THE SECOND NEEDS ASSESSMENT STUDY OF THE COUNTRY UNDER THE AQUINO ADMINISTRATION The Movement for Good

Governance1
The Movement for Good Governance (MGG) believes that citizens should continuously be engaged in a dialogue with government. They should affirm the administration for programs that have succeeded. They should also identify areas that need improvement and strengthening. An open dialogue augurs well for growth, collaboration, and better performance. But citizens feedback need to be fair and should be based on facts rather than perceptions. Nothing can be fairer than using the promises which the President committed to deliver as basis for an assessment. The standards against which the Aquino administration is assessed are those set by himself, and no one else. These promises can be found in his campaign platform, which can be broken down into either 102 or 150 action programs/promises, depending on the websites one visits.2 The Presidents campaign platform was reiterated in his inaugural address, where he promised to keep his promises: No more turning back on pledges made during the campaign, whether today or in the coming challenges that will confront us over the next six years. It metamorphosed into the program of government formally known as his Social Contract with the Filipino People 3 which in turn, serves as the basis of the recently released 2011-2016 Philippine Development Plan (PDP), with Inclusive Growth as the mantra. The Movement for Good Governance uses a scorecard system to assess the performance of the administration based on the extent to which government has implemented the platform of the President. Score 0 2.5 5 7.5 10
1

Assessment The President has broken his promise. There has been very slow or little progress on his promise. Something has been accomplished but is lower than expected. The administration is on track and is expected to achieve the target as scheduled. The target has been achieved as scheduled.

The Movement for Good Governance (MGG) started in 2008 as a coalition of individuals and organizations who believe that he Philippines deserve better governance. MGG supported advocacies and programs on voter and empowerment, leadership development, and election reforms. It launched a TV program entitled Timbangan in partnership with Channel 5 that benchmarked presidential candidates using a scorecard system. MGGs Chair is Prof. Solita C. Monsod. 2 These include the ProPinoy Project (Campaign Promises Checklist), AntiPinoy (Noynoy-Truth-O-meter), abs-cbnNews.com (Aquino Promises Tracker), and politicaarena.com The PNOY campaign website is no longer found in the web. 3 A 16-point program that can be accessed from The Official Gazette

Several indicators are considered as basis of the scores. MGG made its first benchmarking exercise in 2011 with the following scores: Table 1. MGGs Scorecard on the Aquino Administration, 2011 Platform 1. War against Corruption 2. Public Finance 3. Governance 4. Environment 5. Education 6. Health 7. Economy Average Score 4.8 5.8 4.5 4.7 5.68 3 4.4 4.69

The MGG lauded the initial gains of the Administration in implementing its platform, especially the Presidents honesty and good intentions. The competence of his Cabinet members and their dedication to public service were notably observed. The good examples of the DILG and the DBM in setting set good examples in transparency and participatory governance were given high marks. MGG looked with optimism at the promise of CCT in reducing poverty. MGG however notes that a score of 4.69 indicates that many challenges that need to be addressed. These include better public finance through increased revenue collection, increasing and improving health services particularly the poor, improving access to quality education, improving the productivity of the agricultural sector, and providing better infrastructure. MGG also focused on strengthening governance through a coherent and objective appointment system. The rule of law should apply to everyone, including friends, family and supporters. After a year, the MGG benchmarked the performance of the administration relative to its success in fulfilling the promises of the President. The assessment was collectively made by MGG members and the paper benefitted from a peer review. A. THE ECONOMY I. Introduction

1. From Campaign to Contract to Plan: In the run-up to the 2010 Presidential elections, Benigno Simeon Aquino III (PNoy) came up with a 16-Point Presidential Campaign Platform. His inaugural address referred to this campaign promises, saying No more turning

back on pledges during the campaign, whether today or in the coming challenges that will confront us over the next six years. And to further underscore this commitment, his campaign platform metamorphosed into his Social Contract with the Filipino People (again 16 points) which is posted in the Official Gazette, and which served as the basis for the 2011-2016 Philippine Development Plan (PDP). His campaign platform on the economy, which was came second only to his pledge to be the most determined fighter against corruption, is reproduced in toto: 2. From a government that merely conjures economic growth statistics that our people know to be unreal to a government that prioritizes jobs that empower the people and provide them with opportunities to rise above poverty. 2.1 We will have broad based and inclusive economic growth through increased incomes by generating quality jobs and attracting more investments. 2.2 We will improve infrastructure in transportation and housing, which will generate jobs and also support investments. 2.3 We will refrain from imposing new taxes or increasing tax rates. Five of his 16-point Social Contract with the Filipino People deal with the economy: 6. From government policies influenced by well-connected private interests to a leadership that executes all the laws of the land with impartiality and decisiveness. 7. From treating the rural economy as just a source of problems to recognizing farms and rural enterprises as vital to achieving food security and more equitable economic growth, worthy of re-investment for sustained productivity. 8. From government anti-poverty programs that instill a dole-out mentality to wellconsidered programs that build capacity and create opportunity among the poor and the marginalized in the country. 9. From a government that dampens private initiative and enterprise to a government that creates conditions conducive to the growth and competitiveness of private businesses, big, medium and small. 10. From a government that treats its people as an export commodity and a means to earn foreign exchange, disregarding the social cost to Filipino families to a government that creates jobs at home, so that working abroad will be a choice rather than a necessity; and when its citizens do choose to become OFWs, their welfare and protection will still be the governments priority. B. The Plan, the Results Matrices and the Public Investment Program. There has been an unfortunate series of delays with respect to PNoys Social Contract. First, the 2011-2016

PDP was released only at the end of May 2011. Then the accompanying Results Matrices (RMs), referred to in the PDP, which would allow the performance of the implementing agencies to be graded/evaluated, was distributed only in February of this year. What is more, the Public Investment Program (PIP), also referred to in the PDP, which would identify the projects necessary to implement the PDP and the corresponding budgetary requirements and amounting to P4.2 trillion per the final draft last November has not as yet been released to the public. In connection with the PIP delay, there is a silver lining. Those in the know say that it has been caused by PNoys asking questions and/or expressing concern about some of the projects in the PIP. If that is indeed the case, it may well be that it is the first time a President has looked so closely (if a look was given at all) at what is deemed to be necessary to turn a development plan into reality. Which may then mean that the President may have also read the Plan itself, as well as the Results Matrices. Which augurs very well for their fulfillment. The 98-page RMs document should make easier the assessment of the performance of PNoys second year, because it contains, for each chapter/sector of the PDP, the outcomes desired; which of the 16-point Social Contract items are being addressed; the indicators/units used for such outcomes; the baseline values of these indicators/units; the end-of-plan target values, and the Implementing Agencies(IAs)/Oversight Agencies (OAs) that presumably will be held responsible in this whole-of-government managing for results approach. On the other hand the level of specificity of the targets (98 pages worth, including a detail such as the increase in eggplant production) may result in overlooking the forest for the trees, or abandoning what begins to assume the proportions of a hopeless cause. Another shortcoming of the RMs is that in most cases, annual, or even mid-Plan (contrary to what is asserted in its introduction) target values have not been set. . For example, with respect to GDP growth, what is stated is that at the end-of-plan period, the growth rates of the economy should have averaged 7 8 % a year, while annual agriculture growth rates should average 4.6% - 5.7% a year. To address this shortcoming, the MGG assessment makes the assumption that these annual averages are themselves the target for the year. Still another problem with the RMs has to do with the fact that when work on the PDP started, the National Income Accounts (NIA) had 1985 as a base period; when improvements to the NIA were made, including its rebasing to 2000, the necessary adjustments were not made in the PDP, nor in the subsequent RMs. A couple of indicators particularly sensitive to this problem are the investment ratio (capital formation/GDP) and the average real per capita GDP, which are used to determine performance in achieving high and sustained economic growth. The base values and the targets for these (there may be others) in the RMs are still quoted in 1985 prices, which are no longer in use, making it difficult to then determine whether the targets have been met. In addition, the capital formation concept has been broadened (e.g. to include intellectual property and military equipment, previously excluded).

