some minimum standards of competence and probity need to exist for a government to perform these functions well. In developing and emerging economies, these tasks are made more complicated due to the limited nature of available resources, weak organizational capacity and poor institutional integrity. But as demonstrated by East Asia in the last century and now by Sub-Saharan Africa in the early part of this century, governments need not be whiter than the falling snow to perform these functions well enough.

Retracing steps

Early in his administration, the president was concerned about changing the atmospherics to promote good governance, which was what he rightly perceived as his mandate from the Filipino people. He sought to achieve this by:

–          Replacing Mrs. Arroyo’s appointees and going after his predecessor through the courts. This was achieved with a series of executive orders, impeachment complaints and charges being filed. When the PDAF and DAP controversies broke, this extended to filing cases against incumbent legislators, such as senators Juan Ponce Enrile, Jinggoy Estrada and Ramon ‘Bong’ Revilla.

–          Improving the integrity, efficiency and effectiveness of the government’s expenditure program through reforms in the Department of Public Works and Highways and Department of Budget and Management. Corollary to this was making the budget process, the bidding and awarding of contracts, more transparent and accountable.

–          Improving the collection efficiency of revenue agencies such as the Bureau of Internal Revenue, Bureau of Customs, and government owned and controlled corporations by going after tax cheats and smugglers, reforming the governance of corporate boards and initiating a performance based bonus system.

In all this, the administration has actually been quite successful in getting what it wanted. Mrs. Arroyo is under hospital arrest; the Chief Justice appointed by her was impeached and convicted; her Ombudsman resigned; and, the three senators mentioned have been suspended and are in detention. New budget and procurement procedures are now in place. Collections and dividends from revenue generating agencies and corporations are up, meaning to say their performance is improving.

So what has the administration done wrong? Why are its approval ratings going down now despite its many accomplishments in the area of good governance? I would like to go beyond just the immediate causes to offer three fundamental problems. Three things, which I believe the administration is guilty of—they are:

  1. Focusing too much on reforming the government’s budget and expenditure processes and not enough on a whole-of-economy policy agenda.
  2. Focusing too much on the process of good governance and not enough on the ultimate, end-goals or outcomes of good governance.
  3. Not being bold, or forward-looking enough in its plans and vision for the country.

Let us tackle these one-by-one.

On the first point, the administration, by focusing on the efficiency of the government’s expenditures, limited itself to influencing a mere 20% of GDP that the annual budget represents. Economic policies, which affect 100% of the economy, on the other hand, have been neglected, to say the least. Just consider the following:

–          We are facing an imminent energy shortage, despite paying some of the highest electricity rates in the region. Some parts of the country are already experiencing regular, rotating blackouts.

–          We are facing a logistics and ports crisis, with freight landing but remaining inside Manila’s container port due to regulatory bottlenecks at the national level, which have led to unlicensed trucks being apprehended by the city of Manila. This crisis in Manila is going on despite the excess capacity that exists in Batangas and Subic Bay ports.

–          Our urban roads are congested limiting the flow of people and goods around the city, impacting on our productivity and the cost of delivering basic goods and services.

–          The metropolis suffers from a lack of urban planning, co-ordination and integration with surrounding regions.

–          We are paying some of the highest rates for internet and telecommunications services, and suffering from one of the slowest internet bandwidth speeds and poor connectivity in the region.

–          The NAIA, our most important gateway to the world, is considered one of the worst airports. Even the opening of an extra runway in Sangley Point a few years from now will simply ease congestion slightly.

–          The MRT and LRT systems are hampered frequently with accidents and breakdowns.

–          Our public transport system is not safe for the riding public or motorists.

–          Pollution is choking the city, leading to health risks and higher health bills.

–          Our higher educational institutions continue to slide down global league tables and a lower proportion of their graduates succeed in passing their professional licensure exams.

–          The sleeper issue is water. Will there be enough of it with all the growth happening in our urban centers?

Now energy, ports, communications, transport, roads, clean air and water, education and skills all affect the efficiency and productive capacity of our economy. If regulatory and line agencies lack the capability to independently plan, manage, monitor and guide the players that operate in these sectors in line with national development goals, then the future growth of the economy will be significantly constricted.

