efficient allocation of resources

A Philippines that Works: Economic Vision and Platform

Speech by Senator Benigno S. “Noynoy” Aquino III delivered on January 21, 2010 before the members of the Makati Business Club at the Peninsula Manila Hotel, Makati City

Four-part video of the speech, courtesy of NoyTV on YouTube:

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A Philippines That Works Economic Vision and Platform

Officers and members of the Makati Business Club, Your Excellencies of the diplomatic corps, ladies and gentlemen, my friends and countrymen.

Thank you very much for giving me the opportunity to address you. I trust your asking me first is not based on alphabetical order, or based on age, but perhaps, based on who you think will most likely win the coming election.

As managers, you recognize that one of the necessary skills of an effective manager is time management. Is it possible that you have invited me to determine if there is still a necessity to spend time with the others?

Baka naman inuna niyo ako upang malaman kung sapat na ako at hindi na kailangang pansinin yung iba?

I think we are all aware of the problems facing our country. We share the same statistics. We probably even share the same conclusions about the need for better governance. To rehash all of these problems at this forum would be a waste of your time. But what we have now is an opportunity for you to get to know me, to find out the advocacies that I champion, the perspective and philosophies I bring to the equation and some of my proposed solutions to give an insight into my inner persona.

Levity aside, the political exercise that we will engage in this May is a crucial one. It will be, as it is for every fledgling democracy, a test of the strength of our political institutions. The peaceful transition of power has become a symbol of political maturity across the world, with many still failing to achieve the credibility that is the cornerstone of a genuine political mandate. With the electoral scandals that have stalled our democratic progress as of late, it is not a test that we can afford to fail.

We have an administration whose mandate is clouded in doubt and overshadowed by allegations of fraud because it refused every opportunity to clear the air and be held to account. Its choices have limited its decision-making to seeking ways to ensure day-to-day political survival and self-interest. We must now become a government committed to accountability. A government that works with the people in achieving long-term change.

We must make the shift from bare economic survival to robust economic growth. We must make the change from treading water to keep afloat, to reaching that promised shore where we can all stand tall as healthy, happy, educated and responsible fellow citizens.

But why does transformation seem like such an impossible dream?

Isa sa mga tema ng ating kalaban, yung “ang pagbabago, madaling sabihin yan pero mahirap gawin,” is probably echoed by a lot of Filipinos. The oft-repeated question is, why can’t we advance? Why can’t we progress? What is it in us that limits or prohibits our growth as a people and as a country?

All of you are aware that most of the contenders have had years, possibly even decades, of preparation for this electoral exercise. I had no such ambitions to run in the 2010 elections but I responded to the people’s clamor. I am but the face of what we believe is the overwhelming demand of our people to repudiate everything wrong in the current administration.

Given that I only announced my decision to seek the presidency on September 9, and I only came to that decision the day before, I have not had material time comparable to our opponents. What is perplexing is that viewing the same problems, and having access to the same data for the most part, we believe the solutions have been there all along, and necessitate only clear political will to execute. But most of our opponents seem to indicate the contrary opinion that there is very little that we can do to change the situation. One has to wonder: did they overstudy the problem, or are they committed to preserving the status quo?

If the leader is not convinced that change is not only necessary, but extremely possible, how does he lead us to the promised land?

What is it that we want to change?

We want to repair the damage that has been wrought on our democratic institutions by those who have sought to manipulate them for their own selfish ends.

We want to improve the situation of our people, who have suffered years of neglect because of a self-absorbed leadership obsessed with political survival.

They are poor. Many of them are homeless. Each year, we add some 2.5 million mouths to feed to our already hungry population. Of these new additions, one third were the result of unplanned pregnancies. We have a growing underclass that statistics tell us have given up looking for work. A permanent underclass that includes the five million of our countrymen that are illiterate, which means their opportunities in life will always be limited to living hand-to-mouth.

We want to give our young the opportunity and means to improve their lot in life.

