A permanent solution to the broken budget System

02 October 2013

By Benjamin E. Diokno

… Recent events show what’s wrong with the present budget system. After almost a year of budget preparation (January to July) and budget authorization (August to December), the President may choose to reorder the budget and implement it any way he wants. In 2011, the President, acting on the recommendation of the Budget Secretary, created a P72.2-billion Disbursement Acceleration Program (DAP).

The DAP was the source of P1.1 billion in additional pork barrel a few months after the senators voted to convict former Chief Justice Renato Corona last year.

Except for four senators — Ping Lacson, Joker Arroyo, Pia Cayetano, Bongbong Marcos, and Miriam Defensor — all 20 senators received an amount ranging from P44 million (for Teofisto Guingona) to P44.5 million (for Koko Pimentel) to P92 million (for Juan Ponce Enrile) and P100 million (for Frank Drilon). The other senators each received P50 million.

Call it anything you want — a bribe, an incentive, or a reward — but clearly, this suggests that the market-clearing price of a vote convicting Corona is roughly P50 million. The congressmen who voted to impeach Corona got their own fair share. Mr. Abad has yet to reveal the list of congressmen who received the additional pork and how much.

Mr. Abad revealed that the additional pork came from DAP which was introduced in 2011 and reintroduced in 2012. Curiously, no such budget items exist in the General Appropriations Acts (GAA) of 2011 and 2012. It came about as a result of the almost limitless power of the President to slice and dice the GAA to generate large lump sums as a source of discretionary spending.

In a sense, this confirms the huge pork barrel at the discretion of the President. In 2011, as part of the P72-billion DAP, Mr. Aquino released an additional P10 billion to the National Housing Authority, P5.4 billion for the Department of Agrarian Reform, P8.6 billion for the Muslim Mindanao Autonomous Region, and augmented the Internal Revenue Allotments by P6.5 billion.

The preparation of the DAP was done at the inner sanctum of the Department of Budget and Management (DBM), away from the public’s eyes and definitely without the participation of members of Congress.

The following questions might be asked: How were the new budget commitments arrived at? Where did all these monies go? Who were the service providers? Were they chosen through competitive biddings? And who were the real beneficiaries?

For 2012, the DAP reemerged. Because the budget was not carefully reviewed by Congress as before and because project implementation was still slow, the President realigned and reshaped the budget so some new projects could be funded. Some of these projects were the Department of Tourism and the Department of Public Works and Highways (DPWH) projects (P5 billion), premium payments for teachers (P4 billion), Tulay ng Pangulo (P1.8 billion), rehabilitation of regional health units (P1.96 billion), the Department of Education’s public-private partnership for school infrastructure (P4 billion) and Bangko Sentral’s capital infusion (P20 billion).

Now, it is the Commission on Audit’s responsibility to find out how these pork barrel funds — congressional and presidential — were allocated and disbursed. Was the money spent well, leaked out with the help of some corrupt NGOs (not necessarily Napoles’), or did it end up in the pockets of some legislators?

Most Filipinos, especially those who pay their taxes diligently, are furious at their leaders for misallocating, misusing, and directly partaking of their taxes.

There is hope. But only if the Aquino administration will act on some real budget reform proposals like the Budget and Impoundment Control bill and the Freedom of Information (FOI) bill. He should also commit to strengthening the budget review staffs of both Houses of Congress.

But there are reasons to despair, too. First, the President has shown his willingness to defy the overwhelming public outcry against the pork barrel. He appealed to the Supreme Court for the lifting of the TRO on the release of the balance of the Priority Development Assistance Fund for 2013.

Second, his allies in House of Representatives are equally defiant and totally unresponsive to people’s preference. The House passed the P2.268 trillion President’s Budget for 2014 with the P25.4-billion pork barrel intact — hidden in the budgets of various departments, the bulk of which will go to DPWH. The Department of Health and the Department of Labor will each get P3.69 billion, while the Department of Social Welfare and Development will receive P4.71 billion.

The Department of Education will receive an additional allocation of P1.02 billion, while the Commission on Higher Education will get P2.67 billion for scholarship programs.

The redeployment of the budget from PDAF to line ministries is illusory. But it doesn’t fool the general public. In practice, there is no guarantee that these new line items will be released by Malacañang. Under existing budget rules, the President retains his power to cherry pick, to choose which budget item to release and which to withhold.

Third, the President refuses to integrate into the regular budget the following off-budget sources of revenues: the P130-billion Malampaya Fund, the P12.5-billion motor vehicle users’ charge, the Philippine Amusement and Gaming Corp. social fund and the Philippine Charity Sweepstakes Office’s charity fund.

The current pork barrel controversy, and the perceived and real abuses of the presidential power to disburse, have given President Aquino III a rare opportunity to permanently fix the flawed budget system. Such opportunity, if seized, will strengthen the weak political institutions. Otherwise, elections will forever be available only for the rich and Congress will forever be subservient to Malacañang.

It would be a monumental tragedy if Mr. Aquino would let this opportunity to fix what’s wrong with the budget system go to waste.

Dr. Diokno is Professor of Economics at the U.P. School of Economics and was Secretary of Budget and Management.

Posted in money, pork barrel

6 Responses to A permanent solution to the broken budget System

  1. October 7, 2013 at 2:39 am
    GabbyD

    so here’s my whole confusion about the “bribe” issue.

    Corona verdict: Only three voted to acquit Corona and they were Senators Joker Arroyo, Miriam Defensor-Santiago and Ferdinand “Bong-Bong” Marcos Jr.”

    and dap was given out here: “Except for four senators — Ping Lacson, Joker Arroyo, Pia Cayetano, Bongbong Marcos, and Miriam Defensor ”

    so, there is no real matching to the VOTES and the DAP. how do we know that it was bribery that caused the aquittal?

  2. October 8, 2013 at 1:38 pm
    john c. jacinto

    wala namang ebidensya na kinausap ni PNoy ang mga senador at pinangakuang bibigyan ng karagdagang pork barrel (DAP) pag bomoto sa pagpapatalsik kay corona. teka nga pala, di ba gusto naman nating mapatalsik si corona dahil deep within ay alam nating guilty siya?

    • October 8, 2013 at 2:00 pm

      kahit pa guilty talaga, kung guilty talaga, nakakailang na kinailangang makiusap pa di-umaano si pnoy sa mga senador…

  3. October 8, 2013 at 2:38 pm
    john c. jacinto

    kuwentong kutsero lang po yung sinulat ni dante ang.

  4. October 8, 2013 at 4:17 pm
    john c. jacinto

    nagiging ulyanin na kasi si mang joker, ni hindi na niya natandaan na siya mismo humiling para pondohan ang ilang proyekto para sa mga kababayan niya sa bicol. but even assuming that DAP funds were released as a form of “incentive”, or “suhol” for the senators who voted for corona’s removal (which was laudable and legally warranted), did anyone from the Liberal Party senators pocket the money?

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