Offices, debt servicing get chunk of 2014 budget

by RG Cruz, ABS-CBN News

Posted at Jan 16 2014 11:21 PM | Updated as of Jan 17 2014 08:51 AM

MANILA - Filipino taxpayers are footing the bill for a P2.268-trillion national budget this year, which is being spent mostly on maintenance and other operating expenses (MOOEs), debt servicing, and personnel services like salaries and benefits as well as pensions of retired personnel than new infrastructure.

This is based on the 2014 national budget as approved by Congress and signed into law by President Aquino.

MOOEs refer to expenses incurred in daily operations like office supplies, communication, travel expenses, and maintenance of offices.

Government spending in 2014:
MOOEs - P803.23 billion (P567 billion for financial assistance and subsidies)
Debt Servicing - P793.53 billion(principal plus interest)
Personnel Services - P689.41 billion
Capital Outlay - P421.34 billion

These figures aggregate the personnel services, MOOEs, and capital outlay of different agencies, including agencies which got the lion's share of the budget.

By contrast, government is spending only around P179 billion for calamities and disasters:

Calamity funds/disaster-related funds - P123 billion
DILG fund for enhancing LGUs' capacity on climate change adaptation and disaster risk management - P76 million
DOTC QRF for disasters P1 billion
DSWD assistance for victims of disasters - P714.59 million
DSWD QRF - P662.5 million
DPWH QRF - P650 million
DND QRF - P352 million
DA QRF - P500 million
Calamity Fund - P13 billion
Reconstruction and rehab - P20 billion
Unprogrammed - P80 billion (depends on revenues)
Contingent fund - P1 billion

The unprogrammed fund is a budgetary item that can only be tapped or spent depending on funds generated by government through revenues or loans during the year.

UP Economics professor and former Budget Secretary Benjamin Diokno said, "unang-una, nariyan pa rin debt service pero bumaba na iyan. Suwerte naman tayo, iyung because of crisis, napakababa ng interest rate binabayarang utang (at) nagbago. I imagine panahon ni Cory, interest rate close to 20%, until recently mataas din debt service. Pababa na iyun although malaki pa rin."

Former National Treasurer Leonor Briones of Social Watch Philippines shares this view.

"Walang masyadong significant na pagbabago sa spending patterns. Nakita nyo, malaking bahagi, napupunta sa personnel. Isang bahagi, napupunta sa pagbabayad ng utang. Over P300 billion, kung isama mo principal, over P700 billion," she said. "Konti na lang natitira para sa capital outlays. Iyun ang primary sakit ng budget system mula't-sapul pa. We're not spending enough for capital expenses. There was a time 60% would go to personnel expenditures."

Similar to previous administrations

Budget Secretary Florencio Abad, however, pointed out that even under previous administrations, spending on debt servicing and personnel services was really heavier than capital outlay.

"Even during their time, debt servicing is biggest spending. We inherited huge amounts of debts," he said. "When we came in, debt service was 20% of the budget. You'll see it is falling and I think for 2014 it will be down to 16%."

"The percentage of the budget going to debt service is falling consistently over past 3 years. As a proportion of GDP, we're not borrowing as much as before because our revenue collections have been improving through time. We're in fact in better shape than before," he said.

Based on a briefing paper of the Budget Department, the Department of Education was listed to have received the highest budget among all the agencies of the government.

Rounding up the top 10 are the Departments of Public Works and Highways (P219.91B), Interior and Local Government (P136.14B), National Defense (P123.19B), Health (P90.77B), Social Welfare and Development (P83.4B), Agriculture (P80.03B), Transportation and Communication (P48.89B), Environment and Natural Resources (P23.92B), and Agrarian Reform (P20.38B).

When we are not paying the country’s debts, we are paying salaries and pensions of government workers and maintenance and operating expenses.

"Natural iyun, nagkaroon ng series of salary increases sa gobyerno," Diokno said. "For last 3 years, itinaas ang sweldo, may additional hiring. Supposedly mas marami pulis at sundalo, mas marami teachers dahil na-expand education program. Labor intensive yan. Baka sumasama na rin iyan pension ng military nabanggit sa SONA."

Diokno adds, "lalo na pag binilang nakalaan sa pension ng military police. Lumalaki talaga social services. Napakaraming batang Pinoy. Inexpand educational system, malaki iyung ano dun. School building lang, umaabot P45 billion for this year alone. Unheard of nakaraang taon, P10 billion at most. Then universal healthcare, although di pa 100%”

A review of the budgets of the top 10 agencies with the lion's share of the national budget shows a significant number of agencies spending more on personnel services of each agency. That includes salaries, benefits and perks of the bureaucracy and maintenance and other operating expenses, than for capital outlay---which funds the construction of new infrastructure or projects.

