Poverty, SONA 2012

Sona 2012: Aquino’s failure to ease poverty and provide social services

Deceptive. How can the CCT ease poverty when the program’s beneficiaries are being driven away by big business? (Photo from Bulatlat.com)

Part III: Reviewing Aquino’s “Social Contract” and performance

Read Part I: On job creation here

Read Part II: How the rich is getting (scandalously) richer here

Two of the most important commitments Aquino made in his so-called Social Contract are the provision of social services, specifically education and health; and poverty reduction. To review, Aquino promised to make education the central strategy for investing in the people, reducing poverty and building national competitiveness. He also vowed to advance and protect public health as a key measure of good governance and not as a tool for political patronage. Finally, he pledged to reorient Arroyo’s anti-poverty programs that instill a dole-out mentality to well-considered programs that build capacity and create opportunity among the poor and marginalized.

In the run-up to the President’s third Sona, Malacañang has been pretty aggressive in its propaganda on how the administration is supposedly addressing the basic needs of the people. The new budget proposal of government for 2013, for instance, is being packaged as empowering the marginalized, with significant increases in the allocation for basic social services and bigger conditional cash transfer (CCT) budget. Government has also been advertising economic growth as inclusive, with the supposed benefits being felt by everyone.

Gradual improvement?

The administration’s propaganda is being propped up by what it makes appear as favorable results of recent SWS surveys on poverty and hunger. In its second quarter survey, the SWS reported that the number of families who consider themselves poor dropped to 10.3 million or 51% of the total from 11.1 million or 55% in the first quarter. During the same period, the number of families who experience involuntary hunger declined to 3.8 million or 18.4% from 4.8 million or 23.8 percent.

Presidential spokesman Edwin Lacierda was quick to credit the administration for this, claiming that the improvement was due to “programs on inclusive growth, education, public health and anti-corruption”. Another Malacañang mouthpiece, Secretary Ricky Carandang, credited the CCT program for the “gradual improvement”.

Steady deterioration

But what trends show is not gradual improvement but steady deterioration in poverty and hunger under the Aquino administration. In 2010, poverty averaged 48% among Filipino families; it then went up to 49% in 2011 and this year is averaging 53% (including the last SWS survey). Likewise, hunger steadily increased from 19% (2010) to 20% (2011) and to 21% (2012). In the last nine SWS quarterly surveys, which cover the Aquino presidency, poverty breached the 50%-mark and hunger breached the 20%-mark in five of the nine quarters. Also, hunger under Aquino is now twice the level during the Estrada administration due to the accumulated impact of flawed economic programs and policies, which failed to address poverty and hunger.

Such steady deterioration in poverty and hunger is happening amid the massive expansion in the coverage of and spending for the ballyhooed CCT program of the Aquino administration. Between 2009 and 2012, the number of CCT beneficiaries ballooned from 594,356 households to more than 3 million (or an enormous 407% increase); the national budget for CCT during the same period also swelled from ₱5 billion to ₱39.4 billion (or a whopping 688% hike). CCT is not only failing to make a dent in poverty and hunger, it is also helpless in even slowing down their further worsening.


Despite repeated statements by the Department of Social Welfare and Development (DSWD), the agency in-charge of the program, that the CCT is not a stand-alone initiative and is being complemented by longer-term and sustainable poverty alleviation interventions, the truth is the CCT is the only program of government to supposedly fight poverty. Aside from providing direct but temporary cash assistance, the conditionalities imposed by the CCT on beneficiaries are also purportedly meant to improve the basic health and education situation in the country. To continue receiving the maximum ₱1,400 a month, a beneficiary-household’s children and pregnant women must attend health centers and posts to get regular preventive health checkups and immunizations. Children must also enroll in schools and attend more than 85% of school classes.

But a look at measurable indicators, like those being monitored by the National Statistical Coordination Board (NSCB) on Philippine social development commitments to the Millennium Development Goals (MDGs), would show that the country continues to fail to attend to the most basic health and education needs of the people. In particular, it is failing in reducing the maternal mortality rate, reducing the prevalence of underweight children under five years old, increasing the completion rate in elementary level, increasing the enrollment rate in secondary level, and improving the results of achievement tests in the elementary and secondary levels, among others.

