TURNO en CONTRA

TURNO en CONTRA
Representative Eduardo Nonato N. Joson
October 11, 2007

Mr. Speaker I rise to speak against HB2454, the 2008 General Appropriations Bill for the following reasons:
I. The Appropriation Bill does not meet the requirements of the "means-end" test, wherein the means must correspond, achieve or approximate the objectives or purposes of the bill.
The budget is a tool for development. It also seeks,among others, to solve the recurring problems that we are experiencing and what is undeniable is the fact of poverty as one of our most pressing problems. Others will say that our debt burden is the problem. Our sponsor, the Hon.Lagman proposes that the issue of population is the key issue in any expenditure measure or any economic development for that matter. Peace and order, quality education and health concerns follow in rapid succession. What is undeniable, Mr. Speaker, is that whatever the problems are, we have failed to solve the said problems in the last 20 years or more. We have been left behind by our neighbors in terms of economic development. We have failed to achieve NIChood status as President Ramos would have said it. And it would seem that as President Erap would have stated it,we are a nation of hoods - hoodlums in uniforms, hoodlums in robes, hoodlums in barong tagalog etc. where every transaction is laced with scandals, scams commissions and outright thievery. Corruption is thus seen as the most progressive industry that we have aside from baby-making as the principal product and made in the Philippines. Politics is a business and political destabilization is a game for power brokers and would be messiahs of national salvation.
“Naiwanan na tayo sa pansitan kundi man sa kankungan Mr. Speaker, at ang tanong: “meron ba tayong maling ginawa, ginagawa at gagawin pa? Tama ba ang pagtanaw sa ating mga problema? Tama ba ang solusyon sa ating mga problema? Tama ba ang mga patakaran o policies para ma-solve ang mga problema ng bansa? Ano nga ba ang pinakamalaking problema ng bansa? Magkakasundo ba tayo na ang pinakamalaking problema natin ay kahirapan?” Are we going to be in agreement that poverty is the most pressing problem that our country faces today Mr. Speaker?
Mr. Speaker, I believe that poverty with its twin or corollary effect of economic underdevelopment is our principal problem. Consequently, the budget as a tool for development must address and be the principal means to solve the problem of poverty.

Under RA 8425 otherwise known as the social reform and poverty alleviation act, poverty per se was not defined. Instead, what was provided for is “absolute poverty” or that which refers to the condition of the household below the food threshold level; and “relative poverty” as referring to the gap between the rich and the poor. Webster on the other hand defines “poverty” as the state of being poor or without competent subsistence; need; penury or the condition that relates to the absence or scarcity of requisite substance or elements; poverty is also synonymous with beggary,destitution,distress, indigents,mendicancy,need,pauperism,penury, privation and want.
In the Philippine Context, statistics by the National Statistical Coordination Board (NCSB) released last June 2006 indicates that approximately 24 out of 100 Filipino families did not earn enough in 2003 to satisfy their basic food and non-food requirements. In terms of population,30 out of 100 Filipinos in 2003 had income short of the minimum cost of satisfying the basic requirements of food, health, education, housing and other amenities of life. Other statistics just like the news, support the widening gap or inequality between the rich and the poor.
Twenty years ago, I termed the great divide as a split level economy, a Pajero economy (ngayon yata BMW na) and a nation of squatters literally and symbolically. Makikita rin ang mukha ng kahirapan sa pader na naghihiwalay sa ating mga subdivision at high rise condominiums at mga bahay na kariton, tagpi-tagping tirahan at mga palaboy at pulubi na nagkalat sa ating mga lansangan. Ito ang mapait na katotohanan Mr. Speaker at kahit anong development theory o poverty alleviation policy pa, kasama na ang social reform agenda ng dating Presidente Ramos, millenium development goals, medium term Phil development plan, angat pinoy ni erap, kabisig ni President Cory at kabalikat ni President GMA, sa nakaraang dalawampung taon, sa aking personal na experience at pananaw, lumala pa ang kahirapan batay sa mga lumalabas na hunger statistics. According to the national nutrition council, hunger worsened by 6.8 percentage points from 14.7% in the 1st quarter to 21.5%(equivalent to about 3.8 million families) in the third quarter due to high food prices. At patuloy na walang pag asenso ang ating mga magsasaka sa kanilang kabuhayan kahit pa nagkaroon ng land transfer at distribution. Buti na lamang at meron na siyang anak na OFW na alipin sa ibang bansa habang siya ay alipin sa sariling lupa. ......