Of the DepEd's budget, close to about P194.44 billion will go to personnel services, which almost 4 times the budget for capital outlay of P52.5 billion. MOOE is P34 billion.

The DepEd has a separate budget for school buildings, which is another P1 billion. The budget, however, doesn't show how many school buildings it intends to construct, or how many new teachers it wants to hire.

Of the DILG's budget, P75.25 billion will pay for personnel services, about 15 times the budget for capital outlay at P5.37 billion. MOOE is P19.6 billion.

The DND's budget will spend P54.73 billion on personnel services, against P5.92 billion for capital outlay. MOOE is P21 billion.

The DAR budget will spend P4.34 billion on personnel services, against P2.63 billion for capital outlay. MOOE is P13 billion.

The DSWD will spend P78.02 billion for maintenance and operating expenses, compared to P4.6 billion in personnel services and P119 million for capital outlay. The DSWD maintains the conditional cash transfer or Pantawid Pamilyang Pilipino Program worth P62 billion for this year.

The DOH will spend P59.22 billion for MOOE, compared to P10.91 billion for personnel services and P14.21 billion for capital outlay. The DOH is in charge of building hospitals.

The DENR will spend P10.47 billion for MOEE, compared to P5.1 billion for personnel services and P7.76 billion for capital outlay.

On the other hand, the DPWH will spend P191.23 billion for capital outlay compared to P5.195 billion for personnel services. The DPWH is in charge of major infrastructure like roads and bridges. MOOE is P10.2 billion.

The DA will spend P38.27 billion for capital outlay compared to P3.4 billion in personnel services. MOOE is P26 billion.

The DOTC, in charge of the country's airports and seaports, will spend P27.06 billion for capital outlay compared to P3.8 billion in personnel services and P14.5 billion in MOOE.

Little money for new infrastructure

This leaves the country with little money for new investments in infrastructure---which Diokno says is crucial to propelling the economy.

It also doesn’t help that the government has a backlog in implementing infrastructure projects.

"Tingin ko, malaking pagkukulang sa public infra talaga," Diokno said. "If you want to sustain growth, kailangan bigyan atensiyon ang public infra, roads, bridges, urban transit system, water systems, ports facilities. Kapag tinignan ang pag-aaral ng karatig bansa, nangungulelat ang Pilipinas."

Like Diokno, Briones feels government needs to spend more on capital outlay especially after the country was battered by a series of disasters.

Briones said even the spending on education is not enough. "Sinasabi natin, capital outlay in terms of absolute amounts. Number one is education pero pag tanungin naman advocates, 'di iyan tugma sa international standards na kailangan ilang porsiento ng GDP mapunta sa edukasyon. Number one edukasyon sa spending pero di sapat."

"Anong matitira sa capital development, taktika ng gubyerno is PPP? They are building schoolhouses pero under PPP, private sector nagbuild niyan. Amortized over a certyain period of years. Impact sa budget 'di significant. Iyun ang debate namin sa budget policy. Not everybody is enthusiastic about PPP. Hindi lahat successful. Mabagal dahil ang private sector, wary of dealing with government."

Abad, meanwhile, said there are 2 kinds of personnel services. "There are office people and people you need to provide basic services like teachers. We have 600,000 teachers and then police, soldiers, medical personnel. These are people who provide services. We have increasing numbers of doctors, nurses, midwives this year."

Abad adds, "the biggest spending we're making and also in compliance with the Constitution, is the DepEd and also public works. We're hiring more and were building more classrooms, 45,000 thousand more all over the country."

He said the government hopes to close the backlog in classrooms soon.

'Luzon bias'

Briones, meanwhile hit the government's alleged bias for Luzon, which gets the bulk of the money. "School building program, largely concentrated in Luzon. I've been to Visayas and Mindanao, nakikita ko maraming lugar na walang eskwelahan."

Abad, however, says government will be building more roads and bridges this year.

He also said infrastructure spending is on the uptick and will overtake debt servicing in the next years.

The 1987 Constitution said that the highest budgetary priority be given to education. President Aquino ran and won on a campaign of, among others, economic progress but with 2 years left before stepping out of office, some critics think he is not putting his money where his mouth is.