Decentralization 8: PIPER Forum on Fiscal Decentralization

Fiscal decentralization is an important part of political devolution and decentralization. A local government unit (LGU) that has relative administrative autonomy and independence from the national government (NG) but has no fiscal independence from NG will be less empowered and hence, not really independent from it.

I have written several papers in the past about decentralization but they are more on the level of political philosophy, like the relationship between local governments and civil society, decentralization and privatization. Here are my past papers on the subject:

Decentralization 1: It's Still More Government, July 25, 2007

Decentralization 2: From Local Government to Civil Society, August 30, 2008

Decentralization 3: Challenges to Local Government, November 18, 2008

Decentralization 4: Local Taxes and Provincial Airports, May 30, 2009

Decentralization 5: Privatization and Civil Society, February 22, 2010

Decentralization 6: Local Fees and LGUs' Independence from NG, September 20, 2010

Decentralization 7: From Decentralization to Privatization, January 25, 2011

I still have to explore more specifically on fiscal decentralization. Thus, I was happy to see the forthcoming Philippine Center for Economic Development (PCED) Institute of Public Economics and Regulation (PIPER) (in partnership with GIZ (Deutsche Gesellschaft fuer Internationale Zusammenarbeit)) policy forum on “Fiscal Decentralization after 20 Years: What have we got to show? What have we learned? Where do we go from here?”

The line up of speakers and reactors is impressive. Here's the program.

8:00 – 9:00 am Registration

9:01 – 9:30 am Opening Remarks
Sec. Cayetano W. Paderanga, Jr.* (Director General, NEDA and Chair,PCED Board of Trustees)
Dr. Herwig Mayer (Program Manager , GIZ Decentralization Program)

9:31 – 10:30 am SESSION 1: A 20-YEAR RETROSPECTIVE
Speaker: Dr. Benjamin E. Diokno (Professor, UP School of Economics and Former Secretary, DBM)
Reactors: USec. Austere Panadero (Undersecretary, DILG - Local Government)
USec. Jude Esguerra (Undersecretary, NAPC)
Dr. Milwida Guevara (CEO, Synergeia Foundation)

10:31 – 10:45 am Coffee Break

10:46 – 11:46 am SESSION 2: ASSIGNMENT OF FUNCTIONS AND INTERGOVERMENTAL FISCAL RELATIONS
Speaker: Dr. Gilberto M. Llanto (Senior Research Fellow, PIDS and Former Deputy Director General, NEDA)
Reactors: Hon. Sherwin Gatchalian (Mayor, Valenzuela City)
Dr. Roberto de Vera (Professor, School of Economics, UA&P)

11:47 am – 1:30 pm Lunch Break with a Roundtable Discussion
Host/Moderator: Dr. Andreas Lange (Chief Advisor for Local Planning, GIZ)
Conversationalists: Gov. Jose Ma. Clemente S. Salceda (Governor of Albay)
USec. Mario Relampagos (Undersecretary, DBM – Operations)
Hon. Jesse M. Robredo* (Secretary, DILG)
Dr. Enrique T. Ona* (Secretary, DOH)
Sen. Ferdinand R. Marcos, Jr.* (Chair, Local Government, Senate)
Cong. George P. Arnaiz* (Chair, Local Government, House of Representatives)
Hon. Roque Tiu* (Board Member, Province of Leyte)

1:31 – 2:30 pm SESSION 3: GOVERNANCE AND ACCOUNTABILITY
Speaker: Dr. Paul Hutchcroft (Professor, Australian National University)
Reactors: Ms. Leonor Briones* (Lead Convenor, Social Watch Philippines)
Ms. Malou Mangahas (Reporter, Philippine Center for Investigative Journalism)

2:31 – 3:30 pm SESSION 4: INTERNATIONAL PERSPECTIVE
Speaker: Dr. Jan Werner (Professor, BITS Iserlohn, University of Applied Sciences, Germany)
Reactors: Dir. Janet B. Abuel (Director IV, DBM – Regional Office I)
Dr. Eduardo Gonzalez (Professor, UP Asian Center)

