Press Release
September 15, 2011

Kapihan transcript Part 1 of 2

It's his almost 24 years in this chamber, which will sadly end in 2013. He is graduating. So, good morning. Welcome to our Kapihan.

Thank you Bote and thanks to our colleagues from the media. I think, it's been some time since we had a dialogue like this. And I welcome this, not necessarily just about the budget. The budget is a very arid, dry topic. We can discuss other topic outside the budget to make it more entertaining, perhaps more engaging.

Looks like this government is more fixated on arresting the deficit than creating jobs and spending for infrastructure.

Yes, I'd put it rather frankly to the secretary, whether the aim of his watch is just simply to reduce the deficit or if not, the ultimate objective of government and nation in this times of hardship to create jobs and grow the economy-- isn't that the ultimate purpose?

Deficit spending to be accurate is just a method of financing your development and as I explained, you know, our deficit is less than 3 percent. In fact, it's just averaging 3 percent for the past five years and in perspective, three percent is not going to break us and make us like a sore thumb in Asia or in Asean. That's par for the course. And when we compare ourselves to the European Union, it's now encountering serious financial difficulties. The deficit ratio, for instance of Greece is almost 17 percent. It's like 17 percent of their GDP is their deficit. The same with Portugal, with Ireland, with Spain.

Now they have to go back to the basic. How to grow their economy. The second point I raised is that is going to be easily leaked or reduced, because we are now awash with cash. The world is full of liquidity and the Philippines especially is liquid. We have about 1.8 trillion pesos parked with the BSP, money coming from the commercial banks. Why is it there? Because those are surplus funds of banks with no counterpart borrower. Walang demand. So, if you are not earning, under the rules of BSP, you can deposit it with the BSP and you earn 1 percent, 2 percent overnight rate. Imbes na idle sa bank, it earns while parked with the BSP.

Now 1.8 trillion is almost unbelievable. That's record liquidity. That's why ang borrowing ngayon, if gov't borrows, yung 90T-bill interest rate is .4 percent, less than half a percent. Yung one year T-bill is only 1 percent. Look at that borrowing rate. So govt can borrow and finance our infratrucures - roads and bridges, our lack in classrooms, clinics, etc. very cheaply! Why are they not doing that? Maybe the inadequate or insufficient weighing betweem the need to grow the economy and create jobs and they need to stabilize the deficit.

Why the budget cuts on some govt agencies ...

Generally, that's true but I'd like to see it as more sectoral perspective. The cuts mostly are in human capital services. Education, health and in infrastructure. The one that moves commerce and people around - roads, bridges, etc.

Now, these two, education and health, roads, bridges, access roads, these are the investments in human capital and in physical infrastructure that ultimately will help you tremendously when the good times come back. Because then you would have taken good care of your people, they're in good health, equipped them with the necessary knowledge and skills and then they have good roads to which to travel to which commerce of men can be undertaken.

These are what the economists call productivity enhancing activities. But what seems to be the overwhelming emphasis? Welfare, diba? We are at most doubling the amount of the so called Conditional Cash Transfer? As Sen. Drilon said, we are doubling the pension payments to the extent that we are setting aside more money to the retired soldiers than setting aside to the active soldiers. Skewed masyado ang allotment ng limited resources.


But what's happening on the ground in terms of disbursement and spending? Even worse, because just listening to the DPWH, they have an infra budget of 90 billion for 2011. What have they spent as of August 31, 2011? 16 Billion lang, yun lang ang na -disburse out of 90 b, so they have to catch up and say, yeah we will spend 20 Billion from now on so that by the year end we would have spent 80 Billion out of that 90 Billion.

But you see that's easier said than done as I mentioned to Sec. Purisima. Because we are now entering the rainy season and these are infrastructure diba? Noon ngang dry season, ang average nila 16 Billion over six months, parang 2 Billion lang every month. So there's something wrong with this kind of planning and execution.

New malacanang pork barrel... miscellaneous personnel benefits funds...

I think that's greatly misunderstood. The miscellaneous personnel fund has always been a heading or an item in the budget. It provides for the reserved fund for any position that may be created during the budget year. That is the rationale for that.

Now, there is a refinement year for 2012. What the budget has done is all the unfilled items, all the appropriations of unfilled times in all the agencies, they collected it and they put it under the miscellaneous fund. Is that to convert the miscellaneous fund into a huge, huge pork barrel of Malacanang. Hindi naman. Because before you can get funds out of that miscellneous fund, you have to show that there is a vacancy, that you have to fill or there is a new position that was created but was not funded under your budget. So there's a mechanism for monitoring the release and utilization of that fund.