The reason is that while the Aquino administration intends to instantly improve the coverage of public health and education in the country through the CCT, it does little to ensure the sustained and greater access of the poor to these services. While government is hyping the supposed increases in the budget allocation for basic social services in the past two years, as well as in its 2013 budget proposal, in reality the urgent social services needs of the people remain largely unaddressed and resources allotted remain significantly insufficient.

Neglecting health

Under the 2012 budget, for instance, allocations for 23 state-owned specialty and regular hospitals nationwide were pinned to their 2011 levels despite growing requirements while those which increased their operation and maintenance funds were still unable to recover the huge cuts they had in the past. Further, the Coalition on Health Budget Increase (CBHI) also reported that the state subsidy to indigent patients for confinement or use of specialized equipment has been completely scrapped by the administration.

Another major initiative of government to supposedly improve access to health and complement the CCT is universal healthcare through the country’s national health insurance program (NHIP) being implemented by the Philippine Health Insurance Corp. (Philhealth). This year, Philhealth saw its budget jump by 244% from its 2011 level and in the 2013 budget proposal, it will receive ₱12.6 billion, or almost ₱600 million bigger than its 2012 budget. But as pointed out by the CBHI, Philhealth does not ensure affordable and accessible health services since it is restricted by a budget ceiling for particular health and illness. In addition, the acute need for medicine, supplies and equipment in public hospitals forces beneficiaries to shoulder the expenses for such needs while those in far flung areas, where majority of the poor live, could hardly find Philhealth-accredited hospitals.

Further, the total budget proposed for the Department of Health (DOH) next year is only ₱56.8 billion. Although ₱11 billion higher than its 2012 budget, the said allocation is just a fraction of the ₱243.5 billion that the sector needs to cover the costs of public health care delivery system, health human resource maintenance and development, and preventive and public health programs and promotion, based on initial estimates by the Health Alliance for Democracy (Head).

Insufficient education facilities

The same thing is true with basic education, which despite the seemingly large increases in budget allotment still remains wanting in resources. Estimates by the Alliance of Concerned Teachers (ACT) said government needs to allocate ₱96.5 billion to meet basic inputs for education such as classrooms, chairs, textbooks and water and sanitation facilities. As of School Year 2011-2012, the estimated gross shortages of classrooms reached almost 153,000; school seats, more than 13,000; textbooks, almost 96,000; sanitation facilities, more than 151,000; as well as teachers, almost 104,000, according to the Department of Education (DepEd). But in the 2013 budget proposal of Aquino, allocation for basic educational facilities is pegged at only ₱25.3 billion, which despite increasing by almost ₱9 billion from its current budget is still a meager amount compared to the estimated actual and urgent needs of the sector.

Worse, the DepEd has decided to push through with its controversial K+12 program despite strong public opposition. The program will add two more years to the country’s basic formal education that is presently a 10-year program. Among other impacts, the K+12 program means additional costs for poor families while further stretching the already tight budget for public education. All this means that children of CCT beneficiaries are not assured of completing basic education (which the DepEd prolonged under the K+12 scheme nor accessing quality education (due to perennial shortages in public school facilities and teachers that the national budget could not cover).

The lack of sufficient budget for education and health is being used by the Aquino administration and its allies to justify PPP initiatives in the said sectors such as the proposed corporatization of 26 public hospitals and PPP contracts to build 10,000 to 30,000 classrooms. But this further contradicts the stated objectives of CCT to improve access to health and education as fees tend to rise with private contractors passing the full costs to the public, on top of their own profits.

Displacing the poor

The deception of the CCT is further exposed by government’s treatment of urban poor communities, where many of the beneficiaries live. Because of its centerpiece economic program, the PPP, large areas of urban poor settlements are being demolished or in several cases, set on fire. Peasant, fisherfolk and indigenous communities, who are the poorest of the poor, are also being physically and economically displaced by PPP and mining, energy, plantation and other destructive projects that the Aquino administration has been promoting. How can the CCT ease poverty when the program’s beneficiaries are being driven away by big business?

In the National Capital Region (NCR) alone, the Demolition Watch reported that some 16,000 families in 20 urban poor communities have already been displaced in the first two years of the Aquino administration. The Bagong Alyansang Makabayan (Bayan) – NCR said that the region hosts some 14 large PPP projects, including business districts and parks, port privatization, etc. which could displace as much as 1.4 million poor families.