To address this problem, the MGG applies the targeted percentage increase in the above indicators to the new base values (in 2000 prices) to arrive at the reestimated target values. To illustrate: the base year values (the 2004-2010 average) for the investment ratio in the RMs are 15.3% (Nominal) and 18.2% (real). The End-of-Plan Target Values are, respectively, 20.1% and 22%. This implies an increase of 31% in the nominal investment rate, and 21% in the real investment rate by 2016. Applying these growth rates to the base values computed using the rebased National Accounts (19.2% and 18.8% respectively); the reestimated End-ofPlan values for investment rates would be 25% (nominal) and 22.7% (real). The MGG further assumes that the increase in the indicators targeted for 2016 will be spread evenly over the plan period i.e. the nominal investment rate should be increasing by about 1 percentage point a year and the real investment rate by about 0.65 percentage points a year. With these caveats in mind, let us now proceed to the Economic Scorecard, Year II II. Scorecard on the Economy, Year II: Because the RMs is now available, the MGG assessment of how the economy performed during Year II of the Aquino Administration can now include the assessment of a much larger set of indicators than the Year I assessment. Unfortunately, the websites of many of the IAs/OAs (Implementing/Oversight Agencies) that are cited in the RMs for relevant indicators do not seem to be aware of what their responsibilities arebecause their websites do not have any information on targets vs. accomplishments. For example, the latest National Housing Authority website on performance vs. targets cover the period January-June 2011. Plus, the HUDCC website could not be accessed at all, the message being: Forbidden: You do not have permission to access this document. The question then arises as to whether the whole of government management for results approach is being taken seriously by these agencies. The National Statistical Coordination Board (NSCB) has just uploaded in the StatDev (Statistical Indicators on Philippine Development) section of its website, the 2011 data for 164 of the indicators in the RMs for which data are available (actually there are another 22 indicators for which data are also available, but they are without targets, and whose performance is classified only as either increasing or decreasing, depending on their baseline and latest data), together with their baseline and end-of-Plan target values. The NSCB has also calculated, applying the methodology used for the Millennium Development Goals, what the probability is of achieving those targets given the latest data. The performance of indicators whose probability of meeting target values on time is higher than 90% is classified as good; those whose probabilities are between 50% and 90% are classified as average (i.e. can go either way); and those whose probabilities of achieving the target values are less than 50% are classified as poor. What are the results of the NSCB calculations? Of the 164 outcome/objective indicators listed, 72 show good performance, 13 show average performance and 79 show Poor performance. Is it possible that a tyranny of numbers is at play here, and that the 72 indicators that show good performance are the relatively more important or critical ones, while the 79 poor performers are the less important ones? The answer is no. While eggplant production shows

poor performance, for example, so does the performance of palay production/productivity, or for that matter the real GDP growth rate, and the Exports-to-GDP ratio, and land distributed under the agrarian reform program. And while employment generation shows good performance, so does mango production. If the StatDev already has an assessment, why is the MGG assessment still being done? Firstly because MGG assessment is based on, wherever possible, 2012 data as well, because what is being evaluated is the performance of the in his second year which started in July of 2011. Secondly, the assessment also points out (which is beyond the StatDev mandate) possible inconsistencies in objectives, points out where the RMs do not reflect or have overlooked his campaign promises (which PNoy committed himself to fulfill); and most also points out the impact of the accomplishment/or non-accomplishment of targets on other targets/objectives. We start the MGG Economic Scorecard Year II by showing last years Scorecard Table 2. Scorecard on the Economy, 2011 Platform 1. Inclusive economic growth GDP growth (6.2); Investment ratio (8); employment (7.2) average 7.1 Poverty alleviation 7.5 2.Infrastructure on transportation and housing Infrastructure (2.5); Housing (2.5) 3. No new taxes 4.Plug revenue leakages BIR (6.6); BOC (0) 5.DBM review and plan to reduce overhead costs 6. Modernize the agricultural sector Average Score Weight 7.3 5.0

2.5

1.0

7.5 4.95

-1.0 1.0

0 2.5 4.4

0.2 0.3

The indicators in the RMs that are used for this years assessment of the Philippine Economy over PNoys Year II, and their scores, are as follows: A. GDP Growth: In the first three quarters of PNoys second year in office, real GDP growth rate averaged 4.46% -- 3.7% for Q3 2011, 3.6% for Q4, and 6.4% for Q1 2012. Obviously the growth performance for the first quarter of this year was not enough to pull up the mediocre growth performance in the two previous quarters. This is a far cry from the target of 7-8% a year, and definitely lower than the growth performance in the first three quarters of the Presidents term (which, as can be seen from the table, was 6.2%). Score: 4.5

The RMs lists more specific targets under the high and sustained economic growth objective. Sectoral targets for Agriculture, Industry and Service output growth are set an annual average growth rate of 4.6%-5.7% for agriculture, 8.1%-9.1% for Industry, and 7.1%-8% for Services. All sectors missed their targets, for the period under consideration, with agriculture turning in the relatively poorer performance and services, the relatively better one (Agriculture growth rate 0.1%, Industry 2.55, Services 6.6%). B. Investment Ratio: The real investment ratio for the first three quarters of Year II of PNoys administration averaged 20.9% of GDP, which although less than the corresponding period of Year I (22.6%), still shows a better-than-target performance. Using2000 as the base year, and the assumption that the desired increase in the investment ratio is spread evenly over the plan period the target real investment ratio for 2012 should be 20.1%. Score: 10 (NB: there are no Foreign Direct Investment targets in the RMs, but it is noteworthy that Net FDI for the first three quarters of Year II was 4.5% higher than the corresponding period of Year I). C. Export/GDP ratio: With a base value of 46.7%, the real export-to-GDP ratio is targeted to reach 64.3% by the end of 2016 (there are also end-of-Plan export targets in nominal terms imply increasing exports by $9.8 billion a year or $3.3 billion a quarter). Applying the usual assumption (which means a growth in the ratio of 2.9 percentage points a year), the implied target for 2011 would be 49.6% and for 2012 would be 52.5%. The actual value for the first three quarters of PNoy Year II is an average of 46.7%, which means there was no progress at all. There is a silver lining: QI 2012 Export/GDP ratio was 50.2%. But the Economic Managers who are listed as the IAs/OAs, have their work cut out for them exports for the first quarter of 2012 were only $1 billion more than the comparable period last year. Score: 2.0 D. Employment Generation: The target net new employment is an average of 1 million per year of the plan period, with an end-of-Plan unemployment rate targeted to be as low as 6.8% but with a safety factor of 7.2%. The very good news is that the employment generated in the first three quarters of PNoy II (as measured by the October 2011, January 2012 and April 2012 Labor Force Surveys) consistently exceed 1 million a year : 2.06 million in Oct. 2011, 1.10 million in January 2012, and 1.02 million in April 2012. The unemployment rate for these three periods averaged a little over 6.8%. For gravy, it must be pointed out that the share of wage and salaried employment to total employment rose to 55.5% from 55.0% between April 2011 and 2012. That means that 561 thousand workers joined the ranks of the waged and salaried (mostly from the ranks of the self-employed). Score: 10 E. Income Poverty Reduction: The next Family Income and Expenditure Survey (FIES) will be conducted in 2012, which means that no official data are available. However, the Conditional Cash Transfer Program is very much on track, with almost 3 million poor families

covered as of March 2012 (end-of-Plan target 4.2 million families). There is no report as yet on the status of implementation of the Senior Citizens Law which provides a social pension to be given to poor senior citizens. Another official indicator that can be used to determine not only how the war against poverty is being waged but also how the countrys growth potential can be increased is the Access to Asset Reform, e.g., the increase in the number of hectares of Land Acquisition and Distribution (LAD) under the agrarian reform program. Here the PNoy administration performed poorly. In 2011, only 54.6% of the targeted hectarage for the year had been acquired/distributed. For the first quarter of 2012 (again assuming the targeted distribution will be accomplished evenly throughout the year), that accomplishment rate has gone down to 25.5% (that is to say, only 15,300 hectares of the targeted 60,000 hectares for the quarter (240,000 hectares for the year) were acquired/distributed. The unofficial and self-rated poverty surveys, particularly those conducted by SWS on poverty and hunger, show that there has been no progress at all on poverty reduction in PNoys Year II relative to Year I. The May,2012 SWS survey showed that poverty incidence was 51%, as compared to 49% in June of 2011 margin of error + or 3% (it showed 50% for June 2010 ). The hunger results also showed no significant change between hunger incidence in May 2012 (18.4%) and that of June 2011 (15.1%), although there was a significant drop in hunger between June 2010 (21%) and June 2011. The bottom line in the assessment of the poverty reduction activities of government during the period is that the results are mixed. Score: 5.0 F. Infrastructure: It should be noted that the budgeted outlay for infrastructure for 2012 is 25% more than what it was in 2011. That may seem like a large jump, but then, the 2011 budget was 14% less than that of the year before. In reality, therefore, if the base used is 2010, budgeted infrastructure outlays increased by only 10% between 2010 and 2012. To add to the misery, the expenditure compression witting (to achieve the budget deficit targets) or unwitting (e.g. project delays due to inefficiency) effectively reduced the actual infrastructure outlays. The reasoning at the time was that the Public-Private Partnerships (PPP) would take up the slack. Unfortunately, 2 years after the PPP was touted as the answer to the Philippines lack of financial resources was introduced by PNoy in his first SONA, only 1 project has actually been awarded and only two are ready for bidding out of a list of 22. The government should remind itself of what it says at the beginning of the PDP: Inadequate infrastructure and a resulting poor logistics network have been identified as among the critical barriers to investment and growth. Score: 2.5

