Press Release
November 26, 2015

By Senator Miriam Defensor Santiago
26 November 2015

The 2016 Budget Proposal

Next year, the Aquino administration proposes a P3.0 trillion budget, P447 billion higher than the 2015 budget, or an increase of 17.4 percent.

That is quite ambitious for three reasons. First, is the epic underspending record that it has displayed in the last five years. What has the Aquino government done lately to convince us that there has been a dramatic change its competency?

Second, there is an election ban before and after the presidential elections. That would surely slow down spending for public infrastructure.

Third, a new administration will come to power on 1 July 2016. Historically, public spending would tend to be lower during the first four quarters of a new administration.

Notorious Underspending

The Aquino administration for the last five years has been known for missing its spending targets.

In 2011, it asked Congress for a budget of P1.711 trillion. It managed to spend only P1.557 billion, or an underspending of P154 billion.

In 2012, it asked Congress for a budget of P1.854 trillion. It managed to spend only P1.778 trillion or an underspending of P76 billion.

In 2013, it asked Congress for a budget of P2.021 trillion. It managed to spend only P1.880 trillion, or an underspending of P141 billion.

In 2014, it asked Congress for a budget of P2.281 trillion. It managed to spend only P1.982 billion, or an underspending of P299 billion.

That is a total underspending of P670 billion in just four years. This year is not any better. Planned spending from January to July 2015 was P1.470 trillion. But actual spending was P1.28 trillion, for a colossal underspending of P190 billion in just seven months.

It is not as if the Aquino III administration is meeting its promised outputs and outcomes at less cost. It is simply failing in meeting its promises to the Filipino people.

The Philippines suffers in comparison with its ASEAN-5 neighbors in terms of public infrastructure. It has the worst roads, airports, sea ports, most expensive and unreliable power supply and the slowest and most expensive internet connections among its neighbors.

It has the worst unemployment rates. And it is the poorest in terms of per capita GDP and proportion of poor people below the poverty line.

So why does it continue to underspend? (A) sheer incompetence; (B) deliberatively bloating the budget request so it can play around with the artificial 'savings'; (C) poor budget planning by including in the budget projects that are not implementation-ready; or (D) All of the above.

Budget-Related Challenges

Last year, at around this time, I delivered a privilege speech warning about excesses in pork barrel spending, and abuses in the utilization of lump- sum appropriations and unprogrammed expenditures.

I rise again to repeat the same warning on the 2016 budget; only the portents are more grave and the threats to our financial stability more serious.

Aside from underspending, what are the budget-related challenges which confront us in 2016? The most serious challenge of all is the problem of poverty which continues to rise in spite of our vaunted economic growth.

NEDA Secretary Arsenio Balisacan has reported that among ASEAN countries Indonesia, Thailand, Malaysia, Vietnam, and the Philippines, only our country?s poverty levels continue to rise, while those of other countries have gone down.

Unemployment and underemployment remain inordinately high. Social Weather Stations reports that 27.6% of those without jobs are women. Furthermore, 50.2% of the jobless are within the ages of 18-24 years.

We are not taking care of our young jobseekers. We also face the threats and consequences of accelerated climate change. There will be more storms, typhoons, earthquakes and floods. We cannot reverse the onslaught of natural disasters. We can only prepare for them.

Still another challenge is the 2016 election. There is no doubt at all that the 2015 and 2016 budgets are prone to electoral politics. Decisions about fund transfers in the guise of "savings" are not necessarily for public purposes but for election-related objectives.

However, the most dangerous threat is the continued presence of PDAF-like allocations and the provisions for lump sum appropriations in the General Appropriations Bill (GAB) for 2016. This is in open defiance of the Constitution and the three recent decisions of the Supreme Court on PDAF and DAP.

The entire 2016 President's budget is littered with 'lump-sum' appropriations, some nationwide, some region-wide. Especially lethal are those that would be released "upon submission by the agency concerned to the DBM of special budget(s) detailing the actual project, activity, or program (PAP) and actual amount to be expended, the rationale and purposes approved by the President."

Every time a lump-sum appropriation exists it potentially means that the original budget approved by Congress, the general appropriations act, is illegally superseded and replaced by a mechanism created by one department or agency. This "budget within the budget" is a "pseudo" appropriations made without Congressional imprimatur. It extends to the heads of departments and agencies a power they do not have. By usurping the congressional power of the purse, it violates the principle of separation of powers.