Aggravating the condition of the urban poor is, like in the case of health and housing, state budget on housing is utterly lacking. Despite the seemingly huge increase in the housing budget for 2013 – from ₱6.1 billion to ₱16.13 (excluding the housing bduget for military and police personnel) – the amount still pales in comparison with the estimated requirement of ₱69 billion for the country to meet a portion of its 3.6 million housing backlog and at least be at par with the housing spending of its neighbors in Southeast Asia, based on preliminary calculations by think tank Ibon Foundation.

Right to decent living standard

Aquino has been massively expanding the scope and budget of the CCT despite the fact that it is not clearly contributing to sustained poverty reduction, not to mention that it is funded by $805 million in growing foreign debt from the World Bank and Asian Development Bank (ADB) that has long been debilitating the economy and depriving the poor of much needed social services. One of the biggest reasons why government could not provide adequate education, health, housing and other basic services is because public resources are being siphoned off by debt servicing, which under Aquino has already reached an all-time high of more than ₱60 billion a month.

Access to health and education, and the right to a decent standard of living including the provision of adequate shelter are basic human rights. This means that the government must work towards the creation of an environment that makes freedom from hunger and poverty, and universal access to social services possible, which includes reliable and sufficient livelihood opportunities for all families and the allocation of adequate resources for quality public schools, hospitals, health facilities, and housing services.

Requiring some poor Filipino families to send their children to school and health centers so that they can access CCT money promotes a dole-out mentality and is a distortion of the concept of human rights. It also distorts human right to health and education and to a decent standard of living by creating temporary access for a targeted portion of poor families while using the conditional cash grants as a smokescreen for the defective policies that push an increasing number of Filipinos to hunger, ignorance, and poverty such as the PPP and other programs that benefit only the rich. (End)


PH economy in 2011 (Part 1): Flawed development plan

There is nothing in the 400-page Philippine Development Plan (PDP) 2011-2016 that could create the conditions for inclusive growth as it adheres to the same flawed development paradigm of neoliberal globalization (Image from the NEDA)

First published by The Philippine Online Chronicles

The political noise generated by the showdown between Malacañang, the Arroyo camp, and the Supreme Court (SC) towards the end of 2011 drowned concerns on the anemic performance of the economy. Critics of President Benigno S. Aquino III even argue that the energy of government is being spent too much on going after Mrs. Gloria Arroyo. Consequently, they said, important issues like the slowdown in economic growth are left unaddressed. The most rabid allies of Arroyo even go as far as claiming that Aquino is reversing the supposed gains achieved by the economy during the previous administration.

However, the deteriorating economic performance and social conditions are not simply the result of Aquino’s mismanagement as often alleged by critics and the political opposition. Much of it is due to the lack of real policy reforms that can shift the course of the economy from that taken by Arroyo and previous governments. This has been the underlying reason behind Aquino’s continuing failure to turn the economy around and improve the lot of our people.

Inclusive growth?

In March, the Aquino administration approved the Philippine Development Plan (PDP) 2011-2016 which details the policies and programs that it intends to pursue throughout its term. Supposedly, the primary aim of the plan is inclusive growth that is unlike the trickle-down and jobless growth the economy had in the past. To achieve inclusive growth, the PDP promotes good governance and anti-corruption that are expected to create massive job opportunities and reduce poverty.

But aside from being couched in good governance and anti-corruption rhetoric, the PDP does not offer anything substantially different from past medium-term plans. There is nothing in the 400-page document that could create the conditions for inclusive growth as it adheres to the same flawed development paradigm of neoliberal globalization. Like its predecessors, Aquino’s PDP is skewed towards building the most favorable environment for profit-seeking foreign business and their local partners.

Even the much ballyhooed good governance campaign of the administration has been reduced to issues that affect investment decisions and cost of doing business in the Philippines, including the enforcement of contracts and competition measures. Such pro-business environment could only come at the expense of the toiling masses and other oppressed sectors including small Filipino industries.

To conceal the bankruptcy of globalization policies like its centerpiece program public-private partnership (PPP), Aquino is scaling up the foreign debt-funded conditional cash transfer (CCT) scheme. According to the PDP, the CCT “shall be the cornerstone of the government’s strategy to fight poverty.”