It can only begin if our children and their parents are assured that money spent on education is money well spent. Unfortunately, students are at the mercy of our decrepit education system that allows double shifting, erroneous textbooks and substandard nursing schools to exist. No less than DepEd officials admitted that students in Grade 1 take three subjects in one class period. We have a procurement program so heedless of the need for excellence that it doesn’t care if it produces a textbook series riddled with 500 factual errors. For every hundred kids that start grade school with the hope of achieving their dreams, only fourteen will graduate from college and possess a tangible means to materially improve their lives.

To my mind, the crucial, lacking element in all these is a government committed to a transformation: from a society overwhelmingly poor to one overwhelmingly middle class. In every developed, progressive, prosperous democracy, it is the middle class that is the biggest class. Government, for one, has failed to make the conceptual leap from patronage to development. Efforts at feeding the hungry, clothing the naked, providing basic care to the sick, and offering a quality education aren’t only the people’s rights; they are the essential tools for individual self-improvement.

In 1998, when I first campaigned for office, one lady bluntly told me that regardless of who is elected, things would remain the same for her.

What did she mean?

That she was poor to begin with; that she would remain poor, and in fact, she would be lucky if she didn’t end up poorer, after the candidates leave office.

This brings up the question at the forefront of the minds of our countrymen still undecided on whom to vote for, and pursued by my critics. If this is a time that calls for national transformation, am I qualified to be that transformative leader? Having answered the call of duty, can I ask you or anyone to entrust me with your vote, on faith alone? Never having sought the presidency, I preferred to do my duty and not seek the limelight. Now that I have been thrust in the limelight, it is only fair to answer the question: before you tell us what we can do, what have you done?

I have always believed that the job of an effective legislator goes beyond merely proposing laws, for what are laws but written agreements entered into by members of society on how to harmonize their mutual relations? In fact, I do not believe that we suffer from the problem of too few laws. One of my proposed measures was the recodification of laws, in response to an appeal from the legal community to put some order into our laws, their amendments and those that have been repealed, because even our lawyers are at times confused.

Consider the recent controversy over who gets to appoint the next Chief Justice. We maintain that there are no ifs and buts in Article 7 Section 15 of the Constitution where it states that the current President cannot appoint anybody within two months prior to a presidential election up to the end of her term. An exemption exists, but it applies only for positions in the Executive Department. Yet you have two retired justices arguing exactly the opposite. How can former justices of the Supreme Court be so seemingly confused, when the fact is that the provision regarding presidential appointments is stated clearly in the law?

Our problem is the lack of political will to faithfully implement the many world-class laws that our legislature has passed. A preference for ambiguity even when times call for clarity, leads to artificial controversies. Insecure or overly ambitious leaders need to create a climate of doubt, because it’s in the grey areas that its ambitions thrive.

It is in addressing this problem that I focused on the fiscalizing aspect of a legislator’s job – on Congress’ oversight and investigative functions.

Consider intelligence funds. In the proposed 2010 budget, a total of 1.4 billion was allocated to confidential and intelligence funds.

Woodrow Wilson once wrote that oversight is always preferable to investigation, which is like putting out a fire instead of preventing one. We proposed that if the Executive wants orderly transactions, at least a few members of Congress should be privy to all of the details to determine if they were spent properly. However, this proposal was dismissed out of hand without even a single hearing for the reason that they undermined the Executive’s privileges.

And yes, the investigations were a vital part of my functions, too. I don’t think anyone will begrudge me my efforts in this regard. From Hello Garci and the impeachments, to NBN-ZTE and the fertilizer scam, I did my duty at the forefront of these issues.

The original design of the NBN-ZTE project required a BOT agreement between government and the supplier, not a government loan. But during the NBN-ZTE hearings, we learned that the project was entered into through a government loan despite instructions to the contrary from no less than the President herself. The cost of the intended government loan was P40 billion, (in which P16 billion was for the backbone and P24 billion was for the CyberEd project.) Jun Lozada belied this when he cited P5 billion as the actual cost of the entire project. Ito yung sinasabi niyang kalakaran ng gobyerno, kung saan sa sobrang laki ng patong, bubukol na.

