Sponsorship Speech: FY 2017 General Appropriations Act

SPONSORSHIP SPEECH
SEN. LOREN LEGARDA
FY 2017 GENERAL APPROPRIATIONS ACT
November 14, 2016

Mr. President, Distinguished Colleagues:

We live in extraordinary times and we are going through an extraordinary time of change.

It is therefore my honor to present to you our proposed 2017 budget that sets bold plans to meet not just today’s needs, but one that looks beyond 2017 – one that contributes to delivering long-term solutions to the country’s long-term problems.

The P3.350 trillion proposed National Budget for 2017 is the biggest annual budget ever assembled — a budget that will help deliver the change that our people want.

The Face of the National Budget

The budget before you is not a mere compilation of cold and impersonal words and numbers.  It is the lifeblood of our nation, crafted to fuel hope and inspire our people to believe in our collective future again.

One has to read between the lines of this hefty book, for behind the hard numbers lie stories of real people whose pleas were met with either apathy, neglect, or by the arrogance of power.

Tucked within the thick pages of this book is the memory of young Kristel Tejada who killed herself, unable to raise the P10 thousand tuition fee she needed to continue her college education; our countrymen still affected by the wrath of Typhoon Yolanda and in dire need of assistance; or the farmer mercilessly shot to death because he was asking to be given rice at a protest rally in the drought-stricken, unirrigated farms of Kidapawan, North Cotabato.

They are the faces of the more than 26 million Filipinos who are poor, half of them living in extreme poverty and lacking the means to feed themselves.^[1]

Mr. President, it can no longer be “budget as usual.” We need to have a budget that works – one that places money where they will make a real difference in improving the lives of our people. We need to have an inclusive budget, one that will consider the needs of every Filipino without prejudice to age, gender, sexual orientation and gender identity, ethnicity, faith and religion, and physical limitations.

Unobligated Allotments

We need to be ambitious for our people.  But how can we put life into this ambition if the resources to deliver programs are not spent?

I am outraged by the fact that while our people are pleading for as little as a few hundreds of pesos to buy food or a few thousands to continue education, billions of funds intended for programs have remained untouched.

As of June 30, 2016, our government is saddled with total unobligated allotments amounting to P156.98 Billion.  Agencies simply were not able to spend these funds released in 2015. The logic escapes me.

While agencies, by law, have only until December 2016 to spend these funds, it is unwise to indulge in wasteful year-end spending because this can only result to sacrifices in spending quality.

Mr. President, our budget is our investment for the future.  It is supposed to construct new mass transport systems, new airports, road systems, and schools.  They are supposed to fund services for the sick and poor; provide electricity to our people; and build irrigation for our farmers.   The unspent amount could have built 678,662 decent houses for the poor^[2]; 29,276 kilometers of farm-to-market roads^[3]; more than 215,000 classrooms with toilets and furniture^[4]; or it could have put more than three million Kristels through university.^[5]

Underspending simply means missed opportunities. It means denying our people the services they deserve. We wouldn’t want to engage ourselves in a blame game here; what we wish to encourage is that we all work together and provide the people what is due them.

We are therefore proposing a budget that provides a disincentive to hoard funds by limiting executive discretion to impound funds, in accord with the decision of the Supreme Court.  This budget will also clearly define the conditions under which savings may be declared, compliant with the decision of the Supreme Court.  Starting next year, savings can only be declared under the following conditions: (1) final discontinuance, or abandonment of an ongoing program, activity, or project (P/A/P) by the head of agency concerned due to causes not attributable to the fault or negligence of the said agency, which would not render it possible for the agency to implement said P/A/P during the validity of appropriations; (2) non-commencement of the P/A/P for which the appropriations is released. Non- commencement shall mean the inability of the agency or its duly authorized procurement agent to obligate the released allotment and implement the P/A/P due to natural or man-made calamities or other causes not attributable to the fault or negligence of the agency; (3) decreased cost resulting from improved efficiency during the implementation or until the completion of the P/A/Ps or (4) difference between the approved budget for the contract and the contract price, including any variation required for its project. Programmed appropriations which have not been released or allotments not yet obligated shall not be considered savings.^[6]
Macroeconomic Assumptions

Mr. President, the national budget is anchored on a sound reading of the domestic and international economic outlook.