G. Macroeconomic Stability. 1. The fiscal deficit-to-GDP ratio is targeted to fall from 3.5% in2010 to 2.0 in 2016. The 2011 ratio was 2.0, and as of April 2012, the ratio was a surplus of 0.1%. So there is no question that the target has been achieved. But a closer inspection of the data will show that the reduction in the deficit was not achieved through an increase in government revenues higher than programmed, but thru a decrease in expenditures (lower than programmed). And this, as mentioned in last years Scorecard, does not augur well for growth and investments. To achieve the deficit target, Bureau of Internal Revenue (BIR) tax effort ratio (tax revenues divided by GDP) were programmed to increase by 0.3 percentage points every year until 2016, while Bureau of Customs (BOC) collection revenues were programmed to rise by 0.1 percentage points annually. In 2011, BIR met its targets, but the BOC did not (its tax effort ratio actually decreased). For the first quarter of 2012, both BIR and BOC did not perform as expected, in spite of the fact that in January of this year the Development Budget Coordinating Committee already lowered the revenue target for the BOC by P18 billion pesos. Wherein seems to lie the problem? Here, the linkage between growth and governance and justice issues comes to the fore. Both BIR and BOC have been filing cases under the RATE (Run After Tax Evaders) and RATS (Run After The Smugglers) programs, which were initiated in 2005 essentially to provide maximum deterrence to evasion and smuggling( the demonstration effect/ the fear factor). BIR under Kim Henares, for example, has already filed 117 cases against alleged tax evaders with the DOJ (one case a week is her target) since August of 2010. But only bout 10 cases have been filed so far by the DOJ with the courts. There is obviously a bottleneck there, and it is not hard to determine the cause: lack of prosecutors, in spite of the fact that the 2011 budget had appropriations for 1000 more of them, and the National Prosecution Act guarantees excellent salaries. It turns out that even the original number of prosecutorial positions remains unfilled. That being said, the questions also arise (particularly from whistleblowers Danilo Pacana and Elpidio Que) about why, to date, the BIR has not filed a case/s against taipan Lucio Tan in connection with his beer and cigarette interests, and why BOC has not gone determinedly after oil smugglers, whose rampant activities and success are clear from the data on lagging oil imports in the face of humongous increases in population and motor vehicles. Sacred cows and the Tuwid na Daan, after all, are or should be oxymoronic. Score: 4.0 2. Inflation (Price Stability). The target here is to keep the inflation rates down to within the 3-5% range. For 2011, inflation rate (base year 2006) was 3.8 %. And inflation for JanuaryJune 2012 is reported at 3%. This, like unemployment, is unmitigated success and certainly the whole-of-government is involved here, but particularly the BSP, one of whose main mandates is to keep the inflation rate down). Score: 10.0

H. Governance the Philippines compared with other countries. The PDP emphasizes that if weak infrastructure is a major constraint to growth, so are weak institutions and governance failures. And for the first time in development planning, the plan targets include either improving the standing of the Philippines compared to other countries, or ensuring that Philippine scores are above the median insofar as various indices of governance published abroad are concerned. How has the Philippines fared? 1. Doing Business: The aim is to improve the ranking of the Philippines from the lower 1/3 of the countries ranked, to the upper 1/3. The 2012 Doing Business report, however, shows that between 2011 and 2012, the Philippines went down, rather than up, in the country rankings (from 134 to 136). Clearly, we are off-track, regressing (after a great improvement between 2010 and 2011). 2. Global Competiveness Index (GCI): The aim here is to put the Philippines in the upper third of the global competitiveness ranking as far as industry and services are concerned. The overall GCI for 2011-2012 shows a marked improvement over 2010-2011, as the country rank improved from 85 (out of 139) to 75 (out of 142), even if the overall score, on a scale of 1 to 7, barely moved from 4.0 to 4.1. Among the components of the GCI, the Philippine scores and rankings improved the most in the Macroeconomic environment area (14 increases in rank, score from 4.6 to 5.0), and in Technological Readiness (12 increases in rank, score from 3.2 to 3.5). The country however, deteriorated in rank, if not in score, in the area of infrastructure, health and living, and labor effectiveness which indicates our weakness relative to other countries in pursuing the appropriate policies. 3. Millennium Challenge Scorecard: Here the aim is to score above the median score of the countries being evaluated for the main reason that this is what is required if a country is to be eligible for a compact (aid grant) with the Millennium Development Corporation. There are 3 policy categories Ruling Justly, Investing in People, and Economic Freedom, all closely related to the Millennium Development Goals The new criteria contain 3 more indicators (20) than the old set (17). Ruling Justly still has six indicators, but Investing in People has one new one, Girls Secondary Education Enrolment Rate, and Economic Freedom has two more Gender in the Economy and Access to Credit. For 2012 the Philippines is below the median in two of the six Ruling Justly indicators the Rule of Law and Control of Corruption. It is below the median score in five out of the six Investing in People indicators: health expenditures, immunization rates, primary education expenditures, child health, and girls secondary education enrolment ratio. And finally it is below the median score in four out of the 8 Economic Freedom indicators: Fiscal policy, land rights and access, access to credit, and business start-up. In other words the country is below the median score in 11 out of the 20 indicators. 4. World Justice Project Rule of Law Index. Here, the aim of the Philippines is to go from the bottom to the top half of the regional (East Asia and the Pacific) rankings, which in 2010

involved 7 countries, and in 2011 involves 13 countries. The countries are ranked under 8 factors. There has been improvement between the two years: In the base year, the Philippines was at best second from the bottom of the seven countries, what works out to be the 11th percentile. In 2011, the country is now in the 25 th percentile. But its score deteriorated in Access to Civil Justice (from 0.48 to 0.46 on a scale of 0 to 1), and Effectiveness of Criminal Justice (from 0.53 to 0.45). Score: 5.0 I. DBM Review and Plan to Reduce Overhead Costs, Department of Agriculture Review of all Programs, Modernize the Agriculture Sector. These were all part of the Economic Scorecard for Year I because these were among the campaign promises of PNoy. Last year, the first one got a score of zero (broken promise) simply because the promise was to have been fulfilled within six months. To date it still has not been done. The DA comprehensive review of its programs also has not been done. What remains is the modernize the agricultural sector. For 2011 the infrastructure outlay for agriculture was barely 3% above the 2010 allocation in nominal terms, and therefore it decreased in real terms. But allocations for post-harvest facilities are embarrassingly low. Moreover, actual expenditures in the first quarter of 2012 cannot as yet be determined. In PNoys first year, his No New Taxes promise was fulfilled, but because he refused to consider the reform of the Sin Tax law (not a new tax), the promise that he kept had to be taken against him because of the negative impact on the budget deficit (which was then maintained by expenditure compression) and on growth. Had the Public Private Partnership been implemented immediately, as he envisioned, there would have been no harm, but it was not. A new bill reforming the Sin Taxes has been passed in the House with PNoys blessings, but it is still in the Senate, and at this point, the benefits of that bill (assuming it will be passed) can not still be attributed to PNoys Year II. Score: 3.0 Table 3. Summary of Economic Scorecard II, 2012 Indicators Real GDP growth rate Export/GDP Ratio Investment ratio Job generation Poverty reduction Infrastructure Macro Stability Deficit/GDP Inflation Governance Compared to other Countries Score 4.5 2.0 10 10 5.0 2.5 4.0 10 5.0

Rest of scorecard I Average score B. The Finance of Government

3.0 5.6

The fiscal program of the Administration is built on tuwid na daan. Putting an end to the culture of entitlement or wang wang will lead to preventing corruption, saving resources, and financing the delivery of adequate public services. Honest governance will restore public confidence and attract public investments. In the 2011 SONA, the President proudly reported that government kept its promise of providing services that the public needed without having to raise taxes. Additional revenues are expected to be realized if we become more serious in curbing and punishing tax evasion and smuggling.4 The administrations priority is improving revenue administration by pursuing cases relentlessly until those involved are prosecuted punished, and government gets its due share. 5 PPP remains the strategy of government in building infrastructure. Budgeting is anchored on transparency with the requirement for all government agencies to post information on project implementation. After a year of no new taxes, the President threw his support behind the bill that would restructure the taxation of rates on cigarettes, fermented liquor, and distilled spirits. Although the bill approved by the House is a watered down version of the reform, the MGG lauds the President for supporting a much needed reform. Aside from making the excise tax collection more buoyant, the bill is a health measure to help discourage smoking and excessive drinking. 1. Financing Government. Government continues to be on the deficit mode with the right reason: government has to be the driver of growth when global economy is weak. Expenditures exceeded revenues by P197.75 billion in 20116. But the plan of government to use deficit financing to prime the economy has not been fully accomplished. The level of spending was programmed to reach P1.6457 trillion and spending fell short by P87.30 billion. 8 The underspending in infrastructure resulted from good governance and anti-corruption programs implemented by departments like DPWH which adopted reduced cost-structures, more transparent bidding processes, reviewed approving authorities, more objective prioritization of road projects, among others.9 Catch-up spending was made in the last quarter to reverse the year-on-year deceleration during the first three quarters of 2011. The last quarter spending (P397.2 billion) accounted for 31.3 percent of the total disbursements for the year.10 Prudence in spending can also be explained by constraints in revenue collection. The major collecting agencies of government failed to reach targeted revenues, the BIR by P15.85
4 5

