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Business Matters

Charter change? At what cost?

Provoked by Finance Secretary Sonny Dominguez’s brutally blunt critique of the constitutional committee’s Bayanihan Charter, some members reacted in the spiteful manner described as “pikon” (“poor sport”—though that’s a grossly inadequate translation). Fr. Ranhilio Aquino ran to Daddy Digong, challenging him to sack or silence Cabinet members criticizing their output. Others faulted the economic managers for ignoring the con-com’s request for guidance on economic issues. Given only a general overview of the proposed charter, however, finance officials were understandably reluctant to provide the hard numbers the con-com probably wanted.

It would have been improper for Secretary Dominguez to require the con-com to keep the costs of their new charter’s governance structure within his budget cap. The con-com was not buying a car, a process that normally begins by setting a budget, which determines the affordable brands.  A million pesos would give buyers several options. But they would not bother inspecting BMW or Benz models clearly beyond their budget. A budget limit at the outset would have constrained the con-com’s deliberations on reforms the country needed. Its mission was to propose remedies for specific ailments afflicting the body politic.

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The Con-com’s first responsibility was to identify the weaknesses in the current Constitution most urgently requiring attention, and to prescribe the necessary treatment. Money should not dictate the diagnosis. It would be senseless for Finance to say that the con-com should not exceed the costs of herbal medicine and Zumba dance instructors, such as were prescribed for drug addicts; or should adopt the cheaper option of radical amputation, when less invasive robotic surgery may be the correct recourse. Efficacy, not expense, should be the con-com’s first concern.

Once completed, the design should give Finance enough information to assess the likely flow of revenue and expenses and financial viability of the con-com proposal. Secretary Dominguez found the draft charter still “confusing.” But with their experience managing their current budget, economic managers worry that they cannot meet all the costs of the designer drugs prescribed by the con-com without compromising other priorities.

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Compared to governance, unfortunately, the effectiveness of prescriptions is easier to determine in medicine, where corrections, should projected results not materialize, are also easier to make. Which is why business corporations prudently conduct pilot projects to test the feasibility of costly, complex innovations and to surface potential problems, before risking company-wide implementation.

This is still the argument for making sure the Bangsamoro regional autonomy succeeds, before proceeding to federalism. The Bangsamoro “pilot” would reveal, at a lower cost, what must be done to achieve federalism’s professed objective of collective prosperity through regional empowerment.

While the costs of Charter change are certain, the benefits are speculative. The economic managers now plead inability to give local governments their correct share of tax revenues promised under the Local Government Code but never delivered. How can LGUs trust that federalism will give them a greater share of resources than what they are presently owed? Would they not prefer to get their proper share of resources under prevailing laws, before yielding them for the promise of more under an untested system?

Even granting the excellence of all proposed charter provisions—discounting the doubts of experts from different disciplines—their effectiveness in delivering benefits will ultimately depend on the character and the motivations of the implementors. Con-com chair Reynato Puno blames the elite for opposing Charter change. But he is counting on the elite in Congress to push the Charter change that surveys show the masa repeatedly rejecting. To his credit, he has declared that he would oppose Charter change if it did not ban political dynasties. He admits he cannot ensure congressional approval of this ban.

Charter change will gift us with three absolutely certain results: more bureaucrats, more politicians and more taxes to support them. People want change. But they have been saying that Charter change is not the change they want. This message they must deliver through their votes in the 2019 elections.

Edilberto C. de Jesus (edcdejesus@ gmail.com) is professor emeritus at the Asian Institute of Management.

Business Matters is a Makati Business Club project to share the views of key leaders in the business community. The ideas do not necessarily reflect MBC’s position.

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