UNDAUNTED by the resounding defeat recently of the fourth impeachment complaint against President Gloria Macapagal Arroyo, the opposition at the House of Representatives is embarking on another crusade that does not seem to stand a chance of winning, at least under the present administration.
The opposition now seeks to control the president’s wide discretion in disbursing public money, including the lawmakers’ Priority Development Assistance Fund (PDAF), derisively called ‘pork barrel,’ and other unspent amounts in the annual budget program.
Deputy minority leader Teofisto L. Guingona III is spearheading this move in a bid to prevent a repeat of the alleged diversion of P728 million meant for fertilizer procurement into the administration’s campaign kitty in 2004.
The suspected diversion is now the subject of a Senate probe in which former agriculture undersecretary Jocelyn ‘Joc-joc’ Bolante has been forced into a “starring” role.
According to Guingona, what is now being called the “P728-million fertilizer fund scam” allegedly engineered by Bolante could have been prevented had there been safeguards in the budget process.
“Our studies have shown that current budget procedures that were designed to give flexibility in allocating funds to priority programs were abused, thereby enabling what is now allegedly plunder,” says Guingona.
“Because the national budget is so complex and the amount involved is so large, most Filipinos would rather not have anything to do with it,” he adds. “And yet, if we are to improve our lives as a nation, we first need to take control of our national resources before we can deploy them for our development.”
“Hence, it is imperative that we need to return the budget to the people,” Guingona asserts. “To do that, we need to reform the budget process.”
As a first step, Guingona has filed House Bill No. 5580 titled “Impoundment Control Act of 2008.” It defines impoundment as the president’s refusal to spend or delay the release of duly appropriated funds.
The measure requires the chief executive to secure congressional approval in withholding or completely rescinding the release of any item in the budget program. Moreover, the proposed law requires the president to identify the purpose for which the withheld amount will be used.
Under the bill, the president would need to justify to Congress that the amount he or she wants to withhold or withdraw could no longer serve the purpose for which it was originally intended or appropriated, or that the authorized project/program had already been terminated/completed.
Interestingly, as early as July 3, 2007, a similar bill was already filed in the Senate by Sen. Ramon ‘Bong’ Revilla Jr., a known Arroyo ally. His version even appears to have more teeth than Guingona’s because it has a penal clause.
In the Revilla bill, deferring, withholding, or cancellation of an authorized allocation in the General Appropriations Act would be punished by a fine of up to P100,000 and “temporary special disqualification.”
The penal provision, however, neither defines “temporary special disqualification” nor specifies the officials covered. As well, the bill is not clear on whether or not the president should be among the accountable officials.
In lieu of a penal provision, Guingona’s bill prohibits deferred or rescinded funds to be used for any purpose other than what Congress has authorized through legislation.
Still, Guingona himself candidly admits that controlling the president’s hands in disbursing funds is an almost impossible thing to do given the current composition of Congress and Malacañang’s influence on its members.
University of the Philippines Professor Leonor Magtolis Briones, convenor of the civil society groups Social Watch and Alternative Budget Initiative, fully agrees with the lawmaker from Bukidnon.
“No sitting president will welcome such reforms because the situation favors the executive…and you have to think in terms of 2010,” Briones points out. “Remember, the Bolante thing happened during the election proper. No sitting president and no executive department will give up what it enjoys.”
First step, long journey
But why mount a movement with just faint promise of success under the present circumstances?
“This is the first step of a journey… a journey (intended to) make everybody understand how important it is that our budget law should be reformed and how it can affect their lives,” Guingona says.
“Everything I said seeks to control the wide discretion of the president,” he explains. “Do you think the present president will allow her powers, her discretion to be curtailed? Well, to be realistic, it’s just like the impeachment.”
He reasons, though, “This is not an issue between the opposition and the administration, but this is about reforms for the country, not only for the administration.”
The congressman is counting on heavy pressure from the media, civil society groups, business organizations and the public at large for Congress and Malacañang to agree to reforms in the way taxpayers’ money is spent.
This and other budget reform measures will be presented to the candidates in the 2010 elections and get them to commit to the needed reforms. “After all is said and done, how can anybody in conscience say no to reforms?” Guingona asks.
Abuse of power
Yet, even without the Revilla initiative at the Senate, Guingona’s proposal is not really a new idea. Similar bills had been filed in previous congresses, but none prospered.
