Consultative

A spokesman for the Consultative Committee (ConCom) announced the group would be open to all feedback regarding the draft charter they presented to President Duterte. They announced a meeting between committee members and the Cabinet economic team next week.

The spokesman did not have to say that. By its very name, this was a Consultative Committee. It was supposed to consult with all stakeholders from the very start and not at the very end.

Clearly, the ConCom was blindsided by the fiscal issues raised against the draft federalist constitution they submitted. The economic managers raised issues of cost in the transition and fiscal dislocation subsequently should we plunge into federalism without clear constitutional terms on revenue sharing.

The position of the economic managers was resoundingly endorsed by dozens of business associations and policy groups. Their concerns are pretty explicit. All the members of the ConCom have to do is clarify the fiscal provisions in their draft to avert a massive surge in business uncertainty.

The ConCom, however, first responded by ranting against those critical of their draft. One member called for the members of the Cabinet economic team to be fired by President Duterte. That was such an unhealthy, undemocratic response it turned public opinion against the ConCom.

Then the ConCom resorted to misrepresentation. They said officials from the Finance Department were invited to their hearings but they did not raise fiscal concerns. It turns out one Finance undersecretary was invited midway through the ConCom deliberations but only to be consulted on the political subdivisions the committee was drawing up.

Now, with their draft under heavy siege, the ConCom wants to (finally) undertake consultations. It might not even be their role to do that. The ConCom had submitted its draft. The President endorsed that draft to Congress. It is now one of several drafts available to the legislators. It is not necessarily the draft being considered.

Therefore the role of the ConCom should be deemed terminated. If their work was marred by some incompetence (specifically on the fiscal aspects), this is something public hearings by a constituent assembly ought to be concerned with.

Unfortunately for the ConCom, no public hearings are forthcoming.

Speaker Gloria Macapagal Arroyo correctly put things in perspective. Hearings on proposed constitutional changes can only happen after the two chambers of Congress agree to convene as a constituent assembly. Short of that, all discussions will be a waste of time.

Arroyo’s underscoring of the parliamentary situation stopped the eager-beaver congressmen on their heels. No work on Charter change proceeds until the Senate agrees to participate in a constituent assembly.

In order to entice the Senate into participating in a constituent assembly, Arroyo guaranteed separate voting in the two chambers (a debatable aspect in the 1987 Constitution). The senators fear the specter of being overwhelmed by the vastly more numerous congressmen.

The Senate is mostly cool to the idea of Charter change, and cooler still to this strange proposal to shift to a federal system of government. The chamber has become an immovable object standing in the way of constitutional change. It becomes more obstinate in the light of crucial questions now raised over revenue sharing.

Under the persisting constitutional order, the senators are elected at large. Should a shift to a federal arrangement happen, representation in the Senate would be apportioned to the regions. The composition of the Senate will change drastically. For most senators, especially those elected on the basis of sheer name-recall, this is an existential threat.

The good senators