3: 31 – 3:45 pm Coffee Break

3:46 – 4:00 pm Closing Remarks
Dr. Arsenio M. Balisacan (Dean, UP School of Economics and Executive Director, PCED)

*To be Confirmed

The Chairperson of PIPER is Dr. Ben Diokno, my former teacher in UPSE, undergrad in the early 80s, and in PDE in 1997-98. I know his bias, generally he is for more government intervention and welfarism ala-UN or WB/ADB style, something which I do not support. But nonetheless, I am attending this forum. It is free and open to the public but has limited capacity. Interested parties may inquire from piper.secretariat@gmail.com, or at tel. (02) 9279686 loc 333, Pam Lomaad.

Fiscal Irresponsibility 20: Trade and Budget Balances

Here is the latest stats from The Economist on trade, current account and budget balances of rich and emerging economies worldwide. From the table on "Trade, exchange rates, budget balances and interest rates" December 31st 2011 issue, http://www.economist.com/node/21542207

To summarize, here are the countries with:

A. Largest trade deficit, $ bill: US         -720 Britain  -163 India     -124 Turkey  -107 France  -  99 Spain    -  63 Italy      -  45 B. Largest trade surplus, $ bill: Germany +193 Russia      +188 China       +154 Saudi A.  +150 Norway   +  69 Ireland    +  61 Netherl   +  57

C. Largest current account deficit, $ bill US          -467 Italy       -  79 Turkey  -  79 France   -  68 Spain     -  57 India      -  46 Britain   -  41 D. Largest current account surplus, $ bill: China        +259 Germany +190 Japan        +139 Russia       +  86 Switzerl    +  86 Saudi A.    +  75 Norway    +  70 Netherl     +  67

E. Largest budget deficit, % of GDP Ireland -10.7 Egypt    -10.0 Greece   -9.5 Britain    -8.8 US           -8.7 New Z,   -8.4 Japan      -8.3 Portugal -6.7 Spain      -6.5 Iceland  -6.1 Poland   -6.0 Pakistan -5.9 France    -5.8 Malays   -5.6 S. Africa -5.5 Latvia     -5.5 Lithuan. -5.5 India       -5.4 Venez.    -5.2 Vietnam -5.1 Slovenia  -5.0

F. Largest budget surplus, % of GDP Saudi A.  +14.3 Norway   +13.1 S. Korea  +  2.4 Hong K.   +  1.8 Hungary  +  1.2 Czech R   -4.6 Netherl   -4.2 Ukraine  -4.2 Canada   -4.0 Italy         -4.0 Slovakia  -4.0 Denmark -3.9 Belgium  -3.8 Austria    -3.6 * China      -1.8

The US economy is leading on deficit on merchandise trade and current account, and ranking high also on budget deficit. On the other hand, China, Germany and Russia are leading on trade and current account surpluses.

But the most glaring fact here is that fiscal irresponsibility -- governments which are continuously living beyond their means, spending much larger than their revenues and keep borrowing like crazy -- is alive and kicking for so many countries. Only the governments of Saudi Arabia and Norway have high budget surpluses. Saudi is a big oil exporter, the government, the monarchy, is earning a lot from oil revenues, that's why. In the case of Norway, the government there has lots of revenues from energy sales and exports, among others.

Big government in general is wrong. Government administrators and political leaders tend to over-promise to voters and in the process, encourage the abdication of more personal and parental/guardian responsibility in running the people's own lives. It shifted the attention to more "government responsibility" via nannyism and costly welfare system. Over the long term, heavy public debts and the economic and financial instability caused by such heavy indebtedness is causing diswelfare to the people.
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See also:
Fiscal irresponsibility 15: Philippine government budget 2012, August 08, 2011
Fiscal irresponsibility 16: On government bail outs, September 11, 2011
Fiscal irresponsibility 17: Cut Spending and Borrowing, September 19, 2011
Fiscal Irresponsibility 18: Greece Bailout, October 29, 2011
Fiscal Irresponsibility 19: Rich Countries' Debts, November 24, 2011

Inequality 10: On Urban Congestion

Urban congestion is happening in almost all countries around the world. Hundreds of thousands, or millions of people, are cramped and congesting themselves in a relatively small land area. So residential condo buildings have to be high to accommodate more people on small land space. Skyways, tunnels, subways, elevated ramps have to be constructed to reduce or eliminate traffic build-up in major road intersections.