Guingona says his bill was inspired by the U.S. Impoundment Control Act of 1974, which was triggered by serious doubts that then President Richard Nixon was abusing his power to put on hold the release of funds for programs he did not like.
The U.S. law created the congressional budget office and established procedures for developing an annual budget plan. It put in place safeguards to prevent the executive department from using the budget as a political tool.
Revilla’s bill, for instance, notes that in 1992, only P270.63 billion of the P334.55 billion budget was released, leaving P63.92 billion or roughly 20 percent impounded or unreleased. The implication? The impounded amount could have been used to dispense political favors.
The innocent-looking entry in the annual budget called “overall savings” makes Guingona suspicious, especially when the previous year’s budget is re-enacted and the administration generates substantial savings that can be used for political purposes.
Savings or war chest?
In his analysis of the annual budget programs, Guingona points out that savings in 2005 soared to 17.36 percent, from 0.94 percent in the previous year. The government operated in 2004 on a re-enacted budget of 2003.
The situation was almost the same in 2007 when savings reached 16.71 percent, from 0.20 percent in 2006 when the 2005 budget was re-enacted.
This time, Guingona notes a disturbing P106.11-billion “overall savings” in the 2009 budget. The amount, he says, can find its way into the administration’s “war chest” for the 2010 elections.
The money came from unreleased or unused allocations for agencies and lumped into “savings,” which can then be transferred to favored offices. It is in this process where “abuse of savings” comes in, Guingona says.
There are many reasons why appropriated funds are not released. One is an agency’s non-compliance with the documentary requirements of the Department of Budget and Management. Politics is another, such as what happens when the presidency withholds “pork barrel” allocations for congressional districts of legislators perceived to be “unfriendly” to the powers that be.
“Mukhang sinasadya yata ang re-enacted budget (It looks like the re-enacted budget is no accident),” remarks Guingona. “Kapag tinamad ang Congress, kapag nag-order ang presidente, re-enact na lang ang budget (When Congress gets lazy and the president issues an order, the budget is re-enacted just like that).”
With a re-enacted budget, he explains, the president gets what he calls for emphasis as “beef barrel,” as compared to the lawmakers’ “pork barrel.”
This is where, he insists, the impoundment control measure is necessary to stop the executive from transferring appropriated funds from one agency to another through a circuitous process. And this, he says, is what happened with the controversial fertilizer funds in 2004.
Too many lump sums
Benjamin Diokno, who served as budget secretary to former Presidents Corazon Aquino and Joseph Estrada, says the practice of overstating revenues also gives the president the excuse to generate savings from certain agencies while augmenting the budget of other departments.
This effectively weakens the power of Congress over the purse because the president can choose which projects to fund and which not to fund, oftentimes setting aside the priorities of legislators.
Diokno, an economics professor at the University of the Philippines, warns of possible abuses in the disbursement of many lump sum items or Special Purpose Funds in the proposed 2009 budget.
Guingona himself notes that a whopping 87 percent of the annual budget goes to lump sum appropriations, largely for debt payments. That leaves only 13 percent for Congress to appropriate, or to play around with. Worse, more than half or 60 percent of the 13 percent is in Special Purpose Funds where proposed spending is not itemized, thus making it difficult to track.
Lump sums list
Like Guingona and Diokno, former Senate president Franklin M. Drilon believes that limiting the president’s power to withhold fund releases is an effective option to ensure accountability, transparency, and fairness in the budget process. In a forum on the budget last September, Drilon identified the following as some of the lump-sum items in the 2009 budget that the president or concerned Cabinet secretaries can spend at their discretion:
- P3.34 billion – Malusog na Simula, Yaman ng Bansa Nutrition Program (National Nutrition Council)
- P1.792 billion – Malusog na Simula, Yaman ng Bansa Feeding Program (Department of Social Welfare and Development)
- P5 billion – Pantawid Pamilyang Pilipino Program (DSWD)
- P1 billion – National Targeting System (DSWD)
- P500 million – Core shelter program (DSWD)
- P1 billion – Kalayaan Barangay Fund (SPF)
- P1 billion – Kilos-Asenso Fund (SPF)
- P2 billion – Calamity Fund (SPF-Office of the President)
- P800 million – Contingent Fund (SPF- Office of the President)
- P9.36 billion – Ginintuang Masaganang Ani for Rice (Agriculture and Fisheries Modernization Fund)
The Ginintuang Masaganang Ani or GMA banner programs of the Department of Agriculture under the Agriculture and Fisheries Modernization Act (AFMA) in particular has become a favorite reference of Guingona and other advocates of budget reform to illustrate abuse of the power of the purse.