By insisting on a development model that depends on unreliable external sources of growth mainly from the US and other advanced capitalist countries, Aquino’s PDP is oblivious to the glaring failures of past medium-term plans and the lessons of the ongoing global crisis. Since 2008, many developed countries have been implementing protectionist measures, which for the PDP, are “policies that distort competition” and “are the main impediments to growth.”

For big business

To achieve inclusive growth, the PDP has set a target of an annual expansion in the real gross domestic product (GDP) of 7-8% and an annual net employment increase of one million jobs from 2011 to 2016. The PDP aims to do this by promoting what it described as areas with “the highest growth potentials and generate the most jobs.” The PDP listed them as tourism; business process outsourcing (BPO); mining; agribusiness and forest-based industries; logistics; shipbuilding; housing; electronics; and infrastructure.

It is not by chance that these are the same priority areas being lobbied for government promotion by the Joint Foreign Chamber of Commerce of the Philippines (JFC) to supposedly increase investment and create jobs in the country. The JFC is composed of the chambers of commerce of the US, Japan, Europe, Canada, Australia-New Zealand, and South Korea as well as the Philippine Association of Multinational Companies Regional Headquarters.

This underscores how medium-term plans, including Aquino’s PDP, are shaped not by the specific development needs of the country and its people, but by the particular interests of outside investors forever looking for the most profitable means to cash in on the domestic economy. Filipino micro, small, and medium enterprises (MSMEs), on the other hand, are still reduced to mere adjuncts of foreign business and exporters, and not as dynamic players in domestic production.

The PDP’s priority areas are long held as supposed drivers of growth and employment but have until today continued to fail to induce sustained economic growth, much less address the chronic job scarcity and reduce poverty. They fail because while they may attract some capital and create some jobs, they are not anchored on any long-term national industrialization plan that promotes and relies on domestic production and consumption. They have always been driven by what is profitable for foreign investors and what meets the appetite of the global market, specifically of the developed world.

This has been the case, for instance, in foreign-dominated extractive industries like mining, agribusiness, and forestry which have only plundered the country’s natural wealth to satisfy the need for raw materials of advanced capitalist economies. Export-oriented manufacturing, including electronics, has only exploited cheap Filipino labor and has no significant linkages to the domestic economy. The fast rising BPO industry, meanwhile, is also illustrative of how “growth” has become detached from the specific requirements of the domestic economy as it caters to First World industries and produces jobs that are alien to most unemployed Filipinos.

Labor export

Whether or not these industries could help generate a million jobs a year remains to be seen, but as it is, the target is too modest for the promised economic growth under the PDP to be inclusive. Job scarcity has been at its worst since the past decade, mitigated only by the growing export of overseas Filipino workers (OFWs). In 10 months this year, the country has been deploying 4,441 OFWs every day, higher than last year’s 4,214.

And as if an implied admission of the absence of a comprehensive program for domestic job creation, the PDP endorsed labor export as a policy, defining employment generation as “all forms of employment… whether at home or abroad.” On top of mitigating the jobs crisis, labor export, said the PDP, has also become a steady source of foreign exchange and capital, and help fuel domestic consumption. These are the supposed “benefits” of labor export that the Aquino administration is unwilling to forego and instead pursue through strong domestic job creation. But aside from the incalculable social dimension of forced labor migration, labor export is also anti-development in the long run as the domestic economy is deprived of invaluable human resources.

Justified by its stated goal of creating jobs, the PDP is explicit in its intent to promote the interest of corporations. At the same time, it is silent on the quality of jobs that it intends to produce or in particular, how the rights and welfare of workers will be safeguarded and advanced. Due to the single-minded purpose of the PDP to attract more foreign investment to generate jobs, it is likely that the ongoing assault on workers’ rights to job security, to unionize, and to receive wages that allow for decent living, among others will continue and worsen. Under the PDP, tripartite councils shall be strengthened to ensure “industrial peace”, often a euphemism for subverting workers’ resistance, instead of the government assuming a more proactive role in defending the rights and welfare of wage earners.