Speech of the President before the Makati Business Club and reported by ABS-CBNNews.com, January 21,2010. Budget Message of the President, 2011. 6 Bureau of Treasury 7 Department of Budget and Management, Expenditure Program by Sector, 2010-2012 8 The Bureau of Treasury in its report on national Cash Operation reported government expenditures of P1,557,696 in 2011 9 Department of Budget and Management, Assessment of National Government Disbursement Performance for January to December, 2011 10 Ibid.

billion and the BOC by P54.9 billion.11 Privatization proceeds were off-target by more than P5.0 billion and only reached 15.5 percent of its goal. Government revenues from January to May 2012 were also below target by P130.30 billion, the BIR by P95 billion and the BOC by P47.04 billion.12 Lower spending in relation to target resulted into a lower deficit of P22.79 billion. By netting out interest payments of P130.99, government reported a primary surplus of P108.20 in the first five months of 2012. This really implies that if we were not paying for our debt, government would be in a surplus. The concept of a surplus is too good to be true since interest payments are an integral part of our budget. Collections of the BIR and the BOC for 2011 grew by 12.34 percent and 2.26 percent respectively. Credit can be given to BIR by collecting a little more than the increase in nominal GDP of 8.7 percent. But, it needs to do more. The benchmark for evaluating success in tax collection is the tax effort ratio, or how much of the GDP is collected as taxes. The tax effort ratio in 2011 was 12.3 percent which was lower than the 2006 ratio of 13.7 percent. To be fair, the 2011 tax effort inched by 0.2 percentage point compared to the 2010 level. Much can be said about the effort of BIR to go after tax evaders. The cases filed against smugglers, tax evaders, and smugglers numbered 300 as of June, 2012. The cases bore one (1) conviction by the Court of Tax Appeals, i.e. Gloria Kintanar of Forever Living Products who owed the government P6.3 million. The execution of judgment by the CTA was postponed for humanitarian reason due to taxpayers hypertension. Since then, the taxpayer has been reported missing.13 The collection fervor has also significant trade-offs in terms of certainty in enforcement of tax laws and heavier compliance costs on the part of the taxpayers. BIR reversed many rules and some were made to take effect retroactively. Moreover, rules were issued without the benefit of wide public consultation. The classic examples are changes in the rules on improperly accumulated earnings tax, allocation of costs of banks and financial institutions, reversal of that tax exemption of PEACE bonds, and prohibition of the sale of tax credit certificates. Understandably, the goal is to increase revenue collections, but the strategy heightens the use of discretion and arbitrariness on tax enforcement. Worse, the diarrhea of regulations has had the effect of giving more ammunition to the same clever collectors and examiners. The push for each RDO to have a target number of tax evaders to run after has also resulted in a targeting of easy targets who are less likely to complain or bring back room influence to bear. Government is apparently stuck with its strategy of squeezing more juice out of the existing tax base rather than providing a fiscal environment that is conducive to expanding that base because of its obsession to get a good credit rating.

11

Under the Tax Revenue Program (source: DBM) BIR was expected to collect P940 billion in 2011 and the BTr reported BIR collection of P924.146. The BOC was expected to collect P365.145 billion (source: DBM) and collected P265.108(source: BTr). 12 Bureau of Treasury 13 Philippine Star, July 3, 2012.

The costs of tax compliance have been increased contrary to the worldwide trend of treating taxpayers, the sources of public funds, as clients. Local government units such as Quezon City, Marikina City, and Valenzuela City are considered friendlier to taxpayers. In contrast, the BIR has passed the burden and the costs of tax administration to taxpayers. Lessors are now responsible for ensuring that all their lessees are duly registered with the BIR. They should submit reports on their lessees such as their TIN, authority to print receipts, among others. Financial statements of corporations now includes amounts of input and output VAT, VAT exempt and zero-rated sales and their legal basis, importation and duties paid, excise taxes paid by product, withholding taxes, deficiency taxes and information on on-going tax cases, which should have been captured in the BIRs data base considering that corporations file tax returns regularly, e.g. monthly in the case of income tax withheld. The BOC collection on the other hand is hounded by the problem of smuggling. Several sectors such as the agricultural sector have complained that they could not compete in the market in the presence of smuggled goods whose prices are net of duties and taxes. The effort in collection needs romping-up and deepening considering that the tax to GDP ratios of major taxes have all declined. The effort in collection needs romping-up and deepening considering that the tax to GDP ratios of major taxes have all declined. Table 4. Tax to GDP Ratio of Major Sources of Revenues (in percent) Revenue Source Total Income tax Corporate income tax Individual income tax VAT Import duties 1990 4.61 1.16 1.47 1.22 4.02 2000 5.68 2.41 2.33 1.51 2.66 2010 4.08 2.33 1.33 1.44 2.43

BIR and BOC need to pay greater attention to the thinning tax base due to the proliferation of tax incentives and the growing number of free-riders in the economy. The value of tax incentives that were granted by government in 2011 was reported by DOF at P25.61 billion. 14 The number of taxpayers who were registered with the BIR in 2010 is less than one-half of individuals who were employed in the industry and service sectors (11.20 million registered taxpayers vs. 23.92 million who were employed).15 Even if the number of individuals employed in private household is netted out, the disparity is still significant. Another benchmark of the gap in the tax base is the number of SSS individual members that totaled 29.64 million in 2010.16
14 15

The data may not be inclusive of all incentive laws since there are many agencies administering tax incentives. BIR Annual Report, 2010 and NSCB Statistics on Labor and Employment. 16 Social Security System, Annual Report, 2010

2. Expenditure Management. The MGG noted with great optimism the programs that were instituted by DBM towards making the budget more transparent and efficient. The DBM continues empowering citizens by posting information on the budget and how the budget is disbursed. It continues engaging civil society in planning for the budget and in providing oversight on how public funds are spent. Zero-based budgeting is continuously pursued in allocating funds among competing priorities. The introduction of performance in the disbursement of additional funds to local governments is enthusiastically lauded. The Performance Incentive Fund that was introduced by the DILG and is supported by DBM is making headway with respect to influencing and encouraging local government units to become more transparent in their operations and in complying with rules and regulations in financial management. The DILG confers a Seal of Good Housekeeping to LGUs that provides full information on their budget and their operations to the public and are compliant with COA regulations. With an SGH, LGUs can be awarded one million pesos (P1.0) from the Performance Challenge Fund. The reward can be spent for programs that are aligned with the development program of the national government. The PCF is a milestone is instituting performance as a criterion in the fund allocation and should be broadened not only in terms of funding but in terms of implementation. The DILG and DBM have proved that it is possible to use performance in fund allocation. Performance criteria can be instituted in allocating budgets to government agencies, and even in allocating the PDAF. 3. Financing the Deficit. The MGG takes note of the success of government in lowering the deficit from P314.48 billion in 2010 to P197.75 billion in 2011, or from, 3.49 percent to 2.03 percent of GDP. As a result, government borrowed less. Net financing in 2011, i.e. gross borrowings less amortization, was significantly less compared to 2010 (P115.263 billion compared to P351.65 billion). 17 Debt management benefited largely from the appreciation of the peso and a favorable interest rate regime. But governments effort should not just be focused on the deficit figures, Government expenditures in 2011 were just 2.32 percent above the level of spending in 2010. While this level is considered prudent, it is out of sync with inadequacies in the quantity and level of basic public services especially in heath and in education. We are in danger of not attaining basic MDG goals such ensuring that all the children are in school and are able to complete at least grade 6, as well as in reducing infant mortality rates. We need not mention the need for better paved roads, flood control, and health facilities. And certainly, higher levels of public spending are needed to boost capital formation and productivity to support higher economic growth. The World Bank estimates that a five percentage point increase in the average disbursement-to appropriations ratio results in an additional 0.6 percentage point increase in the GDP growth.18 . If budgets were disbursed as programmed, the economy would have grown by at least 1.6%
17 18

Bureau of the Treasury, National Government Cash Operations Report World Bank Quarterly Report, p. 22

on top of the actual 3.7% in 2011. Raising the level of expenditures require a concerted effort of government in raising more revenues and in overcoming bottlenecks in project implementation, such as turfing and paralysis by analysis. A very big push is needed to get the Public-Private Partnership to assume its role of providing the infrastructure needs of the country. Of the 22 PPPs that are planned by government, only one, the Daan Hari-SLEX Link Road has been awarded and two, the PPP for School Infrastructure Project and the LRT Line 1 Cavite Extension19 are ready for bidding. It is hoped that the government has taken hold of the factors that caused its delays such as policy changes, lack of feasibility studies and organizational and structural changes that tuwid na daan requires. Otherwise, the government needs to make hard decisions to raise more revenues: e.g. it has to trim the long and complicated list of preferential tax treatments and get tougher on the excise tax reform. Table 5. Scorecard on Public Finance Performance Indicator 1. Achieving the Revenue Goals 2. Expenditure Management 3. Supporting the development requirements 4.Empowerment of stakeholders Total Average 0 2.5 5 x X X 7.5 10

DOF 2.5

DBM 7.5

2.5

10

15 27.5/4= 6.88

2011 Scorecard: 5.8 C. GOVERNANCE In his State of the Nation Address in 2011, President Benigno S. Aquino III mentioned among other things, the promises on governance as follows: 1. Gusto nating maranasan ng ARMM ang benepisyo ng tamang pamamahala. Kaya ang atin pong minungkahing solusyon: synchronization. Dahil dito, kailangan nilang tumutok sa kanikanilang mga kampanya; magiging mas patas ang labanan, at lalabnaw ang command votes.
19

Ernesto M. Pernia, When Success Fails, Philippine Daily Inquirer, July 8, 2012.