In its 2007 report, the Commission on Audit (CoA) found irregularities in the GMA programs GMA Rice and Corn, GMA High Value Commercial Crops, and GMA Livestock, including:
- P237.61-million loss or waste of government resources (which could have been prevented if risks were managed through timely devised guidelines, proper coordination with stakeholders, bidding on procurements, acquisition of equipment and farm implements suited to needs and timely delivered, compliance with MOAs and relevant regulations, and timely project progress monitoring and evaluations
- P781.29-million unrealized benefits because projects were either delayed or not carried out due to weak enforcement of conditions to complete the project
- P1.31-billion lack of audit trail due to failure of fund recipients to submit liquidation reports, incomplete or absence of master list of farmer beneficiaries, non-compliance with regulations, MOAs and standard procedures, and NGOs not found in stated addresses/local offices/residents
- 6.5 to 36 percent of sampled farmer beneficiaries in three regions (Regions 3, 4 and 7) did not receive the subsidized rice seeds/fertilizers from DA and denied the signatures appearing in the master list, while in Region 8, 624 kilos or 46 percent of 1, 345 kilos of rice/seeds for distribution were not accounted for.
Guingona says the anomalies that attended the GMA programs and other favored projects of the administration with lump sum appropriations can be repeated in 2009 and 2010 if the public will not keep a tight watch of how the monies are spent.
The way he describes it, the lack of such a monitor made it easy for P728 million of government money to be allegedly distributed to administration allies for Arroyo’s 2004 presidential campaign against popular action film star Fernando Poe Jr.
Guingona says Bolante appeared to have an automated teller machine (ATM) card with a “bank” known as the Department of Budget and Management, which enabled the DA undersecretary to withdraw more than a billion pesos in just one week.
On Feb. 2, 2004, the DA requested the release of P728 million from the GMA program fund. Bolante got the money the next day, through Special Allotment Release Order (Saro) No. E-04-00164 for the purchase of farm inputs.
On Feb. 11, DBM issued another Saro, No. E-04-00294 for P1.102 billion requested on Feb. 9 to cover the implementation of the GMA Rice and Corn program.
The initial release of P728 million, Guingona says, came from savings of P970 million in the DA funds in 2003 for the GMA programs and were carried over to the 2004 budget. The bigger release of P1.102 billion came from the regular appropriation of P2.86 billion.
That explains the bigger allocation of P2.86 billion for the DA in 2004 compared to the re-enacted 2003 outlay of P2.56 billion. The GMA programs fall under the SPF/lump sum amount under the AFMA.
Guingona also points out that Bolante actually got P1.83 billion from the DBM in one week, just days before the start of the campaign period for the May 2004 presidential elections.
“The tragedy here is, Joc-joc Bolante did nothing illegal,” Guingona admits. “But is it moral? Is it ethical that P1.83 billion is released in one week during an election period? Something definitely smells fishy here.”
Guingona, though, clarifies that Bolante is finding himself in deep trouble for alleged manipulations in the distribution of the funds intended for farmers. There were substitution of beneficiaries, “ghost” deliveries of farm inputs, and other questionable ways to disburse the money.
In the 2009 budget, the DA allocation, including AFMA, totals P39.7 billion, representing a growth of 56.3 percent from the 2008 outlay of P25.4 billion. The DA was the third of five portfolio agencies with the highest budget increase in 2009, next to DSWD (up by 114.7 percent, from P.4.89 billion in 2008 to P10.5 billion in 2009) and Department of Finance (70.23 percent more, from P8.13 billion to P13.84 billion).
In presenting the P1.4 trillion budget proposal for 2009 to the Senate in September, Budget Secretary Rolando Andaya Jr. enumerated the DA priorities in support of the administration’s thrust for food sufficiency as: fertilizer, irrigation and other infrastructure, extension and education, loans, dyers and other post-harvest facilities, and seeds. These were the same items involved in the 2004 fertilizer fund scam and other GMA programs under the DA.
The 2007 COA report on the DA notes: “The good intention of the GMA Rice Program to reduce poverty incidence and attain national food security is tainted with weaknesses and irregularities in its implementation, reducing the effectiveness of the program.”
Advocates of budget reforms are saying that the only way to ensure judicious spending of the people’s money is for Congress to clip the president’s power to manipulate the budget process.
But the big question is: Will the president be willing to give up such a privilege that keeps her in power?