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Highlights of the Forum on Governance and Law: Realising Change and Approaches that Work

The forum on Governance and Law: Realising Change and Approaches that Work was held last 15 September 2016 at the Rooms 1&2 RV Mitra Building, House of Representatives.  This was attended by representatives from the Commission on Audit, Department of Environment and Natural Resources, Department of Agriculture, Filipino Competition Commission, and Department of Trade and Industry.  Also in attendance were Congressional Staffs, and officers and staff from the Committee Affairs Department and the Congressional Policy and Budget Research Department.

In the opening remarks of Deputy Speaker Rep. Sharon Garin of the OWWA Party List, it was pointed out that economic growth continues to be a concern of the country. She further stressed that high sustainable economic growth cannot be achieved without good governance and policies. Rep. Garin emphasized continued rural development, increased investments, and human development under the inclusive socio-economic reform being part of the 10-point agenda of the present administration. Economic development should improve the quality of human lives.  It should be multidimensional and  should entail not only widening access to markets, but also ensuring more people with access to better education, health, basic infrastructure services, and gainful employment. Therefore, the existing constraints that prevent the realization of growth must be addressed properly and that good governance must promote accountability as without it, laws and policies may be less effective.

The presentation of Dr. Yongmei Zhou, Governance Advisor of the World Bank, entitled “Balancing Reforms: Governance and the Law,” focused on the following main messages of the World Development Report on governance and law:

§  For policies to be effective, institutions need to enable cooperation, coordination and commitment.

§  Various manifestation of power imbalance impedes cooperation, coordination and commitment.

§  The agency of elites, citizens and international actors can expand the set of implementable policies by making the policy arena more contestable, shaping the preferences of policy bargaining actors, and enhancing their incentives for pursuing reforms.

Dr. Zhou stressed that power imbalance is a typical problem in most countries and it can affect policy effectiveness.  She cited other drivers of policy effectiveness: credible commitment, coordination, and cooperation. An example under commitment mechanism is the promise of law enforcement by judiciary and legislatures. She also cited country election as a form of discipline mechanism where citizens opt to vote or not an elective official if he/she is unable to or failed to deliver an agenda. However, she stressed that democratic election is an imperfect mechanism because citizens may not punish a government that failed to deliver its promise.

Dr. Zhou explained that voter’s disappointment over government performance makes voters participate less and therefore less likely exercise the discipline that democratic system is designed to achieve. To remedy such failure, she noted that some countries experimented on transparency measures just like what the Philippine government had recently initiated on Freedom of Information policy. She also mentioned that Sweden and United States were the front runners of transparency in the late 1960s.

In terms of coordination policy, Dr. Zhou stated that effective coordination often involves strong parties and bureaucracies. On the other end, reformers such as politicians, civil society actors, private actors, and/or international actors need to focus on incentives, preferences, and/or contestability to achieve change. She cited the case of Guatemala which displayed high level of impunity, thus third-party mechanism intervention was initiated to curb the domestic problem. In Italy, a notable symbol of change of preference over entrenched tradition was a collective action enforced by group of business and private sectors against the extortion of Mafias.   As a final note, Dr. Zhou reiterated that collective action mechanism for citizen that involves voting, political organizations, social organizations, and/or public deliberation are imperfect mechanisms.

The other speaker during the forum was Mr. James Brumby, Director for Public Sector and Institutions of the Governance Global Practice.  Mr. Brumby stated that the Philippines has a good government framework but the Filipino people don’t get what they deserve. He stressed that there are too many policy reforms that are not being implemented which weigh down on people.

Mr. Brumby enumerated the following areas of concern relative to good governance:

§  Is the budget truly implemented ?

§  Reliance in infrastructure

§  What’s happening in tax?

§  Open government partnership

§  Role of local government

Underspending and spending into different areas from what it was intended including but not limited to unforeseeable events, e.g. Yolanda and the global financial crisis, were among the problem issues in budgeting. In order to reset the budgeting, he underscored the importance of a good quality annual fiscal reporting.  However, there were year-end reports that did not reach the legislature. He recommended that audit reports must be scrutinized by the legislature.  Overall, the Philippines system of governance does not deliver its services well. The government does not have a budget that is reliable enough to provide fiscal discipline and to enable agencies plan for effective provision of services.

Mr. Brumby underscored the importance of the legislature’s role to hold the executive accountable and to improve quality of rules and regulations and institutional arrangements that govern budgeting.  He further stated the problems arising from the overall budgeting would likely affect the delivery of infrastructure services. The case cited was the pending completion of rehabilitation construction caused by the Yolanda event.

On the tax system, Mr. Brumby shared that there is a general agreement across the international community that to have an effective state, a tax rate of at least 15% GDP is needed. The Philippines is currently at 13% of GDP. At present, 80% of the revenues accrues to the central government which it may or may not provide grants to the local government.


Below are some issues raised and addressed during the open forum. 