Infra for profits

As envisioned in the PDP, infrastructure development will serve the overall goals of inclusive growth and poverty reduction in two major ways – first, as a priority area for private investment and as a producer of jobs; and second, as support to economic sectors and as a provider of equitable services, including housing, health, and education. At the heart of government’s efforts to accelerate infrastructure development is the PPP scheme, thus ignoring the decades of harmful experience under privatization. PPP first became a national policy through the structural reforms imposed by the International Monetary Fund (IMF) and the World Bank in the late 1980s during the first Aquino administration.

The case of privatized water and power infrastructure is most telling; private investors are assured of profits through over-generous and anomalous incentives and even bailouts, which exacerbated the fiscal burden of government. User fees have also gone up excessively to the great detriment of consumers especially because the target of privatization has been the basic infrastructure like utilities. These are the sorts of problems that the PDP will aggravate with its avowed promotion of PPP. Under Aquino, the fees at the country’s toll roads have already hugely increased while similarly exorbitant fare hikes face commuters of the LRT and MRT.

Meanwhile, the administration is also proposing specific amendments to the Build-Operate-Transfer (BOT) Law or Republic Act (RA) 6957 (as amended by RA 7718) to set the legal basis of the so-called regulatory risk guarantee. The said guarantee will oblige government to shoulder the “losses” of a PPP investor in case a local court, regulator, or Congress stopped it from imposing a questioned user fee. These issues easily offset whatever economic gains the country gets from additional and improved infrastructure. Worse, even the supposed economic gains are suspect. Due to the flawed neoliberal framework of the PDP, infrastructure development will merely serve the narrow profit agenda of foreign business and their local partners instead of helping lay down the foundation for genuine national industrialization.

Dole and smokescreen

Finally, the PDP has also set “social development” among its agenda, and will “focus on ensuring an enabling policy environment for inclusive growth (and) poverty reduction.” One of the main strategies to meet the social development component of the PDP is the provision of CCT to the poor.

Under Aquino, the scope of the CCT has been expanded tremendously and the program that Arroyo started with just several thousand beneficiaries in 2007 now intends to cover 4.3 million households by end of the PDP. For 2012 alone, the CCT program targets 3 million households with a proposed budget of P39.5 billion (from just P10 billion in 2010). This massive expansion in scope and budget is not backed by any thorough assessment on whether the program has actually contributed to sustained poverty reduction, not to mention that it is funded by $805 million in growing foreign debt that has long been debilitating the economy and depriving the poor of much needed social services.

As it is, even the target of 4.3 million households is still just a fraction of the ever growing population crippled by joblessness or lack of livelihood amid ever rising cost of living – social ills that ironically are being aggravated by the same globalization policies of the PDP. With the absence of programs that can produce long-term, productive jobs, and address the structural roots of poverty such as implementing genuine land reform and dismantling the neocolonial economy in favor of national industrialization, the CCT at best, could only provide temporary dole to a small portion of the poor. For Aquino, the CCT’s best purpose is to smokescreen the failed neoliberal policies of past Philippine development plans in order to justify the present. Meanwhile, questions on the CCT program have also been raised recently by the Commission on Audit (COA), which found out that cash allowances had been provided to families who are not qualified beneficiaries. #

To be continued (read here)

Economy, Fiscal issues, Privatization

Aquino’s 2012 budget: Diretso sa tubo (Part 2)

Aside from creating more profit-making opportunities for private business through the PPP, the 2012 budget is also focused on creating the most favorable conditions for investors. (Photo from mylot.com)

First published by The Philippine Online Chronicles

Continued from Part 1

To fund his Public-Private Partnership (PPP) initiatives, President Benigno S. Aquino III is proposing in his 2012 budget an amount of P8.6 billion for the Department of Transportation and Communications (DOTC) and another P3 billion for the Department of Public Works and Highways (DPWH). The said amounts are for the various PPP ventures of the two agencies, including for the preparation of business cases, pre-feasibility and feasibility studies.

Aquino has tasked the DOTC and DPWH to implement his first 12 PPP projects. PPP Center data show that the DOTC is handling eight projects worth P95.3 billion for the privatization and expansion of the light rail transit (LRT) and metro rail transit (MRT) and another P16.7 billion for the privatization and development of airports in Bohol, Albay, Palawan, and Puerto Princesa. On the other hand, the DPWH is in charge of four projects worth more than P44.9 billion for expressway projects in Luzon.

