Charter-change non-negotiables

As part of his effort to fulfil a promise of change, President Rodrigo Duterte issued in December 2016 Executive Order No. 10 to organize the Consultative Committee (Con-Com) on constitutional reform.

The mandate of the Con-Com is to “study, conduct consultations, and review the provisions of the 1987 Constitution including but not limited to the provisions on the structure and powers of the government, local governance, and economic policies.”

However, this committee is still just a plan on paper. As per news reports, there is already a list of members. But their names have yet to be formally announced.

Nevertheless, both chambers of Congress have already mobilized their respective committees responsible for constitutional amendment and revision. Their hearings, however, have been focused mainly on determining the wisdom and necessity of federalizing government. This is understandable because shifting to a federal structure of government is the main motivation of the President in pushing for charter change.  

However, revising the Constitution actually encompasses a broader political reform effort. According to the United Nations Assistance to Constitution-making Processes (April 2009), “Constitution-making presents moments of great opportunity to create a common vision of the future of a state, the results of which can have profound and lasting impacts on peace and stability.”

It is essentially a reset button because the range of aspects in our political system that can be improved is wide open. Hence, charter change is our opportunity to address anomalies within our country’s overall political framework. This is our chance as one nation to address key development constraints. Yet with these opportunities come great risks as well – hence the need to shape the agenda toward evidence-based reforms.

A paragraph from the President’s second State of the Nation Address underscores the gravity of constitutional reform for all Filipinos, to wit: “Sadly, although we knew years ago that what was needed or [what we] ought to do, we did not do [it] because our idea of government was parochial and we could not rise above family, ethnic, and clan loyalties as well as loyalty to friends and co-workers. No one wanted to be a snitch. That is why we are one in saying that genuine change is what this country truly needs.”

As a first step, then, it is useful to first consider what critical reforms the country needs. This is the motivation that should shape whether and to what extent federalism will actually be part of the solutions.

Without belaboring this discussion, comprehensive studies point to deep governance challenges related to the malfunctioning political system, which has generally failed to produce more accountable leadership, and more predictable and stable policies. Instead, our political system has produced deep political concentration of power in the hands of political clans.

In the words of Alex Lacson, a known reformist, we kicked out a dictator in 1986, only to see him and his political clan replaced by many “mini-dictators” across the country. These leaders have since coveted even more power by enlarging their political clans’ political and economic roles in their respective regions. Empirical evidence shows that not only are these “dynasties in steroids” to be found in the poorest provinces and regions in the country, they are also directly causing deeper poverty.

Simply put, we are about to commence with overhauling our national charter under such dire circumstances. If we are to even consider federalism as a way forward, and first abstracting from other important debates on the process of deliberating this, we note here several reforms that would be critically important if this initiative is to carry any substantive weight at all.

Dynasty regulation and more inclusive leadership 

First, there must be prescriptions in the new Constitution that extensively regulate political parties and political dynasties. Changing the “rules of the game” under federalism without changing the composition of the main players has raised severe doubts on whether any change in governance will be forthcoming.

Political dynasties are expected to thrive under federalism if the main imbalances that produce dynasties are not amply corrected. It is difficult to imagine how some regional warlords, for example, will behave any differently if they are granted access to even greater amounts of public finance, and even more control on a broader array of governmental functions.

To address this problem, one proposal envisions including a dynasty regulatory mechanism that prevents the proliferation of “fat dynasties” (i.e., those politicians belonging to the same clan and simultaneously occupying positions of power).

Such a reform may stand a chance at being supported even by many “thinner” dynasties, to the extent that political clans can still field family members for office; but this will now be regulated so that the country builds a more inclusive leadership structure. More young leaders (even from non-political-clans) could then successfully vie for public office. Given our country will face our “youth peak” around 2050, and more and more young people will join our work force and voting population from now until then, this reform will help open the door for our best and brightest to serve their country.

