No Free Lunch

‘A bad doing good’

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I am personally impressed at how the Department of Budget and Management under Secretary Florencio “Butch” Abad is now taking politically unpalatable but long-warranted reform directions. As such, he demonstrates strong political will and firmly grounded principles, qualities now seemingly rare in public service. For these, he has been awarded the Metrobank Foundation Professorial Chair on Good Governance at Ateneo de Manila University. He recently delivered his professorial chair lecture titled “Pursuing the Aquino Administration’s Agenda for Empowerment Through Public Expenditure Management” to an appreciative multisectoral audience—so appreciative that some declared him a worthy “presidentiable” in 2016.

Backed by President Aquino’s strong political capital from consistently high public trust ratings, Secretary Abad is in a unique position, which most of his predecessors didn’t enjoy, to push for meaningful budget reform. He recognizes that “public trust can only be sustained if the people see that budget reforms indeed result in more services that lift them from poverty and vulnerability, and more investments in their capacity to participate in the economy.” Indeed, with brisk economic growth still not permeating down to the wide majority of Filipinos, and if leadership changes are seen not to change the wide inequities in our society, no amount of voter education will alter the voting habits of the average Filipino voter. President Aquino must convincingly show that  matuwid  na  daan  translates into  umaangat  na  buhay  for most of his “bosses.”

As the man tasked to ensure the greatest and widest benefits from taxpayers’ hard-earned money, Secretary Abad knows that the budget can be a potent instrument toward this end. He takes to heart sound public expenditure management principles that rest on spending prudently (“within our means”), spending effectively (“on the right priorities”) and spending efficiently (“with value-for-money”).

The first is all about fiscal discipline, which he saw was set aside when political survival, rather than genuine developmental considerations, determined budget allocations and releases under the previous president. Case in point is how the debt of the National Food Authority ballooned to a staggering P177 billion at the close of the previous administration from only P18 billion when it started, with P128 billion incurred just in its last two years. Abad also cited government’s cancellation of projects entered into by the previous leadership that were found “wanting in economic viability and credibility,” even in the face of displeasure from certain donor partners and business interests. From these and more, he is convinced that government can spend substantially less without sacrificing the desired results.

Spending effectively requires that the budget be spent in a way consistent with national priorities. Abad is doing away with certain “budget traditions” that gave undue discretion to the chief executive and key influential bureaucrats at various levels. One such tradition is the frequent reenactment of the prior year’s budget due to late or nonapproval of the General Appropriations Act. Noting how no GAA was approved on time and had to be fully reenacted three times in the 10 years before the current administration, Abad moved the budget timetable forward to ensure timely budget approval.

Another tradition Abad has done away with is the preponderance of lump sum funds in various agency budgets. DBM now requires disaggregation of all lump sum funds, with clear indication of their intended uses. Predictably, this has met with fierce, even violent, resistance from “patronage interests” in government, which lost a key tool for gaining political mileage from their electoral constituencies. For the same reason, he says, many politicians have opposed government’s conditional cash transfer program, which has supplanted dependency ties between the poor and their traditional patrons. In classic “if you can’t beat it, join it” style, some politicians have tried to insert themselves in the program, prompting the Department of Social Welfare and Development to mount an “anti-epal” campaign. But fully cognizant that dependency ties could merely transfer from local patrons to the national government (now the “national  padrino”), he stresses the importance of graduating beneficiaries after five years and ensuring their strengthened human capital before then.

Still another old tradition Abad has courageously sought to break, at great political risk, is the untouchability of the budgets of the “sacred cows”: the judiciary and the military. Fiscal autonomy in the case of the judiciary and national security in the case of the Armed Forces can no longer be excuses to evade transparency and accountability, he declares.

Abad’s insistence on spending with measurable results highlights the management dimension in the third element, spending efficiently. DBM’s Organizational Performance Indicator Framework (OPIF) aims at stronger performance management and budgeting in all government entities. Under Abad, DBM has further refined the various agencies’ defined outcomes and major final outputs in the OPIF, ensuring their alignment with government’s priority outcomes. Many more key reforms are forthcoming with the 2014 budget.

Against past experience when the budget was used more as a political tool than as the developmental tool it ought to be, Secretary Abad is a welcome breath of fresh air in the government. Here is a case where A bad (minus the space) is doing much good for all of us.

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E-mail: cielito.habito@gmail.com

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