Duterte’s men are ambivalent about federalism

 

 

By Rose de la Cruz

 

Two of President Duterte’s men—Socioeconomic Planning Secretary Ernesto Pernia (a US-educated economics professor) and Spokesman Harry Roque—are ambivalent about federalism and its impact on the economy. But between the two, Pernia is viewed as having the wisdom and proper perspective rather than Roque, whose tongue works faster than his mind.

 

In response to the clashing (Cabinet) opinions on federalism, former Solicitor General Florin Hilbay said in a tweet: “Pernia an economist and head of the NEDA says federalism will wreak havoc on the economy and Roque, the spokesman, not true: Who has the authority to speak on economic matters.”

 

Just recently, Pernia warned of the ill effects of shifting to federalism on the Philippine economy, saying that “expenditure will be immense and the fiscal deficit to the GDP (gross domestic product) ratio can easily jump to maybe 6% or more, and that’s really going to wreak havoc in terms of our fiscal situation,” Pernia said in an interview with One News’ The Chiefs.

 

Rappler reported that the shift would lead to an additional P44 billion to P72 billion and such expenses would result in a downgrade of the country’s credit ratings.

 

“We are now moving to connect the…lagging regions into the mainstream economy and that momentum of infrastructure improvement in the regions is going to be disrupted,” Pernia said.

 

He warned the government about rushing to federalism and to just “do our homework first in terms of preparing the country, for the economy.”

 

It is expected that President Duterte would make a hard push for federalism in his 3rd State of the Nation Address on July 23. Pernia said economic managers, “are thinking about these concerns, too. It’s a presidential decision.”

 

Rappler said other economists have voiced their concerns about shifting to federalism. University of Asia and the Pacific senior economists Victor Abola and Bernardo Villegas said the country might experience hyperinflation under federalism.

 

It added that a survey by Pulse Asia showed that majority of Filipinos reject the shift to a federal form of government and the Social Weather Station also revealed that only 1 in 4 Filipinos know about the federal system of government. The survey showed that 37% agreed with the federal system of government, 29% disagreed, and 34% were undecided.

 

Roque’s counter

 

Presidential Spokesman Roque insists that federalism would have no effect on the government's budget and would not harm the economy. "The shift to federalism, we reiterate, would have no adverse effect on the Philippine economy. Our budget would remain the same," he said on Wednesday, July 18, in a statement.

 

Without citing any data or source of analysis, Roque explained that national projects would simply be funded by the budgets of local government units.

 

"Identified national projects would be devolved and transferred to the internal revenue allotment (IRA) of local government units. These projects include maintenance of barangay roads and bridges, water supply services, barangay health centers and daycare centers, solid waste disposal system of municipalities, among others," he said.

 

Roque added that the Palace has "discussed and clarified the matter" with Pernia.

 

But Roque's explanation of why federalism wouldn't change the national budget or harm the economy far from covers points raised by economic experts warning of the dangers of the shift.

 

Some economists foresee federalism causing hyperinflation if the government is unable to control spending by local governments given their new sources of income and new powers.

 

Rosario Manasan, senior research fellow of the Philippine Institute for Development Studies, NEDA’s think tank, said the government would have to fork up an additional P44-72 billion for the shift to federalism to be used in salaries of governors and vice governors of the states, senators – whose numbers would increase under a federal government, politicians' staff, and the offices' operating expenses.

 

Rappler’s close reading of the draft federal constitution of the Consultative Committee (Con-Com) shows the cost could be even higher since the committee also created 4 high courts, 6 constitutional commissions, and 18 regional legislative assemblies and the cost of holding a plebiscite to vote on the new constitution, plus elections of the transitional president and vice president as called for in the Con-Com draft.

 

BBL can work

 

Senate Minority Leader Franklin Drilon said the proposed Bangsamoro Basic Law (BBL), which Senate is about to finish, is proof that a region can achieve self-governance without a shift to federalism.

 

BBL is proof that we do not need federalism or amending the Constitution in order to achieve the self-governance or the benefits of federalism that is being presented to the people. Why? The BBL grants self-governance,” Drilon said last July 18.

 

"It's clear we do not need a federal system to achieve what we want to do. And the present Constitution allows the alleged benefits of federalism to be done by legislation," he added in a mix of English and Filipino.

 

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