Download Govt cutting lean meat, not fat - Philippine Institute of Development

Analysis:
Govt cutting lean meat, not fat
By Arnold S. Tenorio, Assistant Business Editor, The Manila Times
THE clamor for a reduction, if not removal, of pork-barrel funds in next year’s budget
is getting louder.
As anticorruption crusaders feed the frenzy, some legislators have joined the chorus
while deflecting criticism toward the executive, which, they say, should also shed
some of its own fat.
But what has been left unsaid in the hubbub over pork is that the planned cuts will
purge little fat, if at all.
In its submission to Congress, Malacañang has proposed a 40-percent cut in the
Priority Development Assistance Fund. From P8.327 billion this year, the PDAF alone
was slashed to P6.1 billion in next year’s budget.
The other major source of pork, budget officials said, involves lump-sum funds
meant for the Department of Public Works and Highways.
In next year’s proposed budget, the DPWH’s capital outlay amounts to P38.720
billion, slightly higher than this year’s P37.448 billion but lower than 2003’s P46.177
billion.
Observers have welcomed Malacañang’s pork-cutting exercise, thinking that what’s
trimmed off from lawmakers’ “allocation” would land on people’s plates in the form of
more public services.
Pork cut no mere juggling
What the executive has failed to amplify, however, is that the 40-percent cut
involves no mere juggling, but a reduction altogether of next year’s budget.
Contrary to popular belief, the excised amount won’t be tucked away in some
underfunded program for the benefit of the poor. It’s literally gone, budget officials
admit.
Even as the debate rages on the merits of a pork cut, the Department of Budget and
Management rules provide that the items on which PDAF may be spent cannot be
dismissed as a waste of taxpayers’ money.
Gone are the days of pork-barrel allocations for building basketball courts and
waiting sheds. Based on DBM’s National Budget Circular 479, the PDAF can be used
only for items such as roads and bridges, flood control, water supply, postharvest
facilities, piers and ports, rural electrification, irrigation, scholarships, hospitalization
benefits, emergency employment and livelihood projects.
A similar menu of infrastructure items prioritized by the DPWH also guides the use of
lump-sum funds falling under it. Budget officials said the circular would be revised to
tailor-fit the items listed under President Arroyo’s 10-point program.
Discretionary funding declining
Public finance experts agree that government’s discretionary spending, or that part
of the budget that goes to building roads, classrooms and hospitals, has been
shrinking over the years. People have to get by with shorter roads for transporting
their produce, fewer schools for improving their children’s chances of finding future
work, and meager facilities for ensuring their resistance to disease.
Public spending since the Asian financial crisis has stagnated at around 19 percent of
the national income, according to Rosario G. Manasan, senior research fellow at
state-run Philippine Institute for Development Studies.
This means government is spending only P19 to help the economy cough up P100 a
year. Whether this would allow the economy to expand between 5.3 percent and 6.3
percent next year remains to be seen.
Comparing expenditure shares of education and health alone, the Philippines trails
behind some of its neighbors with only 3.2 percent and 1.5 percent, respectively, of
the national income, according to the United Nations Development Report 2004.
Thailand and Malaysia are doing better, allotting 5 percent and 7.9 percent for
education, and 2.1 percent and 2 percent for health.
Philippine capital spending is expected to account for only 2.1 percent of the national
income this year and 2.5 percent next year. Debt servicing, meanwhile, would eat up
a bigger 5.8 percent of the national income this year and peak at 5.9 percent next
year.
Indeed interest payments have grown the fastest in the public spending bill, from 3.2
percent of the national income in 1997 to 5.2 percent in 2003—and that’s the
government’s obligations alone, according to Manansan.
Data from the DBM show that the proposed 2005 budget of P907.6 billion is only 0.8
percent higher than that of this year. If interest payments were discounted, next
year’s budget would actually be 1.8 percent smaller.
In terms of expenditure share, interest payments as a sector would eat up a little
more than 34 percent of next year’s budget. Social services would get only 28
percent, followed by economic services, 17.5 percent; general public services, 15.5
percent; and defense, 4.9 percent.
Spare capital outlay
Experts said that if cuts must be made, budget authorities should spare the capital
outlay of line agencies.
What could be reduced or eliminated are the subsidies for fiscally autonomous
government corporations, according to Leonor M. Briones, former national treasurer
and professor at the University of the Philippines National College of Public
Administration and Governance.
In condemning pork, crusaders bewail the sums of taxpayers’ money lost to
corruption, as contractors scrimp on supplies and other expenses to make up for the
kickbacks they gave to lawmakers.
Experts said the issue is not the pork barrel itself, but how it is used. The point is not
to lose the pork altogether, but to reform the way it’s dispensed, Briones said.
Therefore, efforts such as the DBM’s shortlist of acceptable projects aimed at limiting
the menu of items on which pork can be spent are a step in the right direction.
But no amount of budgetary guidelines would minimize waste from pork if citizens
don’t watch where their congressmen and mayors spend their pork barrel and
internal revenue allocation, says Briones, one-time head of Freedom from Debt
Coalition, a nongovernment watchdog.
Judging from the slew of reportage on public waste, a lot of work remains to be done
in the area of organizing a vigilant citizenry, she says.
In this regard recent public interest in pork and public finance issues may not be
enough to keep a lid on waste.
Indeed Malacañang’s plan to reduce the pork has only whetted the public’s appetite
for more cuts. Legislators are having their comeuppance, and the public could say
it’s their just desserts.
What the furor over pork has drowned out is the fact that that piece of ham belongs
to the people, and officials are slicing far beyond the fat and into lean meat.
SOURCE: The Manila Times, 13 September 2004