On the proposal to reduce corporate and income tax, and increase value added tax

Rep. Christopher De Venecia clarified whether the proposal of the present administration to reduce corporate and personal income tax, as well as the increase in value-added tax (VAT), is pro or anti-consumer. Mr. Brumby responded that it is important to make the tax system simpler and more straightforward not only for easier tax administration but also to encourage higher compliance among tax payers. Many economies have suffered problems such as “base erosion” and “profit shifting” thus, a simpler tax system and keeping tax exemptions up to the minimum are needed to make economies more globally competitive. Coordination among tax authorities around the world is also necessary especially on the issues pertaining to the multinational corporations (MNCs) who are paying lower tax rates, in general.

On the issue of “asymmetrical power” and its exclusionary effects

Dr. Socorro Reyes raised the issue of “asymmetrical power” and its exclusionary effects to society. People tend to resort to violence if policies adopted by governments are non-inclusive. She cited specifically the overarching policy of the present administration and the issues on extra-judicial killings (EJK). She likewise highlighted the role of women as drivers of change in modern societies, thus gender equality in governance should not be overlooked. Dr. Zhou affirmed the positive effect of more women participation in government especially on the quality of policies and legislations they advocate. In the case of India, around 1/3 of the seats in the local elective council are reserved for women and this has significantly changed the local dynamics and perception of women in governing communities. Though at first it takes time because women leaders are front persons of their husbands and families running the show in local communities, as they gain confidence later on, they are able to genuinely participate in local governance as competent leaders.

Further, Dr. Reyes stressed that the case in the Philippines is somewhat different where there are more women in the legislature, executive and judiciary branches of government than in the local government level. Less women at the base of political organization somehow reflects the gender stereotype rule entrenched in the country’s social structure and culture.

Rep. De Venecia expressed support to the statement of Dr. Zhou that there is a need to have more women in the national and local governments. He observed that in his legislative district those barangays which have local development plans and which have more robust and dynamic growth in terms of developments are headed by women.

On the drug issue, Dr. Zhou clarified that it is important for the government to work within the bounds of law. People’s behavior is governed by the rule of law, and if the rules becomes confusing, then people’s behavior can also become unpredictable. It is important to bring back the trust of the people to the institutions and promote greater accountability and predictability. Rep. De Venecia cited that Thailand is now shifting its policy from drug crackdown to drug prevention and rehabilitation, after the former was found to be unsuccessful after ten years of implementation. He reiterated that he is supportive of this kind of policy in the Philippines and that the “war on drugs” in the country should not be exclusive and “isolationist”.

On the proposal towards a federal system of government

Taking off from the assessment that decentralization in the Philippines has been a mixed bag, Dr. Miral queried on what are the important factors to consider in designing the Constitution that would shift towards a Federal system of government. Mr. Brumby acknowledged that recent discussions on federalism and decentralization have been very relevant and timely. A well-functioning system is needed with some level of flexibility, such that resources are sent to where they are needed most. The problem with some cases of decentralization like that of Indonesia is that most social indicators which include poverty, malnutrition, and maternal mortality are showing marked increases.

Dr. Zhou reacted that existing literature on the effects of federalism and decentralization on efficiency, on the responsiveness of local governments as well as on peace and unity, are inconclusive. She stressed that there is no magic bullet in terms of designing a Federal system of government but she pointed out that there are some rules on how to design a system that encourages and provides the right incentives.  

First, it is important to assign clear responsibility to different levels of government—e.g. education, agricultural extension, street lighting and cleaning. It is important to assign these different responsibilities to different tiers with clarity to promote greater accountability. Second is to assign some level of responsibility to subnational governments to source their own revenues. The vertical imbalance in the fiscal system where the central government sources much of the revenues is not really helpful in providing incentives to local government units. The key is to give subnational governments a hard budget constraint and consequently make them accountable for their performance in terms of the delivery of public service at the local level. Another important point for decentralization is to encourage local innovation to come up with solutions that address local problems. It is important to design incentives for people to innovate, and to diffuse these innovations and replicate the same to different tiers—i.e. from the barangays to municipal, provincial, regional and national.  A political system should be designed such that innovators exhibit political progression to allow local leaders to compete for excellence. Political parties therefore play an important role of rewarding their well-performing politicians and give them a ticket to the next level in the future, or some sort of a political ladder.  Decentralization is not a magic bullet that could create less corrupt and more ideal local level governments. The challenge in developing a well-designed decentralization and federalism is to bring more and more local government participation to the right side of the distribution curve, or those performing at a higher standard.

On making government more accountable to the budget

Director Novel Bangsal asked about ways on how to make government agencies more accountable to the budget and how to craft an incentive structure that would make them more as a support mechanism rather as a threat to one another.  Mr. Brumby replied that the three Cs - commitment, coordination and cooperation of concerned government agencies - are very important from ensuring the quality of budget preparation by agencies and the Department of Budget and Management, to auditing by the Commission on Audit, and to legislative oversight by Congress.  The preparation and publication of reports that would hold agencies accountable is also important.