As to the causes of poverty, Mr. Speaker, it was pointed out by one economist (Philip Gerson) that poverty persists and the Philippines lagged behind its ASEAN neighbors in reducing poverty incidence "can be attributed to past economic policies that retarded growth by discriminating against agriculture and discouraging investment in human capital. These policies in turn sustained powerful interest groups that blocked or delayed economic reform." Other contributory causes of poverty flow from the population issue, lack of capital resulting from lack of savings/low income and productivity and back to capital as a condition sine qua non for development; poor governance by leaders; lack of quality education and corruption as part and parcel of waste of government resources that could have been used for poverty alleviation.
The man on the street would simply say that “mahirap siya dahil hindi nakapag-aral, lupa lang sa paso o sa kuko niya ang kanyang pag-aari, walang trabahong mapasukan o siya kasi ay magsasaka lamang o mahirap lang po kami. Mahina po ang kita ng tindahan at puros utang pa;marami akong anak na ipinag-aaral at iba pang kadahilanan na di makayang sabihin ang mga katwiran. Ang maliwanag Mr. Speaker, isang kahig isang tuka pa rin;kapit sa patalim;loan dito loan duun;ang kawalan ng pag-asa ay nakabakas pa rin sa kanyang mukha kasunod ng pagkibit balikat at pagsara ng mata at pandinig sa kanyang kinasadlakan.”
It is very clear then Mr. Speaker that something is wrong. The domestic labor market has a very limited absorption capacity. There is a mismatch between courses and jobs. Working abroad becomes a better if not a survival option. Mr. Speaker, there are many problems that need to be solved and we must begin with the basics: food, jobs, new businesses or livelihood enterprises including new direct foreign investments that are labor intensive or that will create subsidiary businesses. In all of this Mr. Speaker, there is a need for change if not a redirection of policy and resources especially the national budget to address the above-mentioned concerns.
From the above mentioned discussion, Mr. Speaker, it is very clear that for the last twenty years, the budget as a development tool has not been responsive in solving the most basic of our problems, poverty and underdevelopment.
I will thus go to the second reason as to why I am speaking against this bill.
2. Mr Speaker, the appropriation bill reflects old and outmoded policies which do not address present and future realities. In other words Mr. Speaker, there must be a paradigm shift or thinking out of the box in order to move the country forward and out of the rut that we are in.
Mr Speaker, for twenty three years that i have been in politics, seven years of which i was a member of the legislature there was no substantial change in the budget process starting w/ the yearly budget message of the presidents, the contents of the budget and the policies behind the budget. It would also appear that interpellations made in the congress hew along the same old refrain although the sponsor or singers may change. The same old songs or policies remain and continue to dominate to the detriment of our people and ultimate economic development of our country. Again Mr. Speaker, we have been left behind. It is time to change our policies so that we can pump prime or jumpstart the agricultural sector w/c involves 70% of our people categorized as poor. The slums or squalid squatter areas unfit for human habitation must be declared as such and a comprehensive national housing program be immediately implemented. The concept and policy of economic infrastructures as the most basic of policy must be brought to the fore,debated over and implemented at the soonest possible time.
To illustrate my point:
The appropriation in the 2008 national budget for the Department of Agriculture is approximately P3.3 billion (P3,326,956,000.00). The Agriculture and Fisheries Modernization Program is proposed to be given P21.4 billion (P 21,438,712.00). The National Housing Authority appropriation is P5 billion (Php5,000,000,000.00) and the National Home Mortgage Finance Corporation P1.4 billion (Php1,400,000,000.00). The Housing and Urban Development Coordinating Council is given a mere P99.7 million (Php 99,770,000.00).
On the other hand, the disparity with appropriations for other departments is obvious. The Department of National Defense shall be getting P50.9 billion (Php50,916,627,000.00). The Department of Interior and Local Government’s appropriation is set at P52.38 billion (Php52,382,339,000.00). A bigger chunk is appropriated for the Department of Public Works and Highways at P86.75 billion (Php 86,754,923,000.00).