We are forecasting real Gross Domestic Product (GDP) to grow at 6.5 to 7.5 percent over the coming year, with inflation rate settling at the level of 2 to 4 percent.  The 364-Day Treasury Bill Rate is projected to hover between 2.5 to 4 percent, while the Peso-Dollar exchange rate is seen to settle between P45-P48 to the dollar.  Our Gross International Reserves are projected at US$86.3 Billion, equivalent to 8.9 months of our country’s imports of goods, services, and income.

These assumptions are based on government’s forecast of strong domestic demand and investment which will continue to boost economic growth.

Some uninitiated fear that the exchange rate assumption may no longer be relevant since the peso-dollar rate is now approaching P49 is to US $1.00. Such fear is unfounded. On the contrary, a peso depreciation favors the government’s fiscal position. Specifically, for every peso depreciation, expected revenues increase by P9.2 billion due to imports and customs duties. While this will also translate to an increase in government’s disbursements by P2 billion to pay for foreign-denominated debts, the net effect is still a positive P7.2 billion.

Expanded spending to deliver growth for everyone

Mr. President, our budget seeks to deliver results.  This will require an expanded spending program in 2017 that will result in a slight increase in our deficit from 2.7 percent of GDP this year to 3.0 percent in 2017.  This, according to our budget experts, is manageable and necessary to sustain the country’s growth momentum.

By the end of the year, the government’s debt is expected to decline to 42.7% of GDP from 44.7% in 2015 and 52.4% in 2010.^[7]  Our economic projections suggest that this trajectory will continue to contract to 35% by 2022.

A proactive debt management will be exercised to strike a balance between easing the debt burden on expenditures and more strategic borrowings, guided by the objective of improving and expanding the delivery of services and benefits that will be felt by ALL Filipinos.

Mr. President, the highest poverty incidence in the country is in Mindanao and this budget takes a conscious effort to address that.  Mindanao has the highest budget growth among the island groupings, with its per capita allocation for 2017, outpacing that of Luzon and Visayas.

As a people’s budget for real change, P1.345 trillion or 40% of the entire budget is being proposed to deliver social services that will address the most basic needs of our people.
P151.5 billion is being proposed to fund health services, including the hiring of doctors, midwives and nurses to service the needs of our poorest communities in the country; build more hospitals; and procure medicines. Rehabilitation centers for drug dependents will be built as part of government efforts to find a lasting solution to our war on drugs.

This Government is delivering initiatives to improve education.  Funding is set at the level of P699.95 billion to finance the construction of classrooms, hire more teachers, and procure instructional materials.

P78.7 billion is set to support a comprehensive social investment package in the form of the Conditional Cash Transfer Program, targeting 4.4 million eligible beneficiaries in 2017.

Inclusive growth means sharing growth with everyone. Thus, the 2017 budget provides social pension to all indigent senior citizens, age 60 and above.

Mr. President, we have a proud history of hardworking people. We should make it easier for them to contribute to our nation’s growth story.

As such, a leap in infrastructure spending is one of the priorities of the 2017 budget given its indispensable role in poverty reduction, raising productivity, and in spreading the benefits of economic growth.  By providing an P860.7 billion budget for infrastructure development, equivalent to 5.4% of our GDP, we are taking a huge step towards ending our people’s daily commute of 3 to 5 hours to and from their places of work and schools. We are strengthening the foundations of education and health, facilitating commerce, promoting mobility, revitalizing our industries, and strengthening services.

The Government is committed to delivering better economic services, thus, 27.6% of the budget or P924 billion is allocated for this purpose.