One friend in facebook, Arcy Garcia, posted below in his fb wall. See the succeeding exchanges. Arcy gave me implicit permission to post the exchange in this blog. We also have an earlier discourse about capitalism vs. socialism, see Political Ideology 8: Diskurso sa Kapitalismo, Sosyalismo at Gobyerno last November 15, 2011.
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Arcy Garcia

ganitong mga proyekto ang halimbawa ng bultuhang SOP, at paggaya sa development model ng Kanluran-semento, bakal, semento. yayaman na naman ang mga contractor. at para na naman sa mga pribadong sasakyan tulad ng skyway..magastos. sisirain na naman ang mga bundok at delikado sa lindol. at lalong nag-aanyaya na magsiksikan tayo sa mga lungsod. ang kailangan ay efficient na public mass transport system- at pagtatayo ng mga ikabubuhay sa mga probinsiya na nakakalat...upang lumuwag ang Metro manila at iba pang siksik na lungsod. Chairperson Tolentino, kuha mo?

MMDA proposes skyways along Metro Manila's esteros - InterAksyon.com

www.interaksyon.com

The Metro Manila Development Authority is planning to build elevated roads or skyways alongside esteros (creeks and streams) in the next two years to ease traffic congestion in the metropolis.

 ·  ·  · Share · Tuesday at 4:33pm · 

• 
  

  Arcy Garcia 
  
  
  
  

  sana maka-isip naman at makapagbalangkas kayo diyan sa MMDA ng isang makataong siyudad.....konsultahin nyo naman ang mga arkitekto at inhenyerong matitino, at hindi mga taga construction companies....Jun Palafox, yung magaling na arkitektong intramuros, etc; balikan nyo mga plano ni Imelda (kahit maganda yun, may mga kakaibang plano yun!); yung holistic; yung kasama ang watershed ng Rizal, at katubigan sa north NCR- para maisama ang climate change effects sa plano.

  
  

  Tuesday at 6:11pm · 

• 
  

  Nonoy Oplas Arcy, anywhere in the world, people want to congest in big cities. Kaya they are building skyscrapers, skyways, subways, tunnels under the river under the mountain -- HK, Bangkok, Taipei, Seoul, KL, Tokyo, Jakarta, Sing, Beijing, etc. Gusto talaga ng mga tao nagsisiksikan, wala namang tinutukan ng baril sa ulo para isiksik nila sarili nila sa big cities, they went there on their own di ba.
  

  Yesterday at 10:49am · 
• Floro 
  
  
  
  

  Mga kapatid, may mga pull factors kung bakit siksikan tayo sa siyudad!Kailangang madevelop ang ibang lugar para mabawasan ang tao sa mega cities tulad ng Manila at Cebu. Agree ako sa efficient Mass Transport. Yung Countryside Development hinid umuubra kasi binubulsa and CDFs. YUng tulay sa probinsiya imbes na malaki ginagawa ay mga overflow na kayang sirain ng baha. Para magkaroon ng bagong project ulit! Ang decongestion mangyayari lamang kung madevelop ang ibang regions at magkaroon ng economic opportunities sa ibang lugar! Anf irony, puro pulpul na politko at mga sipsip sa pulitiko ang mga naiiwan sa mga probinsya na binoboto naman ng mga nabubuhay sa patronage largesse na galing sa corrupt na systema. Edukasyon ng masa ang kaialngan ngunit di natin magawa. Siguro ang pwede lang ay rebolusyon na kinatatakutan natin!

