The Congressional Policy and Budget Research Department (CPBRD) in partnership with the Philippine Institute for Development Studies (PIDS) held a round table discussion titled, “Why Pursue Federalism? Why Not Change the Local Government Code?” The knowledge sharing activity last 13 February 2018 at the Speaker Montilla Hall of the South Wing Annex Building aimed to broaden the understanding of the possible economic and fiscal impacts of the shift to a federal system of government.
Director General Romulo M. Miral of the CPBRD pointed out that proposals to shift to a federal system of government could potentially address a major development challenge, which is eradicating poverty. Dr. Miral attributed the persistent poverty situation to a highly centralized government structure, giving rise to substandard quality of government services. Under a highly centralized structure, the provision of public services tends to be organized into sectoral, instead of spatial categories.
A further challenge according to Dr. Miral is the problem of common pool resource, which is ‘a resource for the joint use of numerous individuals but where the consumption of the resource by an individual or group reduces the amount available to others.’ Individuals or groups are thus inclined to use more of these resources but to invest less in their upkeep. The common pool resource creates a condition where corruption could be tolerated, and patronage politics and political dynasties may thrive.
To address this issue, Dr. Miral argued that proper expenditure and tax assignment, appropriate government transfers, and better government interrelations can help address the common pool resource issue. While either a shift to federalism or decentralization can both address the common pool resource problem, federalism may be a better option due to the following reasons: improved vertical and horizontal fiscal balance, and well-designed intergovernmental relations and institutions that facilitate self-rule and shared-rule, among others.
Dr. Rosario Manasan of the PIDS elaborated on whether federalism is the answer to the country’s problems. She contended that the problem on a common pool resource is not so much the disproportionate regional share of national government spending (i.e., NCR) relative to their contribution to the economy or to their need for public services. She noted that the real issue is the concentration of power in the President which leads to transactional politics and that this concentration of powers resulted from the country’s faulty electoral and party systems.
Dr. Manasan explained that if this was the case, the answer could lie in electoral and political reforms rather in the change of the system of government. A shift to a federal system could alter the distribution of powers between the federal and subnational governments and reduce the federal budget, such that the common pool may decline. This decline will depend on the extent of distribution of powers in the proposed system relative to the present one but the current proposals do not sufficiently decentralize government powers.
Dr. Manasan added that the adoption of a federal system of government will promote increased efficiency in terms of optimal provision of public services and higher societal welfare, enhance accountability to voters, and address ethno-cultural problems.
Dr. Ronaldo Mendoza, Dean of the Ateneo School of Government, built on the earlier presentations of Drs. Miral and Manasan and explained that despite the growth experienced by the country, income inequality continues to worsen. Aside from the concentration of finance and economic activities in very few areas, Dr. Mendoza pointed to political families as a contributory factor to the problem. His study showed that the fatter the political dynasty becomes, the higher the poverty is in a location. According to him, no amount of fiscal reforms can improve the situation if governance does not improve. Dr. Mendoza therefore proposed some governance reforms: poor LGUs with low governance will receive conditional cash transfers and grants, while those middle income LGUs with moderate governance will receive unconditional grants, and those with high income and high governance will not receive any transfers from national government as they are already able to provide for their development efforts.
|1:00 PM - 1:30 PM||Registration|
|1:30 PM - 1:40 PM||National Anthem|
|1:40 PM - 1:50 PM||
DR. SHIELA V. SIAR
Philippine Institute for Development Studies
|1:50 PM - 3:15 PM||
Director General. CPBRD
Senior Research Fellow, PIDS
Dean. Shool of Government
Ateneo de Manila University
|3:15 PM - 4:00 PM||OPEN FORUM / CLOSING|
MR. NOVEL BANGSAL
Service Director, Social Policy Research Service