These projects are on top of the numerous other PPP initiatives that will be handled by the DOTC and DPWH under the medium-term plan of the Aquino administration.

Another major recipient of the 2012 PPP support fund is the Department of Agriculture (DA), which will receive P2.5 billion for right of way, infrastructure, and other related support. The DA and its attached agencies are in charge of 16 PPP projects for medium-term rollout worth at least P55.8 billion for irrigation, post-harvest facilities, and agribusiness ventures, among others.

(Download the complete list of Aquino’s PPP projects here)

PPP for social services

But aside from infrastructure development, Aquino is also expanding the use of PPP schemes to the delivery of social services. One is the P3-billion government counterpart funding to rehabilitate, maintain, and operate 25 regional hospitals. Another is the P5-billion fund for school building construction through PPP, wherein the contractor will undertake the financing, design, construction, and maintenance of classrooms and turns them over to the Department of Education (DepEd) after completion.

In his budget message, Aquino also said that the administration is employing the Multi-Year Obligational Authorities (MYOA) to encourage private participation in the
construction, operation, and maintenance of school buildings, health centers, and other basic government infrastructures. MYOA is an authority released by the Department of Budget and Management (DBM) to enable an agency to enter into a multi-year contract for locally-funded or foreign-assisted projects.

The DepEd has been ordered by the President to pursue PPP projects for the construction of elementary and secondary schools (amount still to be determined) “as public funds are not being able to fully cover the needs of an increasing school population”, according to the PPP Center. DepEd Secretary Armin Luistro has also recently bared his agency’s plan to establish privately-run public schools
supposedly to address critical shortages in the public school system.

Department of Finance (DOF) Secretary Cesar Purisima, on the other hand, said that the government will be bidding out contracts for the construction of 10,000 school buildings within the year. Purisima said the private contractors will build and maintain the school buildings while the government will pay them over a period of time.

Meanwhile, the DOH will handle 11 PPP projects for medium-term rollout worth at least P7.9 billion, including the construction of the Philippine Health Insurance Corp.’s (PhilHealth) building, hospital staff housing facilities, use for commercial operations of hospitals’ unused lands, research facilities and materials, air transport service, commercialization of the Philippine Orthopedic Center, and use of information and communication technology (ICT).

All in all, the 2012 strategic support fund for PPP projects of the DepEd, DOH, DOTC, DPWH, and DA is pegged at P22.1 billion, of which P8 billion are fresh funding for PPPs in education and health.

Budget cuts

While allotting P8 billion and P5 billion in new funding for PPP initiatives in health and education, respectively, the supposedly Diretso sa Tao budget has either frozen or cut the allocation for key items to sufficiently meet the growing public health and education needs.

According to the Coalition for Health Budget Increase (CBHI), for instance, the Maintenance and Other Operating Expenses (MOOE) of five Metro Manila-based special hospitals and 18 local hospitals nationwide have been kept at their 2011 levels. Also, the Personal Services budget of the five special hospitals and of 16 local hospitals nationwide has been reduced.

In addition, the budget for Service Delivery Programs has been cut by almost a billion pesos while the budget for Health Facilities Enhancement Program has been slashed by more than two billion. Also, the subsidy for indigent patients for confinement or use of specialized equipment has been totally scrapped, according to the CBHI. It said that at least P90 billion, or more than P40 billion higher than Aquino’s proposed 2012 allocation, is needed to provide immediate relief to the health needs of the people.

The same thing is true with the education budget. Activist youth group Anakbayan has pointed out that the budget for 50 State Universities and Colleges (SUCs) will be slashed by P583 million. Meanwhile, despite the seemingly huge P31.5-billion increase in the DepEd budget, its allocation can only plug 27% of the backlog in classrooms, 19% of the backlog in desks, and 13% of the shortfall in teachers.

Pro-business budget

The country’s experience with PPP in the past three decades has been awful, to say the least. Various PPP initiatives in the power, water, road, and mass transportation sectors, among others, have all resulted in exorbitant user fees and onerous debts all in the name of assuring the profits of private business. The proposed regulatory risk guarantee of Aquino to further entice the private sector in his PPP program will surely worsen the public cost of privatization.