The alternative budget proposed by some sectors make adjustments by increasing the appropriations for several programs of departments such as Health, Education, Agriculture and Environment.
However, more than adjustments in the appropriations, Mr. Speaker, there is a need for a comprehensive reassesment of our Budget policy. There is an urgent need to make the national budget responsive to the problem of poverty which besets our nation.
From the way this representation sees it, a re-adjustment of our framework is in order. As I have mentioned, investing in physical infrastructure should be seen vis-à-vis investment in economic infrastructures. This may create confusion for some. How is this different you may ask? Let me elaborate Mr. Speaker. In my own definition, “Economic Infrastructure” comprises financing, expenditures or investments which directly create jobs, business or other income generating activity that would directly benefit the person or sector involved, resulting in the receipt of income, savings, capital or increased purchasing power. This concept is also a familiar component in the economic development of Singapore. In the 2007 Budget Statement of Singapore, it was a declared policy of the administration to enhance investments in economic infrastructure which is defined as major investments that will help support the growth of Singapore’s high-value manufacturing and services economy.
From this premise, it is projected that investing in economic infrastructure shall create a multiplier effect, thus, spurring economic growth with the aim of alleviating poverty. The numbers are down Mr. Speaker in terms of improvement in the lives of our people. Among the three pump priming activities mentioned here Mr. Speaker, I would propose the focusing of budgetary resources in building up the economic infrastructure of our country.
In so doing Mr. Speaker, we will be able to create new jobs, businesses and investments which directly affect our economic development. By way of example Mr. Speaker, instead of the usual road construction, we develop the dairy industry of a particular province; instead of other physical infrastructure, the retail and livelihood sectors be primed first. Although there is a study that says that roads have a very high return of investment in terms of economic benefits, other avenues for growth must be explored to its fullest extent. Emergency employment may also be financed from government funds and the private sector may be induced to come in through fiscal and other incentives especially in the agribusiness sector.
Mr. Speaker, there is no denying that the present administration has tried to do the latter but in terms of accomplishment, there was no substantial impact at all.
The second area where there is a big potential of pump priming the economy is in housing. The ratio of economic benefits or return of investment for every peso spent in housing activities is sixteen times. Thus, in the absence of any other better cost-benefit ratio activity, a paradigm shift to housing as an economic tool for development may be our new option as Japan and Singapore were able to do in their development history.
Unfortunately, this sector is often overlooked and given a measly budget. Activity in the housing industry is not deemed an economic activity but more in the line of welfare or social services, as illustrated in the Table of Sectoral Allocation fo National Government Expenditures for Fiscal Year 2006-2008 (Table B.7a, National Expenditure Program FY2008, DBM Publication).
In the 2008 budget, President GMA proudly declares that from the 2006 allocation of P6.1 billion, the housing and community development sector has been provided with P7.6 billion. On the other hand, P75.3 billion is allocated for DPWH infrastructures like roads and bridges, flood controls, national buildings, water supply and other public work projects.
The economic contribution of the housing sector is sorely overlooked. Traditionally viewed as a social development service, figures show that housing is a labor-intensive activity that can provide massive employment opportunities for about 1,063,037 urban and rural construction workers in the housing industry every year. The HUDCC projects that constructing a low-cost housing unit requires an average of eight persons working for three weeks or a total of 124 man-days.
Aside from employment opportunities, housing could generate downstream economic activities. There shall be an upsurge of productivity in other related industries such as construction and real estate sectors, even the mortgage markets and banking industry. It’s benefits to the economy cannot be gainsaid. Directly, the homebuilders and employees who work for the builders experience an increase in economic activity in terms of expenditures. Indirectly, linked businesses, suppliers of goods and services and providers of operating inputs also benefit. For example, those in the wholesale trade provide lumber, roofing, electrical, plumbing and other components. Those in the motor freight firms will be engaged in the delivery of components to the wholesaler and construction sites. There is also an increase in demand for management and consultancy services, engineering and architectural firms who participate in the design and planning of housing units. Ultimately, the increased economic activity results in more income for the persons involved in the housing industry and affiliated businesses, also increasing their spending power which will redound back to economic growth.