Call for Congress to Do its Job

During the last five budgets, Congress has dutifully approved the President?s Budget. What the President wants, he gets. We have forgotten that the Filipino people has vested unto us the power of the purse - the power to determine how their taxes should be allocated. It took the Supreme Court in its unanimous decision on the Disbursement Acceleration Program (DAP) to remind us that we have a covenant with the Filipino people.

Mr. President, we must use the 2016 budget to deal with these threats and challenges. We do not have to be subservient to the Executive Department. We have our own mandate and our own responsibility.

I propose the following:

1. Realign contestable budget items and lump sums totaling P166.3 billion to alternative expenditures for social development.

A. A review of the budgets of government agencies identified P58.2 billion - in budget items which are contestable.

B. Examination of lump sum appropriations yielded P108.1 billion in contestable allocations.

C. These contestable allocations which exhibit the characteristics of PDAF can be realigned to various social development expenditures as proposed by civil society organizations and people's organizations in the amount of P155.4 billion.

Mr. President, by taking this bold step, we realign items of expenditures which are PDAF-like. Thus, we protect the Constitution and respect the Supreme Court decisions. At the same time, we respond to actual needs articulated by our own people which they have presented in their alternative proposals.

2. Disapprove some objectionable special provisions that authorize heads of agencies in the Executive Branch the authority to modify and realign the programs, activities, and projects as authorized by Congress, through the general appropriations act.

The General Appropriations Bill contains some special provisions that unconstitutionally and unlawfully authorize the respective heads of agencies in the Executive Branch -- not even the President as Head of the Executive Branch -- to modify and realign the program, projects or activities after the same has been authorized by Congress through its enactment of the General Appropriations Act. But realignment, reprioritization, and reallocation are species of transfer or augmentation prohibited under the Constitution, Article 6, Section 25 (5). Under Section 25 (5), only the specific officers mentioned are authorized by law to "augment any item in the budget for their respective offices from savings in other items of their respective appropriations".

3. Totally reject the redefinition of savings which exacerbates the unconstitutional provisions of the 2015 GAA and willfully ignores the three decisions of the Supreme Court on PDAF and DAP.

Mr. President, we all know that in 2014, the Supreme Court declared PDAF and DAP as unconstitutional. However, PDAF-like items are still embedded in the 2016 General Appropriations Bill. This is made justifiable by the redefinition of "savings" in the provisions of the bill.

The definition of savings (Sections 65 and 66 of the General Provisions) skirts the Supreme Court ruling (Araullo v. Aquino, G.R. No. 209287, 1 July 2014) against the DAP. The High Court ruled that savings can be declared only when there are still funds available after the final discontinuance or abandonment of the project, activity, or program (PAP).

I therefore propose that the definition of savings as reflected in the 2014 GAA and as expounded by the Supreme Court be incorporated in the 2016 GAA, in lieu of the present definition in the 2016 GAB.

Prior to 2014, past administrations have lived under such definition of savings. The 2015 and 2016 formulations of savings were meant to circumvent the Supreme Court decision on the DAP. Congress should not be a party to this attempt to defy the High Court.

Balances of appropriations arising from unused compensation and related costs cannot, and should not be considered savings, because it might create perverse fiscal behavior. The agency head may choose not to hire personnel (teachers, policemen, judges, etc.) when public interest require that they should, presumably so they can create savings within his/her agency. It may also create incentives for the Budget secretary to overestimate the personnel requirements so he can generate savings that later can be used to augment other items in the budget. It should be noted that the proposed 2016 budget request a huge P92.258 billion for the lump-sum Miscellaneous Personnel Benefits Fund. It would be good budget practice not to treat balances of appropriations from lump-sum funds (Miscellaneous Personnel Benefits Fund, the National Disaster and Risk Reduction and Management Fund (P38.896 billion), the Pension and Gratuity Fund (P113.977 billion) as savings.

Mr. President, we are facing difficult challenges. If we allow the trend of PDAF and DAP abuse to continue we will be neglecting our duty to respond to the articulated needs of our people. We will be abandoning our oath to defend the Constitution.

4. Delete Section 68 of the GAB or House Bill No. 6132. Augmentation from savings, appropriately defined, is allowed in the Constitution under very restrictive conditions. Realignment is not contemplated in the Constitution. It violates the Supreme Court decision on the DAP.

Limit, rather than expand, the scope of the power to augment. If there are new projects that need to be funded, there is always the budget for the next fiscal year. If it is extremely necessary (like in the Mt. Pinatubo eruption or other serious calamities), the President has the option to submit a supplemental budget.

Let us all join hands in making the 2016 budget an inclusive instrument for serving our people and for upholding the Constitution!

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