‘Plan rational’ missing

If a government cannot develop what the late-Chalmers Johnson called a “plan rational” for growing productive sectors in the economy and use its economic agencies to effectively line up the players in their respective spheres of influence to attain the targets of this plan, then it won’t achieve the kind of growth that results in massive improvements in its people’s quality of life.

The administration has identified the business process outsourcing, electronics, semiconductor, logistics, tourism, manufacturing and agro-industrial sectors for growth, and yet if you look at the basic infrastructure needed to power them forward, which includes human capital and skills, the policy frameworks are not providing a conducive environment for this to be a sustainable future.

Over-processed, under-performing

On the second point, the administration has focused too much on the process of good governance, not enough on the outcome. PNoy has focused on cleaning up the bureaucracy of corruption, institutionalizing right procedures of governance, and improving transparency and accountability.

Those are noble things, worth pursuing no doubt. However, in seeking to improve the processes by which the state governs society and the economy, it should not neglect to forge effective tools with which to improve the outcomes of processes without having to clean up the system, entirely.

As the only entity in society with the right to grant licenses, franchises, monopolies and provide public goods, the government actually has some clout to shape the economic landscape if it wanted to. It can direct state resources, finances and act as guarantor to projects that it sees as strategic in nature.

During East Asia’s rapid rise to prosperity, bureaucrats would grant loans at concessionary rates and issue licenses to operate in strategic sectors of the economy to favored companies. In return, they or their political masters would often receive commissions for facilitating these transactions that would go to their political machineries. They were, in this respect, no different from our own bureaucrats.

The only distinction lies in the fact that the recipients of such cheap loans and coveted licenses were obligated to produce results in line with national development targets. If they failed to achieve these performance standards, bureaucrats would wield the stick to rein them in, i.e. loans would be retracted or they would be forced to consolidate or be threatened with the entry of new players. The economic agencies had the tools and acted cohesively to do this.

In the Philippines, we have neglected to develop such tools and organizational cohesiveness. If we had a national policy to increase the average speed of our internet service, for instance, and the current providers were not meeting this target, then our regulators should have the power and authority to slap hefty fines and penalties on them, threaten to suspend their licenses or bring in new players from abroad. The targets should be easy to measure and verify, clearly defined and pre-agreed.

The same should apply elsewhere. Of course, the constitution might stand in the way of some policy tools, such as liberalizing foreign ownership in certain sectors. The problem with full liberalization for its own sake though is that if you continue to have weak agencies without the tools to shape the behavior of players in the market, we could simply end up with foreign players behaving just as badly as local ones. Having said that, all options must be on the table.

The government through its budget process has started to initiate performance based budgeting, which is focused not just on how much gets spent or what outputs are produced, but the outcomes it achieves. This is a positive step. The next logical one would be to empower agencies with the right policy tools to achieve the desired outcomes.

Bolder vision, action-oriented focus needed

On the third and final point, if the government is not bold or forward-looking enough in its plans and vision for the country, then it follows that the agencies which develop policies and regulations for the economy will not be ambitious or strategic enough in wielding the tools for shaping its future. Without a national agenda, agencies will be more susceptible to being ‘captured’ by narrow, vested interests.

Of course the government has developed targets in the Philippine Development Plan. The question here is whether these are the right targets needed to develop a grand vision and narrative for where the country should be heading. Are they bold and forward-looking enough? Are they outcomes-based as opposed to being outputs- or even process-based?

In my view, many of the targets in the Plan remain output-oriented. What matters to the broader public is not how many passengers go through Ninoy Aquino International Airport, for instance, but how comfortable and easy it is for them to do so. There ought to be measures that monitor and track this. There could be 40 million passengers going through NAIA by 2016 as per the plan’s target, but they could all be unsatisfied and disgruntled with the service.

A more visionary target would have been to open a new airport by 2016 to service the expected inflow of passengers into Metro Manila. If the government had come into office with this as a bold target, then agencies and investors would have known what to do and where to invest their resources. The same could have occurred in power.

If the government came in and said we needed to produce X additional megawatts by 2016 and to lower the average cost by Y per cent, while reducing greenhouse gases by Z tons, and empowered responsible agencies with the mandate, resources and tools to get it done, we could have avoided the current situation. I believe dissatisfaction among many citizens stems from the impression, rightly or wrongly, that government just does not have a plan to solve their everyday problems.