But even more alarming is the greater intrusion of profit-oriented investors in the most basic social services. The costs of running of hospitals and schools will certainly rise as PPP contractors expect not only to recover their investment but also to earn profits, which distorts the nature and role of public schools and hospitals. The increased cost will either be directly passed on to the patients and students through higher user fees or to the general public through the regulatory risk guarantee, or both.

From a fiscal point of view, PPP also does not guarantee that the budgetary woes of the government will be resolved based on the country’s own experience. Similar outcomes are evident in other countries. A recent study, for instance, by the Washington-based group Project on Government Oversight (POGO) found that the US government actually spends more when it hires private contractors to provide services than when the government itself is undertaking such tasks.


Aside from creating more profit-making opportunities for private business through the PPP, the 2012 budget is also focused on creating the most favorable conditions for investors, particularly in those sectors that the administration deems as growth and employment drivers. They include tourism, electronics export, and business process outsourcing (BPO), among others.

P9.2 billion, for example, has been allocated for access roads to tourist destinations on top of airport projects that will also be pursued through PPP. P500 million, meanwhile, has been assigned to the Commission on Higher Education (CHED) to focus the curricula of SUCs on BPO and tourism as well as agriculture and infrastructure development.

But these priority areas for development have long failed to spur sustained economic growth, much less address the chronic job scarcity and reduce poverty. They fail because they are not anchored on any long-term national industrialization plan that promotes and relies on domestic production and consumption. They have always been driven by what is profitable for foreign investors and what meets the appetite of the global market, specifically of the developed world.

Dole-out for the poor

The only semblance of Diretso sa Tao in the 2012 budget is the P39.5 billion allocated for the controversial Conditional Cash Transfer (CCT) program. For 2012, the CCT targets 3 million households with a proposed budget of P39.5 billion or P18.3 billion higher than this year’s budget. Aquino aims to cover 4.3 million households by the end of his term.

Such massive expansion in scope and budget is not backed by any thorough assessment on whether the program has actually contributed to sustained poverty reduction, not to mention that it is funded by $805 million in growing foreign debt that has long been debilitating the economy and depriving the poor of much needed social services.

As it is, even the target of 4.3 million households is still just a fraction of the ever growing population crippled by joblessness or lack of livelihood amid ever rising cost of living – social ills that ironically are being aggravated by PPP and other flawed development programs that the 2012 budget supports. Thus, the CCT is simply being used by the Aquino administration to sell his proposed national budget as Diretso sa Tao but at its core is Diretso sa Tubo. #

Economy, SONA 2011

SONA 2011: Making sense of Aquino’s facts and figures (part 1)

Activists burn the Penoy effigy, a symbol of the oppressiveness, incompetence, and subservience to the US of the Aquino administration during the SONA protest organized by BAYAN (Photo by Josh Castro)

Malacañang promised that this year’s State of the Nation Address (SONA) will present “undisputed facts and figures” instead of motherhood statements. President Benigno S. Aquino III did use a lot of numbers in his SONA speech (Read the full text) to underscore the supposed economic gains of the past year. But there were still motherhood statements and the usual “walang wangwang” rhetoric. The figures, meanwhile, are still disputable, carelessly used by his speech writers in an attempt to paint a bright picture of the present state and direction of the economy.

On hunger and poverty

Aquino cited as one of the gains of his government the decline in self-rated hunger from 15.1 percent in June from 20.5 percent in March. This is equivalent to one million families who no longer experience hunger, said Aquino. The figures are from the second quarter 2011 hunger survey of the Social Weather Stations (SWS).

But quarterly hunger surveys are sometimes volatile (e.g. self-rated hunger fell from 21.1 percent to 15.9 percent in Aquino’s first 100 days) so it is important to look at the long-term trend. In the first year of the Aquino administration, quarterly self-rated hunger averaged 17.4 percent. During the nine years of the Arroyo government, it averaged a lower 14.58 percent and just 9.96 percent under deposed President Joseph Estrada. These numbers indicate that the country is still on the path of worsening hunger.

