fiscal management

SOCIAL CONTRACT MY [email protected]#!

The spending pattern of the PNoy administration in the first five months of the year reveals what its real priorities are; and it is not what you think.

Ben Diokno in his column for yesterday’s Businessworld analyzes the actual spending pattern of the government under its own budget for the first five months of the year and comes up with a very strange answer to the question that he poses:

Has government spending really improved as claimed by the Department of Budget and Management (DBM)? The answer is a mixed bag. For public spending that makes a lot of difference in job creation and poverty alleviation such as public works and social welfare, the answer is NO. For other social spending such as education and health there was a slight improvement. And for DPWH, DoH, DA, DSWD, and DoTC, actual public spending from January to May, appropriately measured, was only half of planned spending.

Surprisingly, it was spending for the military and police where actual spending has exceeded programmed spending — DND by almost half, DILG by about 20% (empasis added).

Now given everything that the president has said he would do from the campaign with his Social Contract, to his inaugural, to his first SONA, budget statement, right down to the Philippine Development Plan you could be forgiven for not thinking that the president’s first priority would be the military and police, but that is exactly what his spending pattern has shown.

Indeed, PNoy might have taken the lessons from his mother’s presidency to heart that you neglect the men in uniform at your peril. It is they after all who nearly toppled his mother’s regime several times after they found her to be pandering too much to the progressive movement. Aside from castigating the policy of forced disappearances citing the son of Joe Burgos, Jonas’s case, the president has for the most part stayed clear of any other pronouncements that would be seen as siding with the left.

In fact the president in his brief stint so far has managed to upset different institutions and sectors of our society including the opposition in Congress (that is understandable), the Catholic bishops as a result of the RH debate, labor unions by not vigorously supporting their cause on May Day, and the media (no, sorry the commentariat) by complaining that their coverage of his presidency has been skewed to his personal life.

For the military however the president has reserved the right to partake of the “first fruits” of his reforms to government spending by allocating the additional revenues amounting to close to 30 billion pesos generated by the now streamlined GOCCs to provide military housing and accommodation. This he proudly announced during the Independence Day celebrations.

Not that there is anything wrong with that. Soldiers do put their lives on the line for the country, and it is only fitting that they share in any proceeds of efficiencies generated by any reform. However, it appears that they alone have been singled out in PNoy’s first year to receive the reform dividend.

As highlighted by Diokno, education, agricultural support and social welfare are not picking up. Here’s what Diokno noted

DepEd has performed the best although it continues to spend below its programmed level. DA continues to spend less than half of its programmed budget, though improving. DSWD, contrary to claims that its disbursements has jumped impressively, continues to struggle in spending what Congress has authorized it to spend. The latter is meeting only half of its goals as of May 2011.

Given the start of the school year was in early June, it is dismal for the DepEd to be below its programmed level of spending as of the end of May. And also contrary to the statement by the Palace that the DSWD was on track to spend its allotted budget, the actual data seems to say otherwise. Perhaps Mrs Arroyo was right after all, that the absorptive capacity of this agency was not sufficient to handle the sudden surge. I can already hear her thundering through the chamber with the words, “I told you so.” Followed by an evil laugh MWAHAHAHAHA! AHAHAHAHAHA!

And as far as employment generating public works and infrastructure construction, these were the most badly savaged. Here is what Diokno found

The two infrastructure agencies — DPWH and DOTC — are stuck in their mediocre performance level. Faced with a sharply reduced infrastructure budget, DPWH’s ratio of actual to programmed spending remained unchanged at 0.53. For DOTC, the ratio barely moved, from 0.44 (January to April) to 0.45 (January to May).

…DBM further adds: “The DPWH also attributed the delay in project implementation to the influx of requests for realignments from regional and district offices and other stakeholders even after bidding activities had started, the magnitude of which was estimated to be more than 40% of the line-item projects released.” Incredible!

What happened to zero-based budgeting?

Indeed contrary to the claims by finance and budget officials that they had fast-tracked the release of project funds after the first quarter, the results do not seem to appear two thirds into the second quarter. The current pattern of spending is definitely not programmed, nor does it seem deliberate or intentional on the part of Cabinet. In a word, it means “chaos”.

If I were in charge, I’d be pressing the panic button yesterday!

This is truly appalling, and what it signals is the potential for the government to have significantly underspent its overall allocations by the end of the year given the high season of construction months to have passed it by. As a development planner, I shudder to think what this means for social welfare, investment, employment, livelihood and growth in the last two quarters of the year.

In a fortnight, PNoy’s first year in office will come to an end. There will be many statements released at that point from the Palace about his accomplishments. Unfortunately, if we inspect the financial statements as opposed to the spin doctored ones, we might come to a different conclusion from what they want us to have. If the first fruits of reform have gone solely to the military and police, then it demonstrates which institution the president holds most dear.

This reveals that far from repeating the instability suffered by his mother, PNoy intends to keep a close watch over the guardians of the state. And if that means abandoning the economic and social reform agendas temporarily or waiting for the fruits of reform to “trickle down”, then I guess what he is saying is “so be it.” Somewhere in the big blue yonder, I can hear the ghost of Don “Chino” Roces crying, “Social contract, my ass!”