When President John F. Kennedy in 1961 set a bold, long-range vision and asked for extra appropriations from the US Congress to put a man on the moon by the end of the decade, no one at that point knew how it could be achieved. There were no feasibility studies. The technology was not even available. NASA had to learn by doing, taking action that brought them closer to that vision through experimentation and adapting their plans and organization accordingly.

The many challenges facing our country are adaptive in nature. Intergenerational poverty, climate change and conflict ridden communities: the solutions to these problems are not known in advance. Even experts are confounded when they apply their current state of the art tools. But that should not deter our leaders from framing a bold and inspiring vision for the future, and to set the scene for government, clients and stakeholders to collaborate in finding a unique way forward.

Good (or “good enough”) governance?

As PNoy enters the final third of his time in office, the clock seems to be ticking much faster. People have 2016 on their minds. What he needs to do now is race to the finish line. As he contemplates the legacy that his government will leave behind, he may need to re-think his agenda thoroughly.

While pursuing anti-corruption and good governance is a laudable goal, admittedly it takes several presidential terms, decades even, before this can be fully accomplished. His government has taken many positive steps down this path, and should be commended for it, but as he himself acknowledged in his penultimate state of the nation address, the journey will not end when he steps down.

Given that good governance in its strictest sense will not be achieved during the life-time of his administration, what steps can he take now to achieve better outcomes in many policy areas that directly impact the lives of residents and ratepayers, and will affect the future growth potential of the country?

These steps, when taken, would constitute “good enough” governance, because the process for achieving outcomes may not be perfect, but at least they will allow the government to perform its primary role of expanding the economic base, and with it the capacity to address social disadvantage and environmental damage.

Once the economy has expanded sufficiently, government will be able to raise more revenue, and shall have more resources, which will allow it to continue down the road of good governance and inclusive development.

If the government fails to lift the standard of our economic infrastructure, then growth could stall, and many of the positive steps this government has taken so far might falter as well. When that happens disillusionment might set in, and many of the reforms initiated by PNoy might be wound back.

Finally, the citizenry, for its part, cannot wait decades (or even another term for that matter) before the promise of good governance is achieved, nor should they be made to wait. Four years under PNoy may have already taught them that the path of good governance is just too long and arduous. Their growing dissatisfaction with the results is a sure and telling sign that, as far as they are concerned, good governance simply isn’t good enough.

Report: GovPH cheated by at least US$4B taxes due to smuggling in 2011

Global Financial Integrity: “The report estimated the size of the Philippine underground economy averaged 34.8% of GDP over the study period, and 29.7% of GDP in 2011. Larger underground economies facilitate crime and corruption and decrease tax revenue collection.

Illicit flows were found to both drive the underground economy and be driven by it, a result also found in country profiles of India, Mexico and Russia.”

The full report is here.

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.

Can pork really be abolished, legally or otherwise?

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

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

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

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

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

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

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

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

Policy questions crystallised

What to do with pork?

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

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

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

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

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

How do we improve the calibre of our politicians?

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

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

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

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

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

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

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

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

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

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

Policy tools need sharpening

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

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

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

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

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

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

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

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

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

“Beg your indulgence”

Image credit: internetmonk.com

How the Catholic Church eliminated its own version of pork barrel and how the Philippines can too

Back in the Middle Ages, the Catholic Church was undergoing its developmental phase. It was not the huge global entity that it has become today. It was heavily dependent on the patronage of the landed aristocracy. As a result, the Pope did not have much clout and could not exert central authority to appoint priests and bishops to the parishes of feudal lords who would place their relatives in these prestigious positions.

Faced with limited means to address the missionary role of the Church, priests decided to engage in the practice of selling indulgence, “the remission of temporal punishment due to sin, the guilt of which has been forgiven.” Although the sale of forgiveness, which is what this amounted to was not really sanctioned by the church, it was nevertheless widely practised out of necessity. The funds raised went to pay for monasteries, schools and even Crusades to recover the Holy Land.

Despite the noble causes it supported, the practice undermined the legitimacy of church teachings. The abuse of indulgence eventually contributed to the Protestant Reformation which weakened the Church by splitting it in two. If such an organisation devoted to otherworldly spiritual endeavours can fall for such malpractice, what more a government not meant to be run by angels, solely devoted to temporal affairs?