Pati funds ng unconstitutional bodies?

Yes, because at least, I think the good that we will achieve by centralizing the filling up of position is that we will have a more efficient use and deployment of funds. Whereas when if they were just lodged with the respective ANC's, what happens is that, at the end of the year, the agency will declare it as savings. And they will pay it out as bonus or 13th month pay, or Christmas pay--yun na lang ang nangyayari,. So, this way, I think, nara-rationalize ang filling up of vacancies and as well as the payment of extra compensation at year-end.

Yung pag-impound nung budget...

Hindi naman inimpound, it's realigned. Now, imbes na leaving that appropriation for vacant position, for salary, under let's say, national defense, ilalagay mo yan sa central fund na miscellaneous personnel fund. Dahil nung nasa national defense, ginagamit nila--one of the uses--na 20 percent of the payroll of the DND, and the Armed Forces is vacant - ini-encash nila yan, dinideclare niang savings. And that's the source, I don't if that's still the source of the Pabaon and Pasalubong, etc.

Pabor ako dun. It now makes for a more efficient administration and utilization of very scarce resources.

Re: transparency of special funds

No, its not Malacanang naman. Its under the administration of - the DBM and before you can obtain any release from them, you must submit an application that this is vacant, there is no funds in your agency, and therefore you are applying for release.

Re: excess funds

We are operating under a deficit. Kapag hindi naubos yun, it doesn't mean that there is extra cash wala pa ring cash yun. Because we are always deficit, meaning that our income is always less than our expenses.

Hindi mo naman sila kinokontrol nun dahil you are not preventing them from filing up that vacancy. You are just simply saying to all, and no one is exempted whether it's executive, judiciary or legislative - lahat yang pera na kailangan to fill up vacancies we will place it in one fund, in one pole.

We can spill theoretically, reallocate, and adjust, but ang attitude nga ni Sec. Abad and his circular to all, he is prohibiting any agency, any one from asking congress to do any realignment and he said that the executive submission is the one that controls. So even us, we cannot do any realignment. That's the import of that circular which I think is unconstitutional. But since they are the one holding the purse, effectively now, they can do that, and they've done that during the time of the last administration. They didn't honor any realignment or addition, or adjustment by congress and I think the present administration, through that circular of Sec. Abad is following that line as well.

Kung ako ang head ng agency or head ng house and senate, I will insist that it is the authority of congress as the holder of the purse to decide the priority, the spending priority. In other words, if the executive says, this money ought to be spent for this bridge, and the house of representative as the originator of the budget say no, it's not for this bridge but for the access roads rather than this bridge that leads to nowhere. Then the judgment of congress must prevail over the judgment of ---

But it's not happening nga because of this practice nga.

No one has questioned yet, and I think, one of these days, somebody will bring it to court.

Re: violation of the constitution

It's a very interesting issue and I think, someone have to bring it to the Supreme Court and someone here in Congress, whether from the House or the Senate must raise now that capital question, because during the past administration, they did it, e. no matter what realignment you make, or what addition you make, without violating the increase of budget that's prohibited, just internal realignment, they don't honor it. Ganun ang giangawa ngayon.

Kung ikaw ay part ng executive, hindi mo madidisobey yun. Because Sec. Abad might just don't release your fund.

I think, they should beging trusting each other. We should begin trusting each other. The malfunctioning of government - ang hirap na nga i-operate ng system ng ating government, but the success of our system of tripartite government is coordination. So if you just stick to your turf and assert authority over your turf to the exclusion of others, without recognizing the corresponding obligation and duty of other department to participate in budget, then you have a dysfunctional relationship. I think that's what happened to the last administration. Naging dysfunctional ang relation between the president and the congress as a result of the impoundment of budget by the executive.

Broadband within the DOST ...

Hindi na nga malaman ngayon kung sino ang in-charge sa broadband, ng internet and ICT, e. Whether it's DOCT, DOST, or - hindi mo na alam, Bote, e. That's why I am proposing nga, this DICT. Department of Information, Communication Technology. Para clear-cut. Malaman natin kung sino talaga ang in-charge of the internet, of broadband, of mobile, of electronics, of information and technology.

You know, if you calculate the fees we pay for that service, it's over 1 billion. If you add up all the service charges for the service providers, it's over a billion pesos.

Re: Disqualification of ZTE

Why should we exclude them? Wala namang formal disqualification sa kanila, hindi ba? May allegation nga, oo, pero depende nga, we should get the best. That's why I am recommending that it ought to be bidded out - negotiated type of selection. Bid out and let's welcome all the best and most modern system we can get.

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