Our farmers and fisher folks, many of whom rely on subsistence agriculture, will be better served through credit support and insurance, financial and technological resources, and irrigation and infrastructure support.  This budget will endeavor to provide food for our producers in the rural areas – a sector most vulnerable to the impacts of climate change.
Energy poverty will be addressed and for this, P1.82 billion will be allotted for the Sitio Electrification Program of the National Electrification Administration (NEA) covering 2,410 sitios in remote areas.  P820 million will be allotted to the Department of Energy for the Nationwide Intensification of Household Electrification, and P190 million for the Household Electrification Program in off-grid areas.

Regional economic development will be supported through initiatives that will unlock the potential of MSMEs, boost agriculture, strengthen our competitiveness, promote tourism, as well build resilience in our communities.

A fundamental responsibility of the Government is to protect its people.  To enable our government to succeed in its war on drugs and criminality, we need to provide it with the wherewithal to bring this campaign to its rightful conclusion. As such, we are proposing a P206.6 billion budget for public order and safety, up 19% from P173.2 billion in 2016.  This includes P500 million for the DILG’s MASA MASID or Mamamayang Ayaw sa Anomalya, Mamamayang Ayaw sa Iligal na Droga, a community-based program to engage volunteers in the fight against criminality, corruption and illegal drugs.

As part of our campaign to build a minimum credible defense capability, P147.8 billion will be allocated for this purpose, increasing the allocation by 13 percent from the 2016 budget.

Senate Amendments

Mr. President, after two months of marathon hearings, the Committee on Finance hereby puts forward a proposed budget of Two Trillion Four Hundred Ninety-Seven Billion Eighty-Six Million Nine Hundred Fifty-Two Thousand Pesos (P2,497,086,952,000.00), broken down as follows: with Programmed Appropriations of Two Trillion Four Hundred Thirty One Billion Nine Hundred Eighty Six Million Nine Hundred Fifty- Two Thousand Pesos (P2,431,986,952,000.00) and Unprogrammed Appropriations of Sixty Five Billion One Hundred Million. (P65,100,000,000.00).

This budget seeks to provide more to those in greater need.  Toward this end, we submit the following amendments:

First, Mr. President, this budget will make it possible for the invisible informal sector to now have access to the government’s universal health care program.  According to the Department of Health, some 8 percent of Filipinos are still not covered by Philhealth; hence we have provided a P3 billion increase in the Philhealth budget so that all Filipinos will now be covered by the program, while indigent patients will not have to pay for anything in government hospitals under the No Balance Billing (NBB) policy.

Your committee, Mr. President, tried to go one step further by also providing preventive healthcare services for all government employees in the executive, legislative and judicial branches. Unfortunately, Philhealth is not ready, at this time, to take on the task.  We will persist in this proposal for inclusion in the 2018 GAA.

Second, we have included a P2 billion Irrigation Fees Subsidy in the budget of the National Irrigation Administration so that irrigation service fees will no longer be collected by NIA from farmers’ associations. Our farmers, who feed the nation, are among the poorest of the poor who urgently need government support and intervention.  An accompanying Special Provision for this purpose specifies that this P2 billion allocation shall be used to cover the operating requirements of NIA and the maintenance of existing irrigation facilities which were previously funded out of the collections from Irrigation Service Fees.

Third, all progressive nations have put science, technology, and innovation as a centerpiece of their development policy.  In our case, around 41 percent^[8] were enrolled in Science, Technology, Education, Agri-fisheries and Mathematics (STEAM) programs in schoolyear 2014–2015. To further encourage enrolment in STEAM programs, we are supporting the grant of scholarships to students enrolled in priority courses in all State Universities and Colleges (SUCs). CHED’s Special Provision, prioritizing the provision of state funds to scholars taking up STEAM courses, and other key growth areas such as electronics, business process outsourcing, tourism, general infrastructure and other priority manufacturing industries, will be vital in our effort to build a knowledge-based and innovation economy.

Fourth, the Justice sector is faced with an ever-increasing prison population and with this reality comes the continued deterioration of conditions in our prisons, including the inability to provide decent meals to our prisoners.  We need to support a humane correctional system that will promote the reformation of offenders. As such, we have provided P388 million for the Bureau of Jail Management and Penology, and another P163 million for the Bureau of Corrections to increase our prisoners’ daily subsistence allowance.