SCTEx took around 8 years to construct before it finally opened. Projects of this scale normally require two years to complete. Furthermore, when SCTEx finally became operational, it was found that the central hub, which was Clark, did not have an exit, excluding Clark from the Subic Clark Tarlac expressway itself. How can one justify these kinds of delays where opportunities are lost, costs have escalated and the people’s burdens, instead of being reduced, end up being compounded?

My active role in these congressional hearings has put me at odds with the administration. In 2005, it cost me my post as Deputy Speaker. It continues to put me at odds with the coalition of self-interest that currently holds power. It puts me at odds with other candidates for the presidency.

To lead transformation, you cannot be part of the problem. As I said when I accepted the people’s draft, the job of chief executive is about the efficient allocation of resources. If you have hogged those resources for yourself, if you have lied, cheated, and stolen to gain power, how can you be trusted to lead the transformation our country needs?

Going back on the issue of appointing a Chief Justice prior to the forthcoming elections. If we are to transform the country, it begins with doing what we can, now, to limit the damage and give our people a fighting chance to rebuild our damaged institutions. The Constitution imposes a blanket prohibition with few exceptions concerning midnight appointments. A candidate cannot ask for the people’s mandate, pledging to improve the situation tomorrow, if he becomes complicit in worsening the situation today.

Hindi naman mahirap gawin ang tama. Alam naman ng lahat yan eh. Wala namang magic, wala namang sikreto. Pero bakit pilit pa ring ginagawa ang mali?

There is a widespread perception that success in the business milieu can almost be directly correlated to your closeness to the powers-that-be. Because of this, some players in the industry are forced to focus their activities on maintaining relationships in order to retain the favors that they receive in exchange for cultivating that relationship. This has fostered the wrong kind of competitiveness. While it may work, locally, for now, it has not enabled these players to become competitive in the world market, where the rules of the game do not take special relationships into consideration.

We will encourage free and fair competition in a level playing field. One not need be a crony in order to succeed in the field of business. More importantly, government will not compete with business. Nor will government use its regulatory powers to extort, intimidate and harass.

We will transform our systems to foster service to the public instead of making citizens jump through hoops. We will streamline the approval process, not only for setting up new businesses but also in the regular day-to-day transactions with government, such as the payment of taxes. We will do this on a national as well as the local level.

In 2010, our next President will inherit a continually bloating deficit. As of November 2009, the deficit of the national government already reached P272.5 billion, or 4.1% of GDP.

In addressing the looming fiscal crisis, good governance and the drive against corruption are critical components in our strategy. We will refrain from imposing new taxes or increasing tax rates.

I strongly believe that we can collect more taxes at the BIR and higher duties at Customs if we become more serious in curbing and punishing tax evasion and smuggling. The BIR’s collection dropped by 5.5%, while that of Customs declined by 16.6%. This is the first time in recent history that absolute revenues have actually declined.

Our initial focus then will be to capture a good part of the revenue leaks caused by smuggling and evasion. In this effort, we will not be starting from zero. Be assured that those smugglers and evaders are not faceless and unknown entities. The ideas to improve tax administration and to control smuggling have been there for some time and some programs have been initiated in the past. One of these successful programs was the RATE or Run After Tax Evaders. In fact, some of the people at the Department of Finance and the BIR who have tried to implement reforms before are with us now, and together with reform-minded career executives, we intend to put their commitment and talents to good use under my administration.

My vision is to transform our country into one where we have lower tax rates enjoyed by all, rather than have some enjoy absolute tax exemptions while we burden the rest of the economy with very high tax rates. I believe that markets are better than government in spotting where the growth opportunities are, and, with universal low tax rates, we will encourage entrepreneurs and enterprises to invest and create jobs in any industry. We will, therefore, pursue the rationalization of fiscal incentives early in my administration.