Salamat po sa Kongreso at naipasa na ang batas na magsasabay sa halalan ng ARMM sa halalang pambansa.(SONA 2011) Since 2011 and after postponement of the ARMM election toward a synchronized election, the President appointed an Office-in-Charge (OIC) of the region who would initiate and manage reforms in the ARMM. Election in the region was among these reform measures. Since then, Governor Mujiv Hataman started consultations with various groups, sectors, and experts to spin off the so-called reforms in the ARMM. No one expects much for the reforms to take place within 21 months. The regional leadership is assisted by the Commission on Elections (Comelec), in an effort to clean up the ARMM voters list. The Comelec has identified a good number of names that should be purged from the voters list. Moreover, the creation of the National Commission for Muslim Filipinos (NCMF) and the appointment of commissioners to this newly created body indicate seriousness on the part of the Aquino administration to deal with the problems of neglect and discrimination against Muslim Filipinos. The creation of the NCMF, a body which is equivalent to the National Commission on Indigenous Peoples (NCIP) and whose leadership enjoys a cabinet level rank, boosts the attention given to Muslim concerns and issues. The Muslim population looks forward to what this commission could achieve in the coming years, as the peace talks between the government panel and the MILF continue to define the terms of peace and development in the region. Thus far, the appointed leaders at the ARMM, the NCMF, and the government negotiation panel on the MILF enjoy the support of many quarters because they are individuals known to pursue reforms in governance. On the other hand, a piecemeal approach characterizes the administrations reform measure in the ARMM unless it gets into the bottom of changes as defined under the Organic Act. The terms of reference and the conditions for peace remain unclear to this date. 62. Pinag-aaralan na rin po natin ang pag-angat ng kaso sa West Philippine Sea sa International Tribunal for the Law of the Sea(ITLOS), upang masigurong sa mga susunod na pagkakataon ay hinahon at pagtitimpi ang maghahari tuwing may alitan sa teritoryo. (SONA 2011) The Aquino administration continues to raise concerns over the West Philippine Sea by bringing the matter to international attention and through diplomatic negotiations. The administration through the Department of Foreign Affairs has always opted to raise the level of discussions through diplomacy either directly with China or by bringing the issue to international forums such as the ASEAN. On other occasions, the administration sent strong signals of its determination to protect and defend the countrys sovereignty against China on the Scarborough Shaol. Despite the inadequacy of the Philippine Naval facilities, the administration deployed ships, a sign of the administrations determination to lay claim on the territory. This is a statement of the Aquino administrations purposiveness on national sovereignty.

This indicator is not time-bound and is dependent on some variables including the reaction of China and other stakeholders; however, the administrations move shows determination and purposiveness. In addition to these promises in 2011, the public expects the Aquino Administration to continue its campaign efforts in the four (4) areas of governance reform as follows: 3. Institute a performance incentive system match every peso invested in 4th and 5th class local government units in basic education, maternal and child care, and potable water and latrine. One can add to this goal, the administrations performance in ensuring the rule of law. The Aquino administration continues to make strides in its campaign to make transparency and accountability of public funds through the adoption of the Open Government principle by the Department of Budget and Management (DBM), particularly of the congressional priority development assistance funds. Similarly, the Department of the Interior and Local Government (DILG) remains consistent in its advocacy of promoting the Seal of Good Housekeeping among local government units. The zeal and enthusiasm of the DILG has not waned and the DILG leadership intends to deepen and broaden the performance incentive system. The Department of Public Works and Highways (DPWH) used to be among the top three agencies that have a notorious reputation particularly on corruption, poor performance, and inefficiency. During the last year at least, the DPWH has turned around its image as shown by a positive rating given by the public on the DPWH as among the better performing agencies. The Aquino administration also enjoys a good rating in the aspect of rule of law due to the convincing performance, diligence, and efficiency of the Metropolitan Manila Development Authority (MMDA), although recently, the latter has suffered criticisms from the experimental and arbitrary ruling on the use of the bus yellow lanes along the main thoroughfare of the metropolis. The MMDA leadership has convinced many quarters that it is a hardworking metropolitan authority and has gained the respect of some local government units. The Civil Service Commission has started to roll out its performance and governance targets. The commission has started to show itself as an exemplar of good governance. The CSC should continue to wage its campaign and to show the way forward to its regional offices. There is a growing list of subscribers to the advocacy on the passage of the Freedom of Information (FOI) Bill. A Malacanang version of the bill has been drafted, but the President has yet to openly declare his support for the urgency of the passage of a Freedom of Information bill.

The most remarkable achievement of the administration during the year (and in history thus far) is the crucial role of the administration in inspiring the impeachment of the Chief Justice of the Supreme Court. Having mustered the support of the House of Representatives and the Senate court against the Chief Justice of the Supreme Court, some quarters read the move as a disturbance on the peace of the SC and a defiance on the rule of law. On the other hand, the final outcome of such measure may be considered as a step to bring back credibility and honor to the court in particular, and to the democratic institutions in general. President Aquinos tolerance for his adviser on political affairs, Ronald Llamas, despite the latters involvement in controversial issues including Llamas caught-in-the-act purchase of pirated DVDs, is a spot that challenges the presidents fealty to his call for walang wang-wang. Certainly, this decision offsets the Presidents record on ensuring the rule of law. The failure to reappoint Former Commissioner Gus Lagman, a well renowned IT expert with a record for integrity, does not speak well of the governments determination to protect those who are willing to serve government and have the integrity and competence to do so from the dirt of politics . The loss of Gus Lagman is a big setback in the effort to automate elections. We may get speedier results but we will be uncertain as to whether the election results are truly reflective of the will of the electorate. 4. Take all actions on irregularities in the COA reports. One after another, reports on individuals or groups of agency people known to have questionable accounting performances affirm the resoluteness of the Commission on Audit (COA) to pursue irregularities based on reports. COA has sent the message that it is serious in dealing with people and or agencies with problematic reports. As a result, charges have been filed against concerned individuals on the basis of the COA reports. One may add to this, the charges filed by the Ombudsman on individuals who, according to records, have violated the code of integrity in public service. On the whole, although there may be spots on the administrations promise to wage a fierce battle against corruption, the resoluteness to restore trust in the institutions and to repair the damaged institutions have resulted in respect and trust for the Aquino administration. Such gesture is among the factors that explain why investors trust is regained and the development climate has improved. Table 6. Scorecard on Governance, 2012 Performance Indicator 1. Reforms in the ARMM 2. Management of the Problems Related to the West Philippine Sea 3. Performance Incentive System and Ensuring the Rule of Law 4. Take all actions on irregularities in the COA reports Score 5.0 7.5 6.0 7.5