On Judiciary Reforms

Rep. Jocelyn Limkaichong queried about measures regarding judiciary reforms.  She said that there are many pending corruption cases wherein corrupt officials afford impunity and unreasonably delay the administration of justice by applying for temporary restraining orders (TRO) and injunctions with the courts of jurisdiction. Delays on deciding cases could take 10 years because of this traditional practice that breeds corruption.

Dr. Zhou stated that it is unfortunate that in terms of corruption surveys across the world, the judiciary, police and even the legislature tend to be the top corrupt agencies. It is most corrosive when the judiciary and the police are corrupt because people expect them to be law enforcement agencies.  She stressed the importance of cleaning the house by starting with the big fish, and of starting the professionalization process of staff. Qualification requirements of judges, lawyers and policemen need to be reviewed.  Professionalization of staff creates a dynamic process where professional reputation matters.

Dr. Zhou suggested that the chief executive should appoint a decisive chief justice. She cited the case of constitutional reform in Kenya which had a whole chapter on integrity and leadership.  All the judges were terminated, a recruitment was done based on criteria set in the constitution, and a new chief justice was appointed.  It is a radical approach to clean house and professionalize the judges according to merit and corruption records and needs to be driven by a top-down leadership approach.

On choosing between globalization or localization and punitive or incentive measures

Rep. De Venecia asked about selecting between globalization or localization and punitive or incentive measures. Dr. Zhou explained that localization and globalization are two parallel trends.  She elaborated that in globalization, the velocity of flow of money, people, technology and ideas are drastically different from scenario 40-50 years ago which has vast implications in terms of being able to harness the opportunities provided by globalization.  She cited the example of norm setting – professional norms of accountants and judges, or human rights or environmental standards - which remains to be seen whether domestic players are able to harness the international standards for reform.

Dr. Zhou also noted that localization is a trend in most countries.  However, she reiterated that there is no particular right degree of decentralization per se as it depends on the political setting of the country. Decentralization is used to be thought of from a technical, efficiency point of view but country experiences show that decentralization is always driven by political factors such as power, conflict, identity, redistribution issues, and control of resources such as extractive sectors, and reasons about power and identity. Localization and globalization are not contradictory trends. She cited the introduction of transcalar governance which says that governance is not just about the state and the policy arena in the national level but very much about local and community governance. Global transnational governance is increasingly important.

Between punitive and incentive measures, Mr. Brumby said that punitive actions create some incentives.  When things are not working, the focus is really on punitive actions.  Middle income and rich countries do not really talk so much about punitive actions but more on reinforcing good behavior.  Mr. Brumby added that to get a system working well, government must focus on encouraging positive action rather than focusing excessively on the punitive side. He emphasized that a system that is self-correcting is needed.

On the reform process

In reference to the diagram presented by Dr. Zhou on policy effectiveness chain Ms.  Dale Cornelio of CPBRD raised an issue over cases of multi-institutionality wherein breakdown occurs within the said chain, e.g. preferences prevail over reform mechanisms. She also pointed out the need to scrutinize the deterioration of electoral integrity amidst spreading electoral democracies.

Dr. Zhou explained that the reform process is a highly complex and dynamic process.  In the collective bargaining arena, the power for and against a particular policy direction depends on how people are mobilized.  Further, she elaborated the importance of recognizing a multi-stakeholder dynamic process as a nuanced approach wherein there is a need to anticipate repeated reversals of even promising reforms because those undermining the reform process are very smart and creative at organizing and adopting tactics.

On rightsizing the bureaucracy

Ms. Marites Pempeno of the Committee on Government Reorganization asked about how to strike a balance to create an enabling environment or framework to harmonize the varying stance of different branches of government in terms of rightsizing the bureaucracy. She shared that there are proposals to rightsize the bureaucracy for purposes of good governance and improve public service delivery.  However, there are sixty-eight bills creating new offices filed in the Committee on Government Reorganization. 

Mr. Brumby explained that the importance of commitment, coordination, and cooperation among concerned government agencies in rightsizing the bureaucracy.  He said that there is always the possibility that there is an overstaffing in an agency so there is need to rightsize.  He also raised the possibility of age as an issue in the bureaucracy and the need to bring in a new generation of employees in the pursuit of more efficient delivery of services.  

RVM Bldg., Conference Rooms 1 & 2

House of Representatives, Batasan Hills, Quezon City

15 September 2016, Thursday

1:00-4:00 PM

 P R O G R A M M E


1:00-1:15   Registration

1:15-1:30   Opening program

1:30-1:45   Welcome message

  Hon. Sharon S. Garin

  Deputy Speaker, House of Representatives

1:45-2:00   Forum Overview and Introduction



2:00-2:30    Dr. Yongmei Zhou

   Governance Advisor, World Bank

   “Balancing Reforms: Governance and the Law”

2:30-3:00  Mr. James A. Brumby

   Director for Public Sector & Institutions, Governance

   Global Practice

3:00-3:45  Open Forum/ Q&A


3:45-4:00  Closing Remarks


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