The Philippine state is in a position much like what the early Roman church faced. You have the president of the republic resorting to the bully pulpit of his office, engaging in mini temper tantrums, to complain before the nation that he cannot even get lowly bureaucrats to comply with his orders to do their job and follow the rules set out by the law of the land. These bureaucrats are purportedly protected by wealthy elites who placed them there.

For the same reason, the Priority Development Assistance Funds (PDAF) or pork barrel, though it may go to some noble programs, actually corrodes and weakens our democracy by perpetuating many corrupt politicians in power. This limits inclusiveness in our politics as dominant clans have ruled many places since the time of the late-Spanish or early-American colonial period. Their exclusive control over most jurisdictions has been directly correlated with the severity of poverty across the nation.

The dominance of aristocratic political dynasties, undisturbed by the upheavals of the Pacific war or Marcos’s New Society, is actually facilitated by taxpayer’s money through the institution of pork barrel. These elites have also weakened the state by appointing friends and allies into strategic posts within key agencies and business units such as the Bureau of Customs which provide a revenue stream not for the government, but for the “padrinos” who have cornered it through such appointments.

When appointees are recommended by power brokers acting as “padrinos” and subsequently underperform, we know it is for a reason. Their appointments undermine the very rules that they as officers are meant to uphold. It is clear that the rules within these agencies are not set by the central government, but by power brokers who benefit from illegal activities. This weakens the very integrity of our state, as in the case of the customs agency since it erodes our ability to enforce our borders and puts this power in the hands of crime bosses.

According to Francis Fukuyama in the Origins of Political Order, the Church was able to gain financial independence from its patrons when it undermined the very notion of kinship and family. How did it do that? By refusing to sanction cross-cousin marriages, and recognising the rights of women to own and bequeath property. Previously, childless widows married back into the clan of their deceased spouses which allowed his land and other property to revert back to his family.

By changing this custom, the church encouraged childless widows and spinsters to convey their inheritance to itself. The church profited immensely from this. By undermining the family, the Church was able to wean itself off of the corrupt practice of selling indulgences to fund its missionary projects.

In the same way, the Philippine government needs to wean itself off the system of patronage. Banning PDAF won’t solve the problem, just as banning the sale of indulgences did not prevent corruption from continuing in some shape or form. It takes more than idealistic moral crusading to get rid of it. Apart from eliminating pork, state resources must be used to shore up political reforms that would make elections more inclusive and contestable.

The irony is that the large sum of money devoted to pork demonstrates that the state now has the capacity to directly finance political institutions and decouple our democracy from the “anarchy of families” as Alfred McCoy put it.

If we promoted meritocratic institutions within our political system through state funded electoral campaigns, political parties and better pay for elected officials, we would be able to remove the perverse incentives currently at play that motivate the abuse of PDAF and other appointive and recommendatory powers.

Let’s face it, political dynasties have begged the indulgence of their constituents (we the people) for far too long and gotten away with “patrimonial plunder” (hat tip: Paul Hutchcroft) – which is using the very money they have stolen from the public purse to pander to the needs of the very same people they are keeping impoverished by that act.

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.

Corruption

When President Benigno S. Aquino III took office, it was a welcome breeze. Like the winds were different. In many ways, President Aquino did accomplish the main premise of his campaign. And so the tone of the government was different. You can see this in our news headlines. There are fewer corruption scandals. Some scandals though haven’t sprung up to see the light of day, or maybe like the Senate Christmas bonus scandal taught us, the will of the people shifted the winds.

When the present Ombudsman took office, I had hope that it signaled a more focused approach to solving corruption. We have a president that doesn’t take these things lightly. Under his watch, the Office of the President has been relatively-troubled free. It has among other ways of ensuring transparency, initiated Open Government. In fact, we’ve never had the budget so open, and the Department of Finance so clear that I wonder if any journalist has had a chance to check, just how transparent this is. That said, it doesn’t mean that corruption has simply vanished in our society. It does exist. It exists everywhere, just not so flashy. This troubles me.