Total 2011 scorecard: 4.5 D. HEALTH

6.5

Designed to achieve better health outcomes, establish a more responsive health system, and institute equitable health financing, the Aquino Health Agenda (AHA) is the operational framework under which the Kalusugan Pangkalahatan or Universal Health Care (UHC) program is implemented. Through this, health inequities in the country are being addressed to ensure that all sectors in society receive the benefits of health reform. Universal coverage means that every one man, woman, or child -- must have access to all the quality health services available, without experiencing the barriers of fiscal constraints and financial hardships. For the past two years, the Aquino government has been employing effective measures to control rising costs in implementing universal coverage. Unfortunately, the promise of Universal Health Care (UHC) of the President remains to be seen. Substantial efforts have been made in the way PhilHealth-sponsored members have been provided the benefits that they deserve. Philhealth has also made great strides in targeting the poor by using the National Household Targeting System for Poverty Reduction (NHTS-PR) database of 5.2 million families in order to increase sponsored membership. PhilHealths claim of enrolling 5.2 million poor families as beneficiaries has been questioned since this is less than half of the estimated 11.1 million poor families living in the country. So as to give an honest and objective evaluation of the achievements in the health sector of the Aquino administration, the AHA will be reevaluated using its main strategic thrusts: 1. Financial risk protection through expansion of the PhilHealth enrollment program of the National Health Insurance Program (NHIP), together with improvements in PhilHealth benefits delivery During the two years of the Aquino administration, a total of 26 million poor Filipinos have been enrolled in PhilHealth. An impressive number, yet there is still a huge portion of the population that remains outside the health insurance system. Those enrolled also have limited coverage, with only 20-30 percent of their total hospital expenses covered by PhilHealth. Out-of-pocket expenses continue to be the norm in medical consultations and hospital admissions. The Philippines has an out-of-pocket expense rate of 54.7%, one of the highest in Southeast Asia, while having one of the lowest government expenses at 34.7%. Although the newly released Z benefits package attempts to reduce out-of-pocket payments using the casebased approach, the lack of zero co-payment schemes for all other medical cases has perpetuated the fear of incurring large medical debt especially among the poor. Most Filipinos

have remained disenfranchised and disenchanted with the health care system. They feel disempowered in taking responsibility for their own health and fighting for their right of access to quality medical care. Moreover, increased efforts in bolstering health insurance enrolment have not yielded the desired results. Health insurance protection in many provinces is still below the national average. Except for the City of Makati, no other LGUs have gone on to declare 100 percent coverage for its constituents. Lack of health infrastructure and logistical problems persist. PhilHealth Chief Executive and President Eduardo Banzon mentioned that at least 300 municipalities do not have rural health units. The numbers are also uncertain as to how many of the 2,600 health centers in the country have any full-time medical staff presently manning these stations. At least 150 municipalities remain doctor less. Numerous healthcare facilities are still not accredited with PhilHealth; hence, PhilHealth-enrolled patients would not be able to avail of their benefits if they are treated in non-accredited health facilities. Nevertheless, PhilHealth has taken the necessary steps in order to address these challenges. A step in the right direction is acknowledging the role of health information systems in terms of efficient handling of claims and provision of benefits. Databases in clinics and hospitals have started to be linked to PhilHealth to facilitate claims processing and reduce health insurance fraud. 2. Improved access to quality hospitals and health care facilities Recently, the government revealed its plan to phase out charity wards in public hospitals and enroll the poorest of the poor under PhilHealth so everything would be free including hospitalization, medicines and laboratory costs. This would mean that the 42,997 charity beds in 703 government hospitals would no longer exist. But this has been met with harsh criticism. Phasing out of the charity wards has been projected to increase the number of Filipinos who die (currently, 6 out of 10) without getting any medical attention. The plan has also been regarded as unsustainable given PhilHealths huge debt to its member hospitals, and the predominance of out-of-pocket expenditures. PhilHealth has mentioned that it will have P107 billion in reserves by the end of May 2012. However, several reports claim that premium collection has only been as little as P13 billion, which is lower than the P16.9 billion payout. PhilHealth has questioned the validity of these claims in its 2011 report, showing that overall premium collection has reached P33.29 billion from January 1 to December 31, 2011. Soon after the plan was revealed, the Private Hospitals Association of the Philippines released a statement that it will no longer honor PhilHealth cards unless the state-owned company would be willing to pay more than P2 billion it owes its members. The Philippine Medical Association has also expressed its dismay over the planned phasing out and

emphasized the need for government to be responsible in providing free medical services to the poor. In addition, there is still no targeted health facility enhancement program. Among the geographically isolated and disadvantaged areas (GIDA) in the country, health facilities are nonexistent while most lack basic supplies and equipment to deal with patients. Pubic-private partnerships have not significantly increased its support on the rehabilitation of old facilities and the construction of priority new ones such as Basic Emergency Obstetric Care Centres (BEmOCs) and Comprehensive Obstetric Care Services (CEmOCs).

3. Attainment of the health related Millenium Development Goals (MDGs) In order to reach the MDG on improving the maternal mortality rate (MMR) in the Philippines, the goal is to have at most only 52 maternal deaths for every 100,000 live births. However, maternal and reproductive health indicators in the Philippines remain one of the worst in the Asia Pacific region. There has been no definitive and concerted action in helping to achieve MDG 5 (reduce maternal mortality). A rising trend has been seen in the countrys MMR during the past several years. In 2008, the MMR was at 94 deaths, which then increased in 2009 to 162. But according to the latest 2011 counts, the Philippine MMR now sits at an alarming 221 maternal deaths per 100,000 live births. Health Secretary Enrique Ona has stressed the need to pass the Reproductive Health Bill immediately, amend the law on midwifery and other health professions, as well as consolidate local health systems at the provincial level. Aimed at providing universal access and support to information on family planning, maternal and infant health care, and sexual and reproductive health issues, the Reproductive Health Bill has been stuck in Congress for a number of years now and was even removed last year from the list of priority bills to be endorsed by President Aquino. In contrast, the Department of Health (DOH) noted that the Philippines has had significant gains in reducing child mortality. According to the DOH, the under-5 mortality rate has dropped to 30 deaths per 1,000 live births from 32 in 2009, further closing in on reaching MDG 4 of at most 27 deaths per 1,000 live births. This improvement has been attributed to sustained successful immunizations of babies and school children in the country. Table 7. Scorecard on Health , 2012 PLATFORM 1. Universal Health Care Roadmap through a refocused PhilHealth program 2. Improved access to quality hospitals and health care facilities 3. Attainment of MDG 4,5,6 Total Score SCORE 6 2 1.5 9.5

Average Score

3.17

The current rating is definitely not a remarkable uptick from the initial 2.5 rating for the health sector last year. UHC targets set by the Aquino administration for 2012 have not been achieved. With the slow progress it is taking to revitalize the health system, it will be quite difficult for government to achieve a sustainable UHC program by 2014. Successful implementation of the health agenda goals should be a top priority of the administration. Every stakeholder and partner must be engaged and held accountable for a successful implementation of the programs and policies contained in the Aquino Health Agenda. To address the key challenges, the government must concentrate its efforts through strategic PhilHealth coverage of Filipinos located in the five poorest regions (ARMM, MiMaRoPa, Eastern Visayas, Bicol region, and Zamboanga peninsula) and eight poorest provinces (Biliran, Antique, Zamboanga Sibugay, Abra, Masbate, Sultan Kudarat, Northern Samar, and Basilan) of the country. The provider side (hospitals, clinics and health centers) must improve to respond effectively to a reformed regime of incentives and accountability. Implementing the Essential Health Package must be rolled out to provide all Filipinos with a well-defined package of the most essential, cost-effective and evidence-based health services available. Health research and development must also be given priority. Continuance of the public-private partnerships is imperative to assist and encourage both sectors to meet their responsibilities when it comes to healthcare delivery.

E. Environmental Management
President Aquino has made at least five (5) campaign promises related to the environment, to wit: 1. Caring for the Environment From allowing environmental blight to spoil our cities, where both the rich and the poor bear with congestion and urban decay to planning alternative, inclusive of urban development where people of varying income levels are integrated in productive, healthy, and safe communities. 2. Sustainable Resources From a government obsessed with exploiting the country for immediate gains to a government that will encourage sustainable use of resources to benefit the present and future generations.

During the campaign, President Aquino made 24 additional and more specific promises including20: 3. Strictly enforce environmental laws In celebration of Earth Day on April 22, 2010, the President vowed to make disaster preparedness and the strict enforcement of environmental laws as key objectives of his administration. 4. Safer sources of renewable energy President Aquino stated that he would rather exhaust other means than resort to nuclear power. We have other perceivably safer sources of renewable energy. Nuclear energy has reemerged as an option to satiate the worlds present and future electricity needs. However, it continues to face social acceptability problems because of fears about the safety of its use. There are other sources of energy that have less chances of endangering the lives of people. In the case of the Bataan Nuclear Power Plant, it has a large amount of documented safety hazards and may pose a threat to the safety and/or well-being of the residents around it. 5. Population management via responsible parenthood The President promised that his administration will fully support the crafting of a firm policy that will address the serious problem on population. It will be based on the idea of responsible parenthood: imposing on parents that they should play a key role in ensuring that each and every child they bring into this world has the opportunity to lead a good life, and educating them about the means with which to plan their families so they can create families based on their ability to sustain their needs. In the process of providing a range of options and information to couples, both natural family planning and modern methods shall be presented. I. Performance

1. Caring for the Environment President Aquino has approved the framework developed by the Climate Change Commission including the National Framework Strategy on Climate Change (NFSCC), National Climate Change Action Plan (NCCAP) and guidelines for Local Climate Change Action Plan (LCCAP). These plans cover programs from 2011 up to 2028 as the impact of climate change would require an economic and societal transformation. Some of the green goals identified include: food security; water sufficiency; human security; and environmental and ecological stability. President Aquino likewise signed the Peoples Survival Fund (PSF) into law, which
20

