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Thursday, August 16, 2018

Will federalism bankrupt the government?

ARE the government’s economic managers right in raising the alarm over the shift to federalism?
More than 20 business groups, including the Philippine Chamber of Commerce and Industry, support Secretaries Carlos Dominguez of Finance, Ernesto Pernia of Economic Planning, and Benjamin Diokno of Budget in warning against fiscal risks in federalism.
Even advocates of Charter change would admit that there would be mammoth financial issues in recasting the Philippines’ centuries-old unitary form of government, which has been around since Spain colonized the archipelago in the 16th century, into a federal system never tried before.
Indeed, Wendell Adrian Tamayo, head of the technical working group of the consultative committee, which drafted the proposed new charter, said recently that the government would need P2.2 trillion just to establish new entities under the revised constitution, including 16 federated regions (FRs), the Bangsamoro and Cordillera autonomous regions, four federal courts, and six constitutional commissions.
For their part, the economic managers pointed out what they saw as a big missing ingredient in the draft charter. While it spelled out revenue sharing between the envisioned federal and regional governments, with tens of billions of pesos in additional annual revenues expected to go to the regions, there were no provisions on expenditure sharing.
Hence, the fear that the federal government would sink in deficits by giving up mammoth monies, while still having to fund the lion’s share of government programs, projects and investments.
Share revenues and expenditures alike
For Secretaries Dominguez, Pernia and Diokno, it wasn’t enough that Article XII, titled Distribution of Powers of the Government, transferred major national functions to the FRs, thus relieving the federal administration of the huge costs for such tasks. The finance, economic planning and budget czars wanted to see numbers setting out how expenditures would be distributed between federal and regional governments.

So, why didn’t they propose such numbers and provisions to the Con-com in the months when the draft charter was written. Key agencies got copies of the draft at various stages, but no provisions were submitted by the Department of Finance, the National Economic and Development Authority, and the Department of Budget and Management to address their fiscal and economic concerns about federalism.
For sure, DOF, NEDA and DBM had many pressing concerns on their plate in the past several months, especially with the surge in inflation, widely but wrongly blamed on the first tranche of tax reforms implemented this year.
But given the future-shaping impact of constitutional revision, the Cabinet should still have made time and given attention for crafting the federalism constitution, a centerpiece of President Rodrigo Duterte’s change agenda.
Well, better late than never. Having raised federalism concerns, but still professing to support the systemic shift, the DoF, NEDA and DBM chiefs, along with other agencies, should propose to Congress draft provisions addressing those issues.
Do they want revenue sharing matched with actual expenditures taken over by each federated region, rather than a set amount transferred to every FR, whatever the programs and projects it actually undertakes?
Should there be standards and requirements for FR governments, such as expert agencies to handle delegated functions, before they actually assume those tasks and the funds for them?
Must the federal government get a set amount for programs and projects it still takes responsibility for, before the FRs divide the spoils? As drafted, it seems to be the other way around: the charter would allocate revenues to the regions first, with the federal government making do with leftovers.
Other Cabinet departments may also have provisions to add or revise. The Department of the Interior and Local Government may wish to include governance standards for FR administrations. DILG, the Department of Justice, the Philippine National Police, the Philippine Drug Enforcement Agency, and other law enforcement entities may have issues with the powers given to FRs in regional justice, security, and public safety.
The Department of Health already saw many local government units fall short in DoH functions devolved under the Local Government Code of 1992. It too might want the handover of functions done gradually, with competency and quality of service parameters set, if not in the charter, at least by the Federal Congress.
The Department of Environment and Natural Resources is also no stranger to LGU failings, as seen in the deterioration of Boracay due to poor enforcement and probably corruption in the local administration. DENR would also want standards and parameters set for the exploitation of land, water, mineral and other bounties.
That’s just seven Cabinet departments and a few other agencies. Other entities would want their say, including the judiciary, the audit, civil service, election, and human rights commissions, and the Office of the Ombudsman. Plus, the military, which already took issue with the proposed removal of its designation in the 1987 Constitution as “protector of the people.”
Can Congress produce a quality charter?
With many agencies yet to input into the new constitution, along with key sectors like business, labor, urban and rural communities, and major religions, can Congress get the job done in time and with quality?

Well, if the 50-member Constitutional Commission appointed by then-President Corazon Aquino could produce the current charter, which most Filipinos don’t want to revise for now or forever, the incumbent two-chamber elected Congress, with 321 members and far bigger budget and bureaucracy, surely would do an equally decent job in about the same six months or so that it took to draft the current charter.
Still, there would be a much better revision if it is given more time and specifically entrusted to an elected constitutional convention unburdened by other legislative matters, plus campaigning for the 2019 elections. A con-con would also avoid vested interests and political ambitions impinging on its work and detracting from its credibility.
Hence, Congress should seriously consider passing the work of Cchange to a constitutional convention elected in 2019 and tasked with proposing a charter for 2020 referendum.
Give President Rodrigo Duterte’s paramount legacy an extra year and a dedicated commission. Why not?


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