Even LGUs benefit from investments in the housing industry as this translates to fees in the form of licenses and permits and a higher tax base because of higher assessments. Studies also show that more activities follow when there is a residential area because of the establishment of hardware stores, retail establishments,service establishments, schools, medical centers, etc. Hence, housing projects are termed as locators of consumers. An increase in population due to resettlement is also a factor in increasing an LGU’s IRA. An example of this is the upsurge of housing activities in the various Cavite towns in the early 2000’s. There was a marked increase in local revenues due to a dramatic increase in payments of realty taxes. Such income derived from the payment of realty taxes enabled the province to increase allocations for the Local School Board.
This was also a principal policy of Singapore in its exemplary strides in its economy. Most of the residential housing developments in Singapore are publicly built through its Housing and Development Board. Very few people in Singapore live below the poverty line.
Another engine of development not maximized to its full potential is the agricultural sector.
The magnitude of poverty in the Philippines is highest in the rural areas especially in the agricultural sector. Poverty incidence in the Philippines remains relatively high at 33%, with 3 out of 4 poor Filipinos (about 73%) residing in rural areas. The task of combating poverty and inequity thus draws immediate attention to the rural population, which depends on agriculture for income and livelihood.
The government’s current anti-poverty measures are inadequate to address the problem. In spite of the more than a million jobs generated by agriculture, rural unemployment and underemployment continue to be severe as over 1 million rural workers remain to be unemployed and 3 million are underemployed every year. The administration proclaims that production targets have been exceeded and farm incomes raised, but these are not enough to improve international competitive position, ensure long-term sustainability and improve overall rural welfare. Such shortcoming may be attributed to an apparent lack of strategic focus on programs and projects. Thus, poverty and inequity have remained problems in the countryside.
Instead of focusing on physical infrastructure, higher budget allocation should be given to the agriculture sector to create a greater and direct impact of the lives of the Filipino people.
What is needed is a more holistic approach in reducing rural poverty that will not only address the production bottlenecks in agriculture. This approach calls for the promotion of AGRIBUSINESS. This will not only address agricultural production constraints but also post-production handling, value-adding and distribution concerns, all of which are the major and inter-connected determinants of job creation and income stability in the countryside.
Agriculture is the major source of raw resources on which the rest of the economy depends. It accounts for 20% of the GNP or 1/5 of the economy while 1/3 of the population is employed in agriculture or agriculture-related industries. Farm incomes generally improve with the growth of production coupled with favorable price movements. Rapid, sustainable and equitable agricultural growth is therefore a key to achieving the Government’s target of solving the poverty problem. Studies show that for every 1% increase in per capita agricultural output results to a 1.61% increase in the incomes of the poorest 20% of the population.
Translated in layman’s terms, Mr. Speaker, this growth in personal income shall increase the spending capacity of the population, which will ultimately redound to the benefit of our economy, opening further opportunities for growth in other industries.
Given the performance of Philippine agriculture, there is much that the government can do to create a favorable environment to improve agricultural productivity and rural welfare. The required public intervention to bring about this development will entail an increase in public investment level to more productivity-enhancing expenditures such as Research and Development. It will also require more effective mix of policy inputs, capacity-building, market reforms and improve governance to bring the right investment environment that would encourage private sector participation. Amid increasing physical resource constraints and growing population, higher productivity in agriculture should be aggressively pursued. Expanding irrigation will help boost grain yields, strengthening the research and extension system will enhance agricultural productivity and facilitate on-farm diversification, improved rural infrastructure will reduce transport cost and increase accessibility to markets and public service.
Hence, the benefits of investing in the agricultural sector makes it imperative to prioritize rural infrastructure and raising agricultural productivity.
3. Lastly Mr. Speaker, political will and reforms must come into the picture if we are to concretize the aspirations of our people for a better life. This budget is a tired antiquated rehash of an indolent will and lacks the backbone for the implementation of reforms which are sorely needed if we are to catch up with our neighbors in terms of development and/or qualitative improvement in the lives of our people. The trickle down theory must turn into a downpour. Our people can no longer wait. We have failed to meet the targets set by the millenium development goals and the medium term Philippine development plan. A new approach and economic strategy must be adopted if we are to be considered a developed country which is domestically progressive and globally competitive. We must begin at home then onwards to find our own niche in the sun of international dignity and standing. We must begin now.
Thank you Mr. Speaker