Malacañang, through Presidential Communication Operations Office Secretary Sonny Coloma, has earlier attributed the decline in self-rated hunger to Aquino’s conditional cash transfer (CCT) initiative or the Pantawid Pamilyang Pilipino Program (4Ps), a poverty alleviation measure first started in the country by Gloria Arroyo. In his SONA, Aquino boasted that the 4Ps has already registered 2 million families as beneficiaries, of which 1.6 million are already receiving the cash grant. This means, according to the President, that more than 100,000 families are being saved from the clutches of poverty (naiaahon sa kahirapan) every month.

If this is true, then the Aquino administration can reduce by 2.3 million – the target number of CCT beneficiaries by the end of 2011 – the number of poor families by yearend through the simple provision of cash grants. The total number of poor as of 2009 is just 3.67 million families as officially defined and measured by the National Statistical Coordination Board (NSCB). Thus, by 2012, there will only be 1.37 million poor families (assuming official poverty levels remain the same) – a number that Aquino intends to wipeout with his plan, as he said in his SONA, by including an additional 1.3 million beneficiaries in the CCT program.

But that is going by Aquino’s poverty mathematics which is based on a flawed official definition of who is poor. According to the NSCB, anyone who has P46 a day is not poor – a ridiculously low standard resulting in absurdly low poverty levels. Based on the June 2011 survey of the SWS, 9.8 million households consider themselves poor or almost three times the number of poor families as measured by the NSCB. This means that more than 6.1 million poor families are not covered by the CCT program.

However, its small coverage relative to the total number of poor is just a minor issue compared to the more fundamental issue of sustainability and long-term impact of the program. How can the CCT achieve its stated objective of investing in the poor when it’s funded by debilitating foreign debt and not even complemented by substantial investments in public education, health, and housing? What will happen to the beneficiaries of CCT once the program is over and still no jobs are available?

On jobs

But as far as Aquino is concerned, jobs are being created. In his SONA, he mentioned that the unemployment rate in April went down to 7.2 percent in April 2011 from 8 percent during the same period last year, crediting the efforts of his administration. Some 1.4 million jobs have been supposedly created in his first year. The numbers are from the Labor Force Survey (LFS) of the National Statistics Office (NSO).

The 1.4 million jobs supposedly created between April 2011 and April 2010 could not be attributed to government intervention. In the first place, the only job generation program that the Aquino administration has so far initiated is the Community Based Employment Program (CBEP). This program has only created 170,000 jobs out of a target of 1.1 million. About 63 percent of these jobs are in infrastructure/construction, of low quality, and highly temporary. The 170,000 could even be deceitful because a worker can avail of more than one CBEP job.

Looking at the NSO data, more than 456,000 jobs of the 1.4 million additional jobs are classified as those who worked for private households (domestic help, etc.), self-employed without any paid employee (vendor or sari-sari store owner, etc.), employer in own-family operated farm or business, and worked without pay in own-family operated farm or business. In other words, a significant part of the additional employment in the past year was due to the people’s sariling diskarte and not because of any meaningful job generation program of government. (See Table)

Figures in '000

Furthermore, NSO jobs figures have long been unreliable for distorting the concept of unemployment and statistically deflating the extent of job scarcity in the country. For instance, the NSO does not count as unemployed those who are seeking work but for one reason or another (e.g. school or family obligations, illness, etc.) will be unavailable for work despite an opportunity within two weeks after the survey. Meanwhile, household members who help operate the small family farm, sari-sari store, or eatery are considered employed, including those who helped for even just one hour in the past week before the NSO survey.

Because of such distortions, the number of jobless according to the April 2011 LFS of the NSO is just 2.9 million workers. In contrast, adult unemployment rate as measured by the SWS in its own survey was pegged at 27.2 percent or 11.3 million workers in March 2011. Like in the case of hunger, it is important to study the long-term trend to determine if headways are being made in job creation.

Based on SWS data, the average adult unemployment rate under Aquino is 23.2 percent, a continuation of the deteriorating domestic jobs situation. Under Arroyo, it was 19.77 percent; Estrada, 9.66 percent; and Fidel Ramos, 9.66 percent. NSO employment data since April 2005, meanwhile, could no longer be compared to previous years because of a redefinition made by the National Statistical Coordination Board (NSCB). The shift in definition “reduced” official unemployment by 1.9 million in the April 2005 survey. (To be concluded)