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Business

Bureaucracy’s technical deficit

- Boo Chanco - The Philippine Star

As I stood to ask a question in a recent forum where Budget Secretary Butch Abad was the speaker, he immediately said he cannot answer for DOTC. I guess he meant it to be funny so I laughed. I have been typecast.

The Budget chief went on to say he actually shares my pain and the only difference between him and me is that I write a column. Indeed, Butch had expressed frustration time and again on the inability of various government agencies to deliver the goods despite the budgetary support being given to them.

I told the Secretary that my question was not specifically about DOTC. I wanted Butch to explain what he meant by technical deficit. Sometime ago, Butch offered technical deficit as the reason why despite the availability of funds, government agencies have failed to deliver.

Butch gave a very candid reply. He said the level of technical skills of our bureaucracy, over a million and a half strong, leave much to be desired. And it isn’t just because the pay scales are atrociously low. In fact, in some cases as is true with public school teachers, government pay can be more generous than comparative jobs in the private sector.

I understand the problem. Years of political patronage have bloated the bureaucracy with less than capable people. I have heard experts say time and again that government can function even if we cut the number of people in the government payroll by half.

But that’s not going to happen. Government is seen by many as the employer of last resort. Many of those who end up with government are there because they are unemployable elsewhere.

No matter how determined a president is, it seems virtually impossible to drastically reform the bureaucracy, which is what is called for. Our politics will not allow it. We should be happy with incremental gains.

But it is a pity because we can do better. I have often heard Finance secretaries say they can do with less of the clerks and secretaries in their plantilla. What they need are sharp financial analysts of the type who end up working for the World Bank and other international development financial agencies. They need people who understand the technical nature of DOF’s mandate and who can negotiate with counterparts in banks and ODA agencies.

It is the same thing with DTI. I have also heard DTI Secretaries say they don’t need the army of clerks they have. What they need are trained specialists who understand international trade and can negotiate trade agreements or respond credibly to questions from prospective foreign direct investors.

That’s the “technical deficit” decried by Sec. Butch some months ago as he explained why none of the DOTC infra projects have moved. When I asked him again about this, Sec. Butch didn’t want to focus on DOTC because he said the problem afflicts the entire bureaucracy.

On the other hand, I want to point out the administration is not blameless. When Mar Roxas took over DOTC, he brought in a platoon of lawyers, four of them assuming usec positions. I guess Mar wanted to protect himself from corruption suits and the lawyers made sure of that by stopping all projects from moving.

But DOTC is an infrastructure agency and as such, it needs a multidisciplinary team led by engineers and economists. Indeed, the lawyers only come in after all the technical terms of reference have been ironed out by the technical staff.

Offline, Sec. Butch also explained to me that past projects involving the private sector have turned disadvantageous to the government and the MRT3 project is a good example of that. So, Butch explained, they had to make sure the government and public interest are protected. But he admits, they don’t have to make things so tight so as to kill private sector interest in the projects.

Then again, Sec. Butch also commented that the Procurement Law also makes it almost impossible to procure anything if you follow the letter of the law. Ironically, the Napoleses of our world and their legislative allies still manage to drain the Treasury anyway, the safeguards notwithstanding.

But Sec. Butch made it clear these problems aside, the second half of P-Noy’s term will focus on performance. In fact, he said the 2014 budget will be a performance-informed budget. I wanted to be impressed but it sounded like another technocratic concoction meant to keep our hopes up all the way to June 2016.

This is not the first time they foisted something like that on us. When they took over the reins of government, they talked of zero-based budgeting. That is something familiar to us in the private sector. It is a way of budgeting where every item must be able to defend its existence. It means starting from scratch.

But government does not and cannot start from scratch. It has this bloated bureaucracy to feed. And the existence of political pork barrel indicates there are plenty of sacred cows in the budget. That’s anathema to the concept of zero-based budgeting.

So, now the latest buzz is Performance-Informed Budgeting. In a nutshell, Sec. Butch said they will require agencies to attach performance indicators or what is basically a promise to deliver a service or a project to justify the budget.

Butch said there will be strict monitoring of how agencies are delivering on their deliverables and their performance affects everything from further releases to bonuses for the staff. Does this mean the DOTC bureaucracy will not receive a centavo of bonus because they have delivered absolutely nothing of worth to justify even their existence?

Anyway, Performance-Informed Budgeting is not a new concept. There is a paper about it prepared by the Public Sector Management Unit in the Latin America and the Caribbean Region at the World Bank.

The justification for Performance-Informed Budgeting arises out of the need for governments to operate in a more global, market-orientated environment. This involves systematically incorporating nonfinancial performance information into budgetary decision-making and allocation processes.

This reminds me of the bonus problem at SSS. The new body monitoring operations of GOCCs made the mistake of implementing a performance criterion that merely talks of the financial performance of a GOCC. It was easy for the top guys at SSS to claim the normally large earnings of investment and pension funds as the justification for their bonuses.

Non financial performance indicators must be considered: how long it takes for claims to be processed, service quality at the branches and head offices where long waiting lines of members are common and even for something as mundane as how long it takes them to issue an ID card.

Now performance-informed budgeting holds senior officials accountable for deliverables. They must show what they are accomplishing with the resources provided, rather than how much money is being spent in any area. Agency heads must be able to show value for money.

If the DBM circular guiding the agencies on this cycle of budget preparation is to be believed, they want to do such things as speeding up investment and trade regulatory reform. They also want to pursue the digitization/automation of service delivery to citizens in order to streamline processes and cut red tape.

They also want to reduce the cost of doing business and enhance the efficiency of frontline services, bearing in mind that in the 2013 World Bank Doing Business Report, the country continues to rank low (138th out of 185 countries) in the global scorecard in the Ease of Doing Business, particularly, in starting a business (161st out of 185) and resolving insolvency (165th out of 185).

And hey… they also are looking into increasing the span and quality of transportation. “The investments in the transport sector should strategically contribute to rapid and inclusive growth by adopting a coherent and efficient intermodal transport roadmap; connecting employment-creating areas/centers such as the priority tourism destinations, agricultural and manufacturing production hubs; facilitating access to basic government services like hospitals, schools, housing resettlements and training centers; and by being climate change smart.”

That’s when I stopped reading. My attitude here is… it is good to hear they have good plans and good intentions… but still, to see is to believe. And we are still seeing nothing much by way of infrastructure, particularly in the transport sector. And time is running out and may have already run out. That’s the problem.

Irrisistible

R. Moreno sent this to one of my e-groups.

A man asked a fairy to make him desirable and irresistible to all women.

So the fairy turned him into a credit card.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

AGENCIES AS I BOO CHANCO BUDGET BUDGET SECRETARY BUTCH ABAD BUTCH GOVERNMENT PERFORMANCE PERFORMANCE-INFORMED BUDGETING WORLD BANK
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