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No Free Lunch

More BBB via PPP

/ 05:05 AM November 13, 2018

Annual audit reports of the Commission on Audit (COA) make interesting reading. Having gone through the 2017 reports for some national line agencies and local government units, I’ve seen that complaints on supposed “lack of budget” we keep hearing from government entities and their stakeholders often make no sense. Even the poorest of local governments constantly report significant surpluses in their budgets, i.e., unspent amounts at the end of the year, year after year.

Our own barangay authorities once fended off appeals from the neighborhood association to increase patrols of the barangay tanod after a spate of robberies, insisting residents had to pay for the additional fuel and food costs of the guards. Yet weeks later, they proudly announced in the annual barangay general assembly that the barangay government posted substantial budget savings. Too many people in government seem to think unspent budgets (aka savings) to be a sign of good governance. If that were true, then our major infrastructure departments would be among the best governed of our government agencies.

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Last week I wrote of how the Department of Public Works and Highways was reported by the COA to have spent only P222.7 billion, or about one-third of its total budget allocations of P662.7 billion, for 2017. The bigger bulk (two-thirds) of its annual budget remained unspent, due to the delay or nonimplementation of thousands of infrastructure projects.

If you think that’s bad, wait until you hear about the Department of Transportation, which managed to disburse only P18.2 billion, or just about one-fourth, of its total 2017 budget allocations of P71.2 billion; three-fourths of its budget allocations were not spent. The COA attributed this to the slow implementation of 144 locally funded and nine foreign-assisted projects. The DOTr managers blamed it on change in policy directions by political leaders and economic managers, projects held up pending decision by top management, and delays in procurement due to the complexity of the projects.

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I find it amusing that the DOTr managers pointed to their own top bosses, along with other government leaders (with special mention of the economic managers) as reason for project delays. One of our perennial problems is that, in government, it’s always someone else’s fault when things go wrong. The COA even chose to cite Section 4b of Presidential Decree No. 1445 that states: “Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the financial affairs, transactions, and operations of the government agency.” But finger-pointing is always easy where the
system is marked by weak accountability.

There are so many interesting observations in the audit, but I can only cite a few here. Looking at components of the agency’s budget, the COA noted that the low disbursement rate in the agency’s Motor Vehicle Regulatory Program was mainly due to the unused allocations for payment of vehicle plates and driver’s licenses that could not be paid, due to a pending appeal by the Land Transportation Office of a previous COA disallowance (remember the P450 we shelled out nearly four years ago for new license plates, whose shadow we have yet to see?). There was also zero disbursement of amounts allocated for buildings and structures under locally funded projects, and only P3.8 million spent out of P9.2 billion allocated for railways. For roads and bridges under foreign-assisted projects, only P9.4 million was spent out of P2.3 billion allotted.

There are many more “devils in the details” I could cite, but space does not allow me to do so.

To me, all these point to one logical conclusion: We need to move back toward greater public-private partnership execution of our “Build, build, build” program — but hopefully less via the unsolicited PPP mode that had brought tremendous problems in the past. The PPP Center had already lined up more than 50 PPP projects, much of them ready for bidding after long and tedious work. After all that we’ve seen so far, the sudden shift to having government build projects directly—using, in many cases, China loans that are costly, in more ways than one—seems misplaced and increasingly hard to justify.

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TAGS: Cielito F. Habito, COA, infrastructure projects, No Free Lunch, PPP, Public-private partnership
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