A “REFORM” BUDGET FOR 2011?

• Boiled Green Bananas
• BUSINESS MIRROR
• December 30, 2010
• By Liling Magtolis Briones

Last December 27, 2010 Pres. Aquino signed the 2011 National Budget into law. The budget was presented as a “reform” budget amidst cheers from the DBM, administration stalwarts in Congress and the Senate, as well as mixed reactions from media, civil society and the public.

What reform?

The 2011 budget has two features which are cited as justification for calling it a “reform” budget.

The first is that it was signed into law before the end of the year. The present administration deserves to be commended for the timely passage of the 2011 budget. Worries about a reenacted budget and all its attendant evils were laid to rest.

The second feature is the much vaunted use of zero-based budgeting as a basis for increasing or decreasing or even eliminating budget allocations. As pointed out earlier, ZBB was first introduced during the Martial Law rule of the late Pres. Marcos. It is a tool for ranking proposed budget allocations in terms of their responsiveness to the current priorities of the government.

During Marcos’ time, helped that Marcos was a dictator and the DBM could cut and reduce budget allocations as it pleased. For all the hoopla attending ZBB, it had only limited application to the 2011 budget.

First, there was time limitation—hardly two months before the budget proposal could be submitted to Congress. Second and more important, not all items—especially the biggest items– could be subject to ZBB. Special Purpose Funds, lump sum appropriations, automatically appropriated items like the debt service, could not be ranked by ZBB. Thirdly and most important, as a tool for ranking and rating budget allocations, a national plan has to be the basis or framework for ZBB. In the case of the Philippines, it is the Medium Term Development Plan or the MTPDP. It must be pointed out that the budget was completed before the MTPDP. We now have a case where the budget is leading the plan. In other words, what we have is the cart leading the horse.

Where are the reforms?

It must be recalled that the present administration used to be the opposition. The opposition exposed all the flaws and the shennanigans in the budget process during the past administration and even filed bills to correct these practices.

What were these budget reforms demanded by the then opposition (now administration)?

Down with lump sum appropriations! This was the battle cry then. So what happened to the lump sum appropriations? Instead of decreasing, they have increased. The national expenditures program originally proposed to Congress had over Ph94 billion in lump sum appropriations. It seems that the battle cry of the 2011 budget is Up with lump sum appropriations!

Is the CCT (Conditional Cash Transfer) the solution to poverty? Judging by the blare of trumpets and hymns of ecstatic praise, it appears that the Conditional Cash Transfer Program is the centerpiece of the national budget. As such it has been attacked from all quarters—civil society, media, academics, and members of Congress.

CCT is considered so important that the original Ph5billion allocation of former Pres. GMA has been quadrupled to Ph21 billion and the budget of the DSWD doubled.

The CCT budgetary allocation is double that of the entire budget of the DENR. For all the talk about climate change, loving the environment and doing something about the “inconvenient truth”, the reality is that one program allocation is double that of a major department.

Miraculously, after expensive vitriolic debates in both houses on the vulnerabilities of CCT, it emerged intact, unscathed and untouched when the budget was finally signed. Many are wondering: how much did it cost the administration to protect CCT from the clutches of both houses of Congress? What happened during the last hours—or is it early morning hours –when Congress finally passed the CCT? What happened in the Senate? And most curious of all: what happened during the Bicameral Committee meetings to which the public is not privy?

The merits and demerits of CCT have been discussed. It must be admitted that both the Lower House and the Senate have exposed serious flaws in the program. Social Watch Philippines has a position paper on the CCT. It is clear that giving away cash will not solve poverty. Jobs will.

One of the main requirements of an effective CCT plan is a clear exit strategy.

Once the government starts giving away money to people, they will get used to it and expect the government to give it to them permanently. Obviously, non-stop CCT is not sustainable especially since the government is piling up deficits and revenues are not enough. An exit strategy is obviously needed. Is there one?

What I know is that the World Bank has announced that in 2012 the CCT program will be expanded even more.

LIMIT THE NON-RELEASE OF LEGITIMATE APPROPRIATIONS AND THE CREATION OF FALSE SAVINGS!

This was another battlecry during the bad old days of the GMA administration. GMA was accused of not releasing legitimate budget allocations, labelling them as “savings” and transferring allocations to other programs and so on. For one year alone, she was accused of accumulating over Ph100 billion and transferring these to preferred agencies.

In the 2011 budget the President vetoed a provision on the use of savings from the CCT program, claiming sole executive power over savings. So what is new? Thus with the 2011 budget, the battle cry is “continue full executive control over the creation and release of savings.”

HOW ABOUT THE DISTINGUISHED “THIRD CHAMBER”?

When I was a graduate student in U.P. 50 years ago, the Bicameral Committee was referred to as “The Third House.” It has become more distinguished through the years and is now respectfully referred to as “The Third Chamber.”

As former opposition, the present administration used to decry the utter lack of transparency in the proceedings of the Bicameral Committee which reconciles the House and Senate versions of the budget. There are no minutes of the meeting and it is nigh difficult to trace who initiated last minute changes in the budget.

The situation has worsened. Only the respective chairmen of the two houses meet after dealing individually with interested legislators. The veil of secrecy has not been lifted even with the “reform” budget.

CHALLENGES IN THE IMPLEMENTATION OF THE 2011 BUDGET

The major challenge in the implementation of the 2011 budget is monitoring. Since it is laden with special purpose funds, lump sum appropriations, automatic appropriations and all sorts of features which cannot be penetrated by the magic sword of ZBB, media, civil society and the public have to take up the challenge of monitoring actual implementation.

Where are the entry points for public participation and monitoring in the budget?

1. While the year 2010 is already ending and 2011 will commence in two days, there are still areas open for the public to monitor. For example, the books of accounts will not be closed exactly on December 31. Usually, adjustment entries have to be made before accounting books are finally closed. I know of instances when releases of checks continued well into February of the following year! This explains the long line of legislators who queue at the DBM during this period.
   It will do well for the public to monitor these last-minute releases which could run to hundreds of millions of the people’s money.
2. As for 2011, DBM has already announced that projects will already be front loaded and funds released. This is a rich area for public monitoring and budget tracking.
   Networks like Social Watch Philippines have member organizations which monitor programs in education, health, environment and agriculture. Locally based organizations can monitor projects implemented in their own localities.
3. There is the upcoming challenge of the 2012 budget which DBM is already starting to prepare. Yesterday, DBM convened a round of consultations among various departments and civil society organizations. Participating agencies include the Departments of Health, Agriculture, Education, Public Works and Highways, and Social Work and Development. The event is a precursor of more opportunities for public participation in the budget process.

The budget process is not the exclusive turf of one department. Budget preparation requires the strong hand of the president, especially in the identification of priorities. These have to be discussed and debated strongly in the Executive. The public has to be consulted in the determination of such priorities.

Budget debates are generally associated with the legislature. The budget only comes to the attention of the public when the documents are submitted to both houses of Congress. The crucial process of budget preparation is largely unnoticed by the public.

The budget is too important to be left to the government alone. More than ZBB, there has to be people participation. After all, the budget is the articulation of what a country wants for itself, where it wants to go, and what kind of development it aspires for the people. This is what governance is all about. Seriously.

Source:

http://www.up-ncpag.org/main/news/faculty-articles/63-faculty-corner/112-a-reform-budget-for-2011.html