There is a lot of room for our revenue base to grow. Our tax effort has gone down from 17% at its peak to a worrisome 13% today. If we can only bring this back even to just the 15% level, that will translate to P150 billion in additional revenues, which would make a significant dent in cutting our deficit.

My budget team estimates that for 2009 alone, around P280 billion of our national budget was lost to corruption. If we take the years 2002 to 2009 the total estimates exceed one trillion. Estimates vary, but everyone agrees that the numbers are huge.

If we agree that change is necessary, how can a Presidential aspirant, whose own financial and political ethics are questionable, be effective in leading transformation as the head of the bureaucracy? How can a leader, who is benefiting from the status quo, be able to restore a civic sense and pride in our citizenry? The leader, who has used public office for private gain, will always be the most committed enemy of change.

Rich or poor alike, we have a tangible experience of the sorry state of public infrastructure at present: traffic, which eats up time, which as the saying goes, is money. Railways are built at bloated cost; urban transport is constructed, but not enough trains are on track. Our people are the first to experience the effect of something that works and conversely, something that is badly done because bad intentions handicapped the project from the start.

It is time that our infrastructure agencies and LGUs transform into cooperative ventures with the private sector by bringing forth an agreed public infrastructure program, based on a cohesive plan that optimizes the value of the entire network. In our conversations with members of the private sector, there has been a lot of positive feedback about possibly working with government on this endeavor.

To transform infrastructure projects from sources of waste and scandal into examples of cooperation and efficiency, we will set objective criteria for different types of projects and develop a scorecard that will assess various projects against benchmarks transparent to the public.

Initially we want our infrastructure program to transform from being the means to enrich a few, to being labor-intensive and biased for employment as a means to pump-prime the economy.

When I read about countries that have invested in their agriculture sectors and succeeded, it always pains me to find that these countries – Vietnam and Thailand, to name just a couple – had started by sending their experts to be educated in the Philippines. It seems that we cannot implement among ourselves the lessons we successfully imparted to experts from elsewhere. This will have to change. We must be able to harness our homegrown talent in order to further our local industries.

When we change administrations, there must be a complete review of all the programs in the Department of Agriculture. We can do a lot for our farmers given the present budget of the Department if we eliminate the leaks and focus on the efficient use of resources. For example, we must stop eating up millions in mere administrative costs as in the case of NABCOR, which charged our government P60 million because it served as a useless conduit to regional offices. We will also support efforts such as supply chain management that minimizes losses, creates jobs, consults with stakeholders, and capitalizes on our competitive advantage.

Our core belief is that the current approach to governance and power must change. That is why our terms of reference always begin with the present government, what it has done, and how different our institutions and our nation must be six years from June 30, 2010.

In a small-scale operation it is easy for everyone involved to visualize that entity as the combination of their collective efforts. As opposed to, say, when you are a bigger firm, and there is the management side and there is the labor side. In Tagalog, it’s even more dramatic. Kayo at kami, sa halip na tayo.

We must find a unity that transcends the divisions of today, based on a shared commitment to transforming our country into one that works: One where traffic flows well, garbage is collected efficiently, crimes are solved, justice is served, and our kids are educated properly. It works in the sense that you do not have to flee the country to move up in the world, improve your lot in life, and rise to the highest level your personal merits can achieve.

We are a nation of sacrifice, of diligence, dedication and, idealism, because we are a people imbued with compassion even when we have officials who lie, cheat, and steal. Our faith teaches us that we are our brother’s keeper. Our logic should tell us that in taking care of others, their growth equals our own.

In the movie “Invictus,” Nelson Mandela says, “In order to rebuild our nation, we must exceed our own expectations.” It requires us to insist, always, that we are not a nation of crooks, of thieves, of murderers who get off scot-free and where justice is won by the highest bidder.

In May, you will be asked to make a choice. Will you choose transformation and change or will you choose to uphold the status quo?

We have already made our choice. Ours is a journey towards transformation. I ask you today to join us in this journey now.

Thank you.

[Archived from the official campaign web site of President Benigno S. “Noynoy” Aquino III]