Additionally, the Con-Com must ensure that their draft charter establishes a credible and coherent political party regulatory framework. Obviously, not all the issues of the existing set-up can be addressed here. But a structure more substantial than the present one should be self-evident. A provision that unequivocally prohibits turncoatism would be a welcome game-changer. Ridding the country of “balimbing politics” and forcing politicians to form parties based on reform agendas should also help refine campaign agendas and clarify the choices for our voters towards more informed election outcomes in the future.

Rebalance public finance

Second, there must be a prescription that will rebalance the public finance structure. Presently the central government controls over 80% of the country’s public spending and investments. This gross imbalance is clearly no longer tenable. Simply put, the amount of public money controlled by Malacañang ought to be drastically reduced.

Ostensibly, this reform goes hand in hand with decentralizing the management of government. Suffice to say, the ultimate goal here is to rationalize the President’s power over public finance. This can potentially break the grip of Imperial Manila over the rest of the country and end the pattern of a “winner-take-all President”.

Third and as a corollary reform to the previous one, the new charter must also dramatically redesign intergovernmental transfers. The fact is the Internal Revenue Allotment (IRA) is an outdated system that is not anchored on development outcomes, but on variables that are delinked from public sector performance (e.g., land size, population size, income).

The general view is that it has failed to help bring development to the countryside largely because it has not strengthened local governance on average, nor has it incentivized the mobilization of additional resources at the local level. It has, in effect, been part of a local-central dependency. It is part of the general malaise whereby national dynasties align themselves with many local warlords and dynasties, often perpetuating the status quo.

In order to align incentives toward greater accountability to match higher access to resources, we think it would be possible to design a similar graduation mechanism for local governments. In lieu of automatic intergovernmental transfers based on a rigid formula like the IRA, local government units with low income and relatively weak governance track records could be given access to conditional grants. The conditions could then be geared toward addressing governance conditions or improving allocations toward chronic poverty challenges.

And as local government units move to a slightly better governance track record and slightly higher income levels, they could be given access to unconditional (or less conditional) grants and matching grants. Hence, the goal here is to provide more flexibility in managing local public finance decisions as governance track records become more established and as reforms are built continuously over time.

Build a level economic playing field

Fourth, the new Constitution must open the economy to competition. Per the Philippine Development Plan 2017-2022: “Market competition promotes inclusive economic growth. It is a cross-cutting strategy to expand economic opportunities and increase access to such opportunities.” (See Chapter 16 National Competition Policy Framework) 

We believe that eeconomic liberalization can significantly increase economic opportunities for many Filipinos. Consider removing for instance, foreign ownership restrictions on secular educational institutions (See Article XIV, Section 4 (2)). It then becomes plausible to imagine a learning institution such as Newcastle University establishing a campus in Naga or Bacolod in addition to their campuses in Malaysia and Singapore.

And while investors in the field of education may not bring spectacular numbers in terms of FDI, if the scenario painted here does eventuate, a whole range of economic opportunities immediately becomes available to Filipinos in these areas. More critically, this outcome can also hold true for sectors in our economy, which are currently closed.

It is important to remember though that economic liberalization does not mean the absence of government regulation. The intervention of the state is still necessary to ensure trade practices are fair and just, labor and consumer rights are protected, and our national patrimony is preserved. Simply put, under an open economic regime the welfare of the community must still be the priority over and above everything else.

Needless to say, these enumerations do not cover all that needs to be reformed in the 1987 Constitution. Indeed, we encourage all Filipinos to add on to this list. More importantly, to make their propositions known to the Con-Com. It cannot be emphasized enough that we want the new charter to be more reflective of the times and responsive to the needs of all Filipinos. Therefore, we must be ready to be actively and directly involved in the drafting process.

To counter vested interests, all citizens must be prepared to rally around key reforms that will truly bring about change. Let’s begin that discussion of our non-negotiables sooner, rather than later. – Rappler.com

 

*Ron Mendoza is Dean and Associate Professor of Economics at the Ateneo School of Government and Michael Yusingco is a non-resident Research Fellow at ASOG. The views expressed are those of the authors and do not necessarily reflect the views and policies of the Ateneo de Manila University. +AMDG