  
  

  Yesterday at 11:12am · 
• 
  

  Nonoy Oplas 
  
  
  
  

  Madali naman siguro mag rebolusyon doon sa may gusto. Hahawak sila ng baril, magsisigaw sa kalsada, tapos barilin mga sundalo, politiko at pulis, pati mga sibilyan na di naniniwala sa causa nila, pipilitin mag contribute at pag ayaw, siguro babarilin din. Sa HK, Tokyo, Seoul, Bangkok, etc., super-siksikan mga tao, sisiw mga flyovers natin kumpara sa kanila, pero doon, walang nagtatawag ng rebolusyon, bagkus lalong lumalaki at dumadami tao sa mga syudad nila.

  
  

  Yesterday at 11:15am · 
• 
  

  Arcy Garcia 
  
  
  
  

  Noy, dahil nga sa akala nila, andun ang trabaho. pero pag tumagal, nakikita nila na kulang na kulang pala. pero siyempre, sa anyo ng develoipment model ng buong daigdig (na kapitalista), mas ok na sa siyudad kaysa naman sa bukid at probinsiya. kaya nga dapat even development. dapat gobyerno manguna sa pagdevelop sa ibang lugar na hindi pa developed. para hindi tayo magsiksikan dito. hindi dahil ganyan ang Bangkok, Taipei, Suingapore at Malaysia, ganun na rin tayo dapat. naniniwala akong may isang mas matino at mas makataong kaunlarang modelo kaysa sa tinatahak ng mga bagong yumayaman (ngunit hindi ibig sabihin agad ay umuunlad) na mga bansang Asyano. Lalong hindi ang modelo ng US at UK. sa dulo, agrikultura ang dapat pagtuunan ng pansin ng bansang ito upang tugunan ang kahirapan- hindi mas maraming higanteng tulay, fly-overs, skyways, etc; at mga higanteng gusali.

  
  

  Yesterday at 1:12pm · 
• 
  

  Arcy Garcia tama ka Fkoro. countryside development. kailangang seryosong paunlarin at ituon ang kaunting pera natin sa lalawigan. pagpapaunlad ng agrikultura ang unang assignment ng administrasyong ito. (na sa kasamaang-palad ay hindi niya ginagawa).
  

  Yesterday at 1:13pm · 

• 
  

  Nonoy Oplas 
  
  
  
  

  The convenience is larger than inconvenience in people congestion in big cities. For instance, you live in mandaluyong bec your office is in makati, your children's schools are in pasig and QC, etc. Matraffic, true, but it's shorter compared to living in Laguna or Rizal then work in makati. Maski mahihirap, gusto nila sa big cities kasi madaming opportunidad basta masipag ka lang: maging jeepney or taxi driver, waiter, salesladies in malls, etc. No one is forced and coerced to live in big and congested cities, one can always go to the smaller provinces.
  
  Also, if things are still convenient in Metro Manila, then its population will not just be 10-12 million, it will swell to 15 M or more. Congestion and its inconvenience are the "natural" checks by which people will decide, "will I swap my conveniece here in the province with M.Mla's congestions but bigger econ opportunities there?"

  
  

  Yesterday at 2:59pm · 
  
• Ado  
  
  
  
  

  ‎@ Oplas, sa HK, Bangkok, Taipei, Seoul, KL, Tokyo, Jakarta, Sing, Beijing, etc.. tama ka maganda ang development diyan kasi hindi mga kupal ang namumuno... dito sa atin nangangarap ng kung anu-anu eh wala naman pondo.. Kung sana ang Gobyerno nalang ang nagpagawa ng NLEX, SLEX at Skyaway sana taong bayan ang makikinabang sa 65m na collection diyan araw-araw at pwede pondohan ang guni2 ni Tolentino... Ang TransCo kumikita ng 35B na net income ang gobyerno yearly benenta pa.. ngayon sila Henry Sy ang nakikinabang..

  
  

  Yesterday at 3:09pm · 
• 
  

  Nonoy Oplas 
  
  
  
  

  Ado, sa tutoo lang, madaming pera ang gobyerno. Every year, ang interest payment binabayad nila sa public debt, both foreign and domestic, is about P330 B per year, average for 2010-2012. Klaro na may pera ang gobyerno, pero ang mentalidad, utang pa ng utang total future admins naman ang magbabayad. Dyan pa lang talo na tayo.
  