It troubles me because the War on Corruption seem…cosmetic. What happens when the President leaves office? Have we then institutionalized a system that goes after any sort of corruption? So I had hoped that the Ombudsman could take a measure of cracking down on these things. Have we institutionalized Open Government to such an extent that the next President doesn’t unravel it all?

Two things seem to be the primary problem. First is Bureaucratic Inertia: change is hard to effect in a bureaucracy that has known to do things in a certain way. New ways of doing things? Not that easy to inject in government. The second thing that remains prevalent is the lack of Institutional Memory: which means some of the good ideas from the previous regime is purposely or absentmindedly forgotten by the new one. How strong are the changes that the Aquino administration made going to last in say, a Binay administration? A Bong Revilia administration? Maybe a Cayaetano Administration?

And how long shall we wait until we get real cases filed, and resolutions made in public of fishes suffering because they stole money. Am not talking about Renato Corona or former President Gloria Arroyo. Am talking about corruption in the local governments; in the small institutions of the executive. According to the Ombudsman’s annual report (2011), 3,854 cases were filed against local governments.

The Ombudsman’s annual report goes to say, “In 2011, a total of 5,079 complaints and reports were referred for fact-finding investigation. The total workload of cases for fact-finding is 12,157. More than a quarter of these involve high-ranking officials. Some 3,727 fact-finding investigations were completed in 2011, which is 31% of the total workload. About 12% of these investigations resulted in the filing of criminal and/or administrative cases against the subjects of investigation.”

The document does say that 940 new complaints were referred to mediation and parties “settled their dispute amicably in 62.6% of the cases submitted for mediation”. The Ombudsman says they have a conviction rate of 62.6%. No mention how it took to get to that conviction. They also said that 69% of cases in 2011 were dismissed.

Why am I not happy with this?

Untrustworthy

That seems to be the label which the instigators of ‘memogate’ want to attach to the Vice President Jejomar Binay.

As the 2013 race for the senate heats up, members of the rival faction within the Palace opposing Jojo Binay have leaked a confidential memo he wrote to the president concerning a case involving corruption in the military. The advice contained in the memo was for the government to enter into a plea bargain deal with the former AFP comptroller General Carlos Garcia.

This mirrored the views of the office of the Ombudsman which at the time was held by Merceditas Gutierrez, Mrs Arroyo’s former justice secretary, who subsequently resigned as an impeachment case loomed against her in the Senate which was filed by palace supporters in the House incensed over her acceptance of the deal.

The tactic of the leakers is quite clear: make the public doubt Binay’s anti-Arroyo credentials, and by doing so, shed light on the fact that he too may have skeletons hidden in his closet. This follows news that the coalition headed by Binay and former president Joseph Estrada announced that it might field Arroyo allies not implicated in cases filed against her in their senatorial ticket come 2013.

Concerns over the integrity of the former mayor were conveniently swept under the rug during the heady days of the anti-Arroyo protest movement. Makati became a bastion of opposition in those days when most local government officials were allied with the administration of Mrs Arroyo. When the remains of former president Corazon Aquino were moved from La Salle Greenhills to Manila Cathedral, the cortege snaked through the streets of the central business district in recognition of the critical role it played as a staging ground for massive rallies.

What memogate reveals is the intention of loyalists associated with his political rival within the administration Secretary Mar Roxas to counter the vice president’s popularity by painting him with the same brush that tarnished Mrs Arroyo’s reputation by exposing his willingness to compromise with her on matters of principle that they deem sacrosanct. These insiders may have wanted the case against Garcia to proceed despite the weak and inadmissible evidence because of Mrs Arroyo’s alleged involvement in the “golden parachute” scheme involving large sums of money in exchange for military support for her government that the case had the potential to expose.

Reacting to an article about the incident reported on Rappler, which speculated on his potential motives for supporting the Ombudsman’s position (according to the report his wife had a pending case before her at the time), Binay called the media organization “reckless, irresponsible and malicious”.

Rappler for its part conceded that Binay got it right. The plea bargain was approved by the Sandiganbayan for lack of strong solid evidence. Although, the president and his allies in the house went to great lengths to reverse both the Ombudsman’s and the Sandiganbayan’s decisions, the general was only pinned down by the AFP for holding a green card to the US while in active service. He is currently serving a two year jail sentence for this infraction.