Our budget adheres to the Sustainable Development Goals (SDGs) of ending poverty and hunger, improving health and education, making cities more sustainable, combating the adverse effects of climate change, promoting peace and justice for all, and protecting the environment and biodiversity.  We are on track to meeting the first of seven global targets of the Sendai Framework for Disaster Risk Reduction which is to reduce disaster mortality.  This budget will make sure we remain on course.

And because our culture is our story as a nation, we shall endeavor to provide the funds needed for the integration and mainstreaming of Philippine arts and culture in the country’s educational system, as well support for the National Commission on Culture and the Arts (NCCA).

Special and General Provisions 

I further submit, Mr. President, the following Special and General Provisions for the 2017 budget:

First, in building resilience in agricultural communities, the Department of Agriculture will undertake disaster-resilient agricultural infrastructure projects and practices. The Department of Agrarian Reform will promote the adoption of sustainable farming approaches.

Second, we have introduced special provisions that require the integration of educational modules on indigenous knowledge, heritage, biodiversity, environmental protection, disaster risk reduction and climate change in the K-12 curriculum as well as in the curriculum of State Universities and Colleges (SUCs).

Third, a Special Provision under DENR identifies critical watershed areas, other protected areas, and communities ravaged by extreme weather events as areas to be prioritized as planting sites under the National Greening Program. It also prescribes the inclusion of bamboo, coconut and other indigenous species as planting materials for the program.

Fourth, Special Provisions task the DILG to:

• Ensure that evacuation centers are able to withstand 300 kilometer per hour winds and 8.0 magnitude earthquakes, with natural ventilation and rainwater catchment facilities, as well as special facilities for the elderly, persons with disabilities (PWDs), women and children; and
• Issue rice subsidies in the form of cash allowance, equivalent to 20 kilos of rice to be given to firefighters, jail guards, and police.

Other personnel to be given rice subsidies are the military and uniformed personnel of the Philippine Army, Philippine Air Force, and Philippine Navy.

Finally, the DSWD Special Provision on the Pantawid Pamilyang Pilipino Program specifies that the beneficiaries shall be entitled to a rice allowance in the form of cash grants amounting to a total of P23.4 billion.

In addition, several General Provisions are also proposed:

• Requiring Infrastructure Projects to conform to resilience standards to withstand natural hazards;
• Assigning priority to government structures located in areas highly vulnerable to seismic activity for repair and retrofitting efforts;
• Protecting built heritage, cultural properties, and cultural landscapes from alteration, renovation, or demolition by requiring prior approval by government cultural agencies;
• Requiring the inclusion of the “Protection of Biodiversity” in the development programs and projects of agencies, offices, and LGUs; and
• Setting a One-year Availability timeframe of Appropriations under the 2017 GAA to instill a sense of urgency among government agencies in utilizing their budget to the last peso.

Closing

Mr. President, colleagues,

Once more, we are faced with the task of establishing our funding priorities on behalf of our people.

I need not underscore the fact that Congress holds the power of the purse. It is an empty power, however, if the purse strings are drawn tight by the government’s failure to spend all of its funds judiciously.

The budget bill puts our people at the front and center of our agenda.  It aims not just to create growth, but ensures that everyone benefits from the growth we will create together.

I urge you, Mr. President, and all our colleagues to support this measure.

Thank you.

^[1] Philippine Statistics Authority, Family Income and Expenditure Survey (FIES) 2015.

^[2] Calculated at Php10514/ SQM x 22 SQM = P231,308 per house (tradingeconomics.com)

^[3] Calculated at Php 5,361,930 per kilometer of farm-to-market road (http://www.gov.ph/2014/07/04/dpwh-440-km-farm-to-market-roads-completed/)

^[4] Calculated at Php730,000 per single story classroom with toilet and furniture (Deped)

^[5] Calculated at Php13,009.26 per year per student (2017 budget)  x 4 years = Php52,037 per student.

^[6] GAB definition.

^[7] DBM

^[8] Source: CHED