In keeping with its twisted austerity vow, the Aquino administration sharply cut state subsidies to government-owned and -controlled corporations (GOCCs) and government financial institutions (GFIs) in its first three months. For the millions of Filipinos who demand adequate social services from the government, this is certainly not a welcome sign.
Recent data from the Bureau of Treasury reveals that the government cut its subsidies to GOCCs and GFIs by almost half, from P4.14 billion in the second quarter to P2.21 billion during the third quarter. This amount is also smaller compared to what was disbursed during the same quarter last year which stood at P5.58 billion. The report however did not provide a breakdown of subsidies for each GOCC.
What is troubling is that such drastic cut was done in the spirit of President Benigno “Noynoy” Aquino III’s anti-corruption crusade rather than as consequence any comprehensive performance review of GOCCs. Worse, the huge cut serves as a prelude for the enactment of the 2011 budget, which contains a sharp 40.7 percent cut on allocations to GOCCs.
In his budget message, President Aquino said the reduction in allocations to GOCCs is “in view of the need to rethink government support of questionable GOCC programs.” Aquino pointed out the National Food Authority (NFA), Light Rail Transit Authority (LRTA), and Metro Rail Transit Corporation (MRTC) – which are ironically providers of basic social services – as examples of what he describes “questionable GOCC programs.”
That was not the first time Aquino put such vital GOCCs in a bad light. It can be remembered that in his first State of the Nation Address (SONA) last July, the President also put the NFA and MRTC, plus the Metropolitan Waterworks and Sewerage System (MWSS) and the National Power Corporation (Napocor), in the hot seat. Again, it should be noted that these public corporations are vital to the delivery of social services, regardless of the alleged corrupt schemes of their executives.
Dangerously enough, the Aquino administration stretched its corruption expose in GOCCs to legitimize its abolition plan of some state firms. In September, Malacañang warned that some GOCCS that are either losing money or have huge debts need to be abolished in the name of teaching them “discipline.” At least 14 GOCCs were immediately put under tight monitoring following the Palace pronouncement:
1. Philippine Economic Zone Authority (PEZA)
2. Local Water Utilities Administration (LWUA)
3. Light Rail Transit Authority (LRTA)
4. Metropolitan Waterworks and Sewerage System (MWSS)
5. National Development Corp. (NDC)
6. National Electrification Administration (NEA)
7. National Food Authority (NFA)
8. National Housing Authority (NHA)
9. National Irrigation Administration (NIA)
10. National Power Corp. (Napocor)
11. Philippine National Oil Co. (PNOC)
12. Philippine National Railways (PNR)
13. Philippine Ports Authority (PPA)
14. Home Guarantee Corp. (HGC)
Obviously, these GOCCs are mandated to deliver and manage the country’s basic social services and resources – electricity, water, oil, railways, housing, ports and rice. The NFA, for instance, helps stabilize rice prices by providing subsidies to farmers. NEA, meanwhile, is mandated to implement electrification programs in remote areas where private power firms do not dwell. Abolishing these GOCCs essentially paves the way for the private takeover of basic social services.
Sen. Ralph Recto has pointed it out quite correctly during the budget hearings at the Senate: “In purging non-performing GOCCs, we may have to take into account, albeit on a very limited basis, some state enterprises that were bestowed the unique mandate of delivering basic services to our people.”
Moreso, the Aquino government’s abolition glaringly points to the immediate consequence of mass retrenchment of government employees, estimated to be at 28,000. As aired by state workers’ group Confederation for Unity, Recognition and Advancement of Government Employees (Courage), the abolition plan will lead to increase in unemployment,” apart from removing the “already meager services the government provides to the public.
Apparently, Cagayan de Oro Rep. Rufus Rodriquez showed more prudence and reason than the President in choosing what GOCCs to abolish. In House Bill No. 2867, he listed a number of GOCCs which are questionable by their very names. Some of the state firms included are Banaue Hotel and Youth Hostel, BCDA Management and Holdings Inc., Cottage Industry Technology Center, DBP Data Center Inc., DBP Maritime Leasing Corp., Freeport Service Corp., and GY Real Estate Inc.
It appears that the President is never really serious in weeding corruption out of state enterprises. He is actually solely bent on completely weeding these GOCCs out of the government’s control, portraying them as havens for the corrupt to legitimize as well as to set the stage for what is apparently a mega-sale of social services to private corporations.
In fact, a closer examination of President Aquino’s Executive Order No. 7 (EO 7) will clarify the fate of GOCCs. EO 7 is actually more than just about the suspension of allowances, bonuses and other perks of GOCC executives as how the myopic media reportage describes it. Section 9 of EO 7 also imposes a moratorium on increase in salaries, allowances and benefits not just of executives but also of the thousands of rank-and-file employees in GOCCs and GFIs.
Furthermore, EO 7 calls for a “rationalization of compensation,” which essentially means reduction of compensation of all GOCC and GFI employees. Quite suspectingly, this measure, as well as the salary hike moratorium, is aimed at making GOCCs and GFIs more palatable to prospective private corporations in line with the government’s full-blown privatization plan. The lower the salary grades, the more attractive the GOCC becomes to profiteers.
Aquino’s deceptive anti-corruption rhetoric against state firms becomes more astounding when juxtaposed with the Asian Development Bank’s neoliberal prescription on GOCCs. As contained in its policy and advisory technical assistance paper released in 2008, the ADB recommended the expedited privatization of LRTA, MRT, PNR, NDC and HGC – the same state firms listed by the Aquino government in the 14 “underperforming” GOCCs.
All these indicators clearly show that under this deceitful administration, basic social services are headed straight to the arms of corporate profiteers rather than to poor Filipinos. But things should not be made easy for this regime and for its private partners. Collectively, the people must rise up in protest against this devious scheme.