For his part, the vice president alleges that by making such sensitive deliberations ‘fair game’, the palace insiders have caused harm to the government. This is the fallout of such a propaganda war. By elevating narrow partisan interests above the national interest, these insiders have forgotten their role as custodians of the affairs of state.

On the other hand, such cannot be said of his ally Ernesto Maceda, a prospective senatorial candidate, who in a televised interview connected the case to remove Chief Justice Renato Corona from office with the electoral protest filed by Sec Roxas questioning the vice presidential election results of 2010. “With friends like these, who needs enemies,” the vice president must be saying to himself.

It appears this early that battle lines are already being drawn. The “knights of the round table” in Camelot are laying claim to the mantle of good governance and are intending to lump Binay along with the opposition that was comprised up to this point of Arroyo supporters. Binay on the other hand portrays them as saboteurs out to wreck the president’s effective governance of the nation.

The president for his part is not willing to make a split with his vice president an ‘inevitable’ proposition. He will after all need the support of his deputy in corralling votes in the senate for his proposals if indeed the vice president’s allies control a majority of the upper chamber as polling indicates they will.

The question now is whether the president can and would be able to control the machinations of those that serve in his team to prevent a dysfunction from setting in, if it hasn’t already.

Chief Justice Corona Impeachment is Acid Test for Online Reportage

I am visiting a friend at the Senate today, and have decided to take the opportunity to blog about the impeachment trial of Chief Justice Renato Corona.

It’s only been five minutes and already I’ve encountered a number of political creatures like Adel Tamano and former Akbayan Citizen’s Action Party representative Risa Hontiveros. I also caught a glimpse of Juana Change leading a rally of sorts outside the GSIS building.

The multitudes who have taken time off work to rally against Corona here, and those who support him at the Supreme Court demonstrates how people can take a political issue personally. My own appreciation of the issue is that it is putting every foundation of our democracy through the acid test not merely of public opinion, but of integrity and accountability.

Today’s impeachment trial is remarkable not only because it supposedly tries an Arroyo ally, but also because this is the first time that a Supreme Court chief justice is actually being put through an accountability process. Elected officials endure impeachments and elections, which is also a test of one’s trustworthiness.  Cabinet secretaries are always tested by senate investigations. However, for the longest time it seemed as if the Supreme Court is invincible to any process that would ensure its probity.

That, if proven guilty, even the highest judicial officer of the Philippines can still be made to answer for transgressions is the most encouraging sign.

But Corona is not the only one being tested today. The Senate will also be tested as to how it will decide based on the evidences presented. The House of Representatives will have to prove the merit of its impeachment complaint. And the Executive will have to show restraint and respect for the other branches of government, and let the impeachment run its natural course.

I see this also as an acid test for online reportage. The Corona trial have opened other discussions, and one that I am keenly looking at is the perception of University of Santo Tomas (UST) professors—and journalists from traditional media—that online reportage is reckless and inept in meeting the standards of journalism. One of my UST professors presented some valid questions on Facebook. “Is online journalism really the future of journalism?,” he asked. “What are its rules? What is it needed?”

His inquiry and ideas carry weight, but we also cannot deny that professionals in traditional media have likewise failed in upholding their lofty journalism standards. A number of people actually believe that Rappler is more credible and less vulnerable to sensationalism and politicking than TV Patrol.  But of course we cannot only give readers a choice between Korina Sanchez and Maritess Vitug, and say that’s the best we can provide. Online needs to step up.  We are not only in the hot seat because of that UST statement, but because we really are the future of news reportage.

The emergence of the Internet practically forces every journalist to go online or face the consequences of having your story read only 24 hours after people have read about it on Facebook. Simply put, you either go online or become irrelevant.

I feel also that online reportage is not yet as corrupted and subservient to political and capitalist interest as television, the broadsheets, and the radio. Majority of online writers have managed to maintain their impartiality, and this is something we must continue and even improve upon. Online communicators will also be called to be anointers of Truth in this momentous trial that carries inconceivable political and legal repercussions. It is an opportunity for us to prove that we can provide relevant and unprejudiced reportage on this trial because every word we write means the difference between a reader who is misinformed or one who has been provided sufficient knowledge and insights to make one’s own opinion on Corona and the impeachment. Twenty minutes before the trial, and it’s time for us to step up. Time for us to blog.