  Kaya Ars, be careful what you wish for. When you wish for more govt involvement, govt will give you and me more debts, more pork barrel for legislators, more corrupt officials.

  
  

  Yesterday at 3:15pm · 
  
• Ado  Pag ang pera mo ay pangbayad lang sa utang hindi mo pera yan, pera na galing buwis ni Juan de La Cruz.. marami din pera ang mga GFI natin pero kanino pinapautang? sa mga capilista at mga Politiko na nagpapahirap sa taong bayan at mga manggagawa.. Hindi malinaw ang direction ng ating gobyerno..
  

  Yesterday at 3:31pm · 
• 
  

  Arcy Garcia 
  
  
  
  

  Precisely Pareng Nonoy, dahil nga wala nang kabuhayan, wala pang matinong social services at edukasyon, hindi pa convenient. Pero hindi ba dapat gobyerno ang nag-iisip kung paano ikalat ang convenience at ikabubuhay. kapag kapitalista langtulad ni Henry Sy ang hahayaan nating magpasiya- pati Bagiou at maliliit na burol, tatayuan niya ng SM Mall, kahit pa man magkalubug-lubog tayo sa baha. kasi siya, safe sa kanyang palasyo...

  
  

  15 hours ago · 
• 
  

  Nonoy Oplas 
  
  
  
  

  Pero di ba ginagawa ng malalaking kapitalista ngayon tulad nila henry sy, gokongwei, ayala, etc. Nasa davao, cebu, bacolod, iloilo, baguio, pangasinan, CDO, Bulacan, Tarlac etc na ang SM, Robinsons, ayala malls, etc. Yong SM sa Rosales, pangasinan, nalubog ng todo sa baha nong 2009, typhoon pepeng. Pag sila nagkalat ng malls or subdivisions or call center bldgs nila, walang taxes kinukuha sa atin. Pag gobyerno namudmod ng pork barrel sa mga congressmen at manuhol sa mga goernors and mayors, puro tax money natin yon. Eh kung ginastos lang nila yon sa mga personal na bagay at pamumulitika, wala rin. 
  Meanwhile, not only the mall developers, but also the various franchised companies (jollibee, chowking, mang inasal, starbucks, generics pharmacy, etc. are in many provinces now, not only in big cities but also in small cities and municipaliities. ALL at no cost to us taxpayers. It's really the govt that really wastes than spend wisely our money.
  7 hours ago · 

It may sound "heartless" to justify urban congestion where social inequality is more pronounced and more visible. But the point is that people flock on their own to urban centers voluntarily -- poor, middle class, rich, government agencies -- because of various convenience: proximity to better healthcare facilities, educational and cultural institutions, commercial and financial centers, airports and seaports, trains, etc.

It's also a case of people voting by their feet, beyond the ballot and elections. Moving from the provinces or rural areas to big urban centers, and/or moving to other countries, where they think better economic and social opportunities will be more available to them.

Government central planning in business and economic development should be avoided as much as possible. Government should focus on promulgating the rule of law. Go after thieves and carnappers, both private and government. Go after kidnappers, killers and murderers, both private and government. Go after extortionists and land grabbers, both private and government. Go after scammers and violators of transactions and contracts, both private and government.

When people are assured that what they enter into will be transparent and respected up to the future, they will have peace of mind. They can invest in rural agri-business, resorts and tourism centers in far away areas, other business enterprises, knowing that contracts with various people and enterprises will be upheld, knowing that corruption and extortion in government is minimal or zero. Then rural development as advocated even by those who dislike urban congestion will slowly materialize.
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See also:

Inequality 5: Comments to Why Inequality is Good, May 11, 2011
Inequality 6: On Social and Class Dominance, May 13, 2011

Inequality 7: Roger Federer, Manny Pacquiao and Free Market, June 19, 2011

Inequality 8: On Sustainable Inclusive Growth, June 23, 2011

Inequality 9: CMFR Forum on Inclusive Growth, September 22, 2011