The Promises of Benigno C. Aquino III. www.blogwatch.tv last accessed 15 July 2011

provides a Php1.0 billion fund annually for projects to mitigate the effects of climate change in the country. The law complements Climate Change Act of 2009 that was passed under the Arroyo administration. While these frameworks are in place, implementation efforts need to be coordinated, and monitored to secure and sustain their mitigation and adaptation effects. The Aquino administration has yet to reflect the environmental targets in the Medium Term Philippine Development Plan (MTPDP) for 2011-2016. This task needs will need broader citizens participation in the development and approval of the MTPDP. President Aquino issued EO 26 on February 24, 2011 establishing the National Greening Program (NGP), a 6-year reforestation program to green some 1.5 million hectares of degraded forest lands. It was personally launched by the President with an inter-agency team to develop a sustainable forest resource base and rejuvenate rural economies. Its ultimate goal is to provide livelihood opportunities for some six million families in the upland areas across the country within six years. The President issued Proclamation 125, declaring 2011 as the National Year of Forests in the Philippines, in support of the UN declaration. 2. Sustainable Resources Under Aquino's term, mining investments increased by 65 percent from 2009 to 2010 and US$17.35 billion worth of mining investments are expected to be made by 2016. The administration has repeatedly issued statements in support of mining liberalization. Aquino's appointment of the former Executive Director of Philippine Mining Development Council (PMDC) as DENR Secretary and Presidential Adviser on Mining further indicates his adherence to the previous administrations path towards mining liberalization. Much remains to be seen if law enforcement will mitigate the ecological footprint from increased mining activities. On July 9, 2012, Malacanang issued EO 79 which details the governments new policy on mining. The EO seeks to increase the governments share from mining activities, impose a moratorium on the grant of licenses to new mining activities (pending Congressional action on royalties), and attempts to align national policy with local regulations. The administration has been recognized by academics, activists and the mining industry for having consulted and reflected stakeholder inputs in the formulation of EO 79. It remains to be seen how such a policy will be enforced in the midst of an increase in mining activities. The Presidents issuance of Executive Order 23 was a welcome relief from massive deforestation and a lack of a decisive policy in this regard. EO 23 imposed an indefinite and comprehensive restriction on logging all over the country despite opposition from wood producers. A nationwide logging moratorium on Philippine national and residual forests is to be observed to protect and stop the destruction of watersheds and river systems. The EO created a task force to lead governments campaign against illegal logging. Under EO 23, DENR is instructed to stop logging firms from cutting trees while government is in the process of

reviewing all existing logging agreements. DENR, through MO 52, is now mandated to immediately cancel the concessions of logging companies that have violated forest laws, while ceasing from issuing and renewing logging contracts and tree cutting permits in all natural and residual forests. EO 23 has been criticized for loopholes in the sense that it has not revoked or categorically banned commercial logging but only stops DENR from granting new contracts while reviewing existing contracts. Loopholes involve the ability of special interests to lobby for labeling natural and residual forests as plantation forests to secure an exemption. Continuous flash floods and massive evidence of illegal logs in these sites betray the lack of enforcement of this policy, and the Administration needs to follow through on enforcement issues. 3. Strictly enforce environmental laws Despite pronouncements of finding a balance for resource use and environmental protection, the Administration has a mixed record in enforcing the Philippine Clean Air Act or Republic Act No. 8749. Certain provinces such as Cebu have experienced coal ash residues, listed as an air pollutants, prompting Cebu local government officials to take action themselves to suspend the companys (KEPCOs) business permits. President Aquino has praised KEPCOs record as being very friendly to the environment despite the experience of the host community. DENR has yet to implement the Ecological Solid Waste Management Act (Republic Act 9003) prohibiting the operation of any dumpsite by local government units in the country. Under the law, these dumpsites must be replaced by a sanitary landfill (SLF). It also mandates the LGUs to come up with a 10-year Solid Waste Management Plan that must be completely in place by 2011. Related to this, the enforcement of environmental protection remains woefully inadequate with the unabated rise in environment-related murders. Seven (7) environmental activists have been killed under the Aquino administration, among them Eliezer Billanes, Gawad ng Bayani ng Kalikasan awardee, who was killed on March 9, 2009, because of his staunch opposition against the Xstrata mining project in the Socsargen region. The latest victim is Dutch activist Willem Geertman of Alay Bayan Inc. (ABI), a development oriented NGO in Central Luzon. The other 33 cases of killings among environmentalist activists since 2001 remain hitherto unresolved. In response, the President has given 7 posthumous awards for these environmental heroes for their efforts, but prosecution support and outcomes are wanting. Aquino also ordered the Executive Secretary to provide the Environment Heroes Foundation with P5.0 million from the Presidential Social Fund to assist families who were left behind by employees of the DENR who died in their line of duty. President Aquino also ordered the National Bureau of Investigation and Philippine National Police to form a joint task force for the arrest not the perpetrators and the masterminds of the crimes. The President ordered three government agencies the Department of Interior and Local Government (DILG), Department of Justice (DOJ), and DENR to intensify the campaign against illegal logging. The successful prosecution of violators remains to be seen. It should be

noted that some P16.0 million worth of illegally cut logs in Butuan City were undetected by local personnel. 4. Safer sources of renewable energy On June 16, 2011, the Department of Energy (DOE) launched the National Renewable Energy program that aims to promote increased share of renewables in the countrys energy mix. President Aquino has likewise pronounced a need for moratorium against the revival of nuclear power in the country, in response to the controversy generated by the Japan nuclear incident. However, the Department of Energy (DOE) has delayed the full implementation of the Renewable Energy Act by allowing discussions on the feed-in-tariff (FIT) rates for renewable energy to drag on, while permits were being given to investors in coal-fired power plants. Since the passage of the Renewable Energy law in 2008, there have been 281 projects on the pipeline that are waiting to be developed. Most are on hold because of the non-implementation of FIT and other incentives. In the meantime, the DOE is processing bids for coal extraction for 38 sites with its successfully concluded contracting round in March 2012. This forebodes an increased dependence on coal as a primary fuel source. Between 2009 and 2010 alone, the percentage share for coal in power generation increased from 27 percent to 34 percent. Further, 10 (ten) more coal power plants are projected to be constructed within this decade. 5. Population management via responsible parenthood President Aquino has verbally affirmed his support for the states provision of modern and natural family planning methods, and the underlying recognition of the role of large family sizes and increasing population to the countrys sustainable development. However, he has stopped short of certifying any of the related bills (e.g., Responsible Parenthood, Reproductive Health Bills, or even a purely natural family planning alternative) as a priority measure. In the meantime, because of such inaction, the Philippines climbed higher on the Annual Ranking of Failed States21. The Philippines is in the same league as Equatorial Guinea, Egypt, Laos, Pakistan, and Bangladesh in terms of population pressures, (7.7/10); and ranked worse than West Bank, Papua New Guinea, and Angola. Further, the countrys resulting ecological state continues to worsen with such inaction:
o

The Philippines has less than 10 percent of its forest cover and coral reefs remaining 22, while only 39 percent of 525 water bodies are potential sources of drinking water.23

21

Foreign Policy Magazines Annual Ranking of Failed States. www.foreignpolicy.com. The Philippines climbed up the ranking and is now at 53 (2009) from 58 in 2007, driven by a key component: population pressures 22 Conservation International. Philippine Biodiversity Conservation Profiles. 2002. Pp.3-4. 23 EMB. 2006. National Water Quality Status Report 2001 to 2005. http://www.emb.gov.ph/wqms/2001-2005%20NWQSR/NWQSR%20%20Body.pdf and, World Bank. 2003. Philippine Environment Monitor

o o

44 percent of the population earn less than $2/day, and 2/3 of the population are engaged in unsustainable environmental and natural resource usage.24 The Philippines shares the vicious cycle of high population growth, social conflict; large migration; depleted ecosystems, food, water and energy insecurity/insufficiency/dependence; failing governance; failing health care and education systems as political and environmental hotspots as Afghanistan, Bangladesh, Burundi, Haiti, Indonesia, Nepal, Madagascar, Mongolia, Pakistan, and the Solomon Islands.25 Growing population, combined with inconsistent governance, has increased the Philippines resource demand from less than its own biocapacity in 1961 to over twice its domestically available biocapacity in 2002.26

Table 8. Scorecard on Environmental Management Performance 1. Caring for the Environment 2. Sustainable Resources 3. Strictly enforce environmental laws 4. Safer sources of renewable energy 5. Population management via responsible parenthood Total Average 2011 Scorecard: 4.7 Score 6 6 5 5 4 26 5.2

F. EDUCATION
The Presidents Basic Education Reform Agenda has ten programs and has been adopted by the Department of Education. The agenda introduces structural changes on how the education system should be delivered.
24 25

State of the Philippine Environment: A Progress Report, February 2006 Diamond, Jared. Collapse: How Societies Choose to Fail or Survive. Penguin. 2005. pp. 496-499; 515-516 26 World and Country Trends. Global Footprint Network. http://www.footprintnetwork.org/en/index.php/GFN/page/footprint_for_nations/

The 2011 MGG assessment looked at the plans which translated the reform agenda into a program of action, assessed the reasonableness of the targets, and evaluated at the allocation of resources to show that the reform agenda is indeed a priority of government. The 2011 report observed that reasonable plans have been made to carry out the reforms and that the levels of budget support in 2011 and 2012 demonstrate the Governments commitment to the addition of two years to the basic education cycle. The current assessment focuses on the progress of DEPED in plan implementation. 1. Twelve-year Basic Education Cycle. The President, during the campaign period, committed to expand the basic education cycle, from a short 10-year cycle to a globallycomparable 12 years. The MGG notes the serious discussions that the Steering Committee has had on the additional two years in basic education. But the implementation of the new curriculum for grades 1 and 7 can be described as token and the roll-out programs are not seamlessly connected. Standards and competencies have yet to be set for grades 11 and 12. A general plan for the entire 12-year cycle is not clear and definitive. The roll- out year-by-year does not appear to take into account the risks that are back-ended to SY 2016-17. One of the basic questions that needs to be asked is what is the strategic spending and investment plan for the additional 2 years? 2. Universal pre-schooling (kindergarten) for all. The President promised that all public schools children will have pre-school as their introduction to formal schooling by 2016. A Universal Kindergarten Law has been enacted. Teaching materials have been developed and are available for digital download. However, toys and learning packages were not procured and delivered in time for the start of the school year. A question for readiness is raised because the numbers presented by DEPED appear to be overstated. Official statistics from DEPED are not readily available for verification by an outside party. 3. Madaris education for Muslim Filipino children as a sub-system in the education system. The pronouncement of the President was to provide a full basic education for all Muslim Filipino childrento give proper respect to their culture while providing a sound curriculum in English, Filipino, Science and Math. Madaris education, with subjects in Arabic Language and Islamic Values Education [ALIVE] can be integrated in our public school curriculum as additional subjects. In 2011, MGG noted the lack of clarity on how school divisions should implement the Madrasah curriculum on their own. Similar concerns are raised this year with fears of backsliding due to the neglect or lack of priority of the Madaris education. 4. Technical-vocational education as an alternative stream in senior high school. One of the platforms of the President is to reintroduce technical-vocational education in our public high schools to better link schooling to local industry needs and employment. This is important because up to 48% and 42% of all senior high school boys and girls respectively are

more interested in work after high school or have no plans to go on to university (DepED survey, February-March 2005). DEPED has made efforts to recognize the ladderized education curriculum and to integrate the STVEP into the formulation of the new curriculum. Techvoc schools are actively participating in piloting grade 11. The budget for the repair and rehabilitation of Techvoc schools has been downloaded to schools. But these notwithstanding, Techvoc education is not given as much priority even in the discussions of the Steering Committee and there are little provisions for its development in terms of planning and investments. 5. Every child a reader by Grade 3 (Grade 1 once universal pre-schooling is realized).The focus given by the President on childrens reading skills is noteworthy. The program has been rolled out in 8 out of 17 regions with a budgetary allocation of P8.5 million. The said budget and the effort are too small compared to the importance of the task. 6. Science and math proficiency. The President promised to rebuild the science and math infrastructure in schools so that we can produce more scientists, engineers, technicians, technologists and teachers in our universities so that this country can be more globally competitive in industry and manufacturingTo build a culture for science and math in our schools, we need science/math clubs and elementary, high school science/math fairs. No specific plan or any significant program to expand science and math in the school system has been made. Computerization of schools is an ongoing concern but computerization by itself is not an enhancement of science and math skills necessarily. 7. Assistance to private schools as essential partners in basic education. The Government assistance to students and teachers in private education (GASTPE) has been substantially increased as planned. 8. Medium of instruction. One of the pronouncements of the President is to become tri-lingual as a country: Learn English well and connect to the World; Learn Filipino well and connect to our country; Retain your mother tongue and connect to your heritage. DepED is pursuing the Mother Tongue-Based Multilingual Education (MTB-MLE) which started in 2000 as the Lingua Franca Education Project. Budget support has been expanded in this important area (P77.6 million in 2011). Training for teachers has been conducted; learning resources and teacher guides for 12 of 16 major languages have been developed but have not been completely procured and delivered. 9. Quality textbooks. The President emphasized that I will not tolerate poor textbook quality in our schools. Textbooks will be judged by three criteria: quality, better quality, and more quality. DepED has continued initiatives under the previous administration to improve on the quality and procurement of textbooks starting with the adoption of more stringent

requirements for textbook content evaluators and meeting with publishers to strengthen the collaboration for ensuring quality textbooks. The textbook procurement by direct contracting was done in late 2011l Complete deliveries were made to schools and school districts before the school year in June 2012. There are no negative reports on the quality of the new textbooks that have been procured. 10. Covenant with local governments to build more schools. The Presidents commitment during the campaign was to build more schools in areas where there are no public or private schools in a covenant with LGUs so that we can realize genuine education for all. The nuance of this statement is not just to build classrooms (in already overcrowded schools) but to build new schools (where the classrooms would be located). The covenant is limited to 19 local government units, and is too small to be considered significant. LGUs are important because DEPED can leverage its own funds with the Special Education Fund of the LGUs. They also have public land which can be provided for new sites. DEPED could gain a lot of leverage with LGUs if it manages this relationship more strategically. Table 9. Scorecard in Education, 2012 Campaign Promise 1. Twelve-year Basic education cycle 2. Universal pre-schooling 3. Madaris education for Muslim Filipinos As a sub-system within the education system, 4. Technical-vocational education as an alternative stream for high school 5. Every child a reader by grade 3 6. Science and math proficiency 7. Assistance to private schools 8. Medium of instruction 9. Quality textbooks 10. Covenant with LGUs to build more schools Total 2011 Scorecard: 5.68 MGG notes with enthusiasm the improvements in the performance of the Aquino administration as shown by the increase in the performance scores in almost all areas of governance. We commend the successes of government in employment generation, in controlling inflation, in instituting transparency led by DBM and DILG, the provision of assistance to local governments based on performance, the decline in infant mortality, the greening program, and consultative processes in budgeting and in formulating the mining Rating Score (Rating x weight) 5.33 1.07 7.0 1.40 2.67 0.27 3.67 3.33 2.33 8.33 10.0 7.67 4.33 0.37 0.33 0.23 0.83 1.0 0.38 0.22 6.1

policy. MGG lauds the significant strides made in increasing the amount of assistance to private schools through the GATSPE, and the preparations for the use of the mother tongue in instruction. The challenges that government continuously faces are in poverty reduction, provision of infrastructure, increasing global competitiveness, expanding the Philhealth coverage, greater protection to mothers, broader and deeper access of the poor to health care, environmental protection, development of safer sources of energy, and population management via responsible parenthood. The adoption of the K to 12 curriculum has to have a seamless plan and mode of implementation and needs to be backed up resources. Greater attention should be made on the development of technical-vocational education, enhancing the reading skills of children and sharpening their capability and aptitude in science and in mathematics. The management of public finance should gear towards capturing the increasing labor force as well as those in the shadow economy into the tax base, reducing the number of free riders through a reduction and simplification of tax incentives, installing certainty in the enforcement of tax laws, sanctions against big-time tax evaders, and a service orientation among the revenue enforcement agencies. Table 10. Summary of the Scores on the Performance of the Aquino Administration, 2012 Areas for Assessment 1. Economy 2. Public Finance 3. Governance 4. Health 5. Environment 6. Education Total 2011 Score 2012 Score 4.4 5.66 5.8 4.5 3 4.7 5.68 4.69 6.88 6.5 3.17 5.2 6.10 5.59

Annex A References for the Health Assessment 1. 2011 Stats and Charts. Philippine Health Insurance Corporation. URL accessed: http://www.philhealth.gov.ph/about_us/statsncharts/snc2011.pdf. Last accessed July 20, 2012. 2. Bawat Mahirap, Protektado. Banzon, Eduardo P. July 10, 2012 article in Business Mirror. URL accessed: http://www.businessmirror.com.ph/home/opinion/29745-bawatmahirap-protektado. Last accessed July 19, 2012. 3. Maternal Mortality Rate Rose in 2011, says DOH. Alave, Kristine L. June 18, 2012 article, Philippine Daily Inquirer. URL accessed: http://newsinfo.inquirer.net/214829/maternalmortality-rate-rose-in-2011-says-doh. Last accessed July 18, 2012. 4. PhilHealth Useless in Rural Areas. Ramos-Araneta, Macon. July 18, 2012 article, Manila Standard Today. URL accessed: http://manilastandardtoday.com/www2/2012/07/18/philhealth-useless-in-rural-areas/ 5. Private Hospitals' Threat - No Longer Honor PhilHealth. URL accessed: http://indopinoy.blogspot.com/2012/07/private-hospitals-threat-no-longer.html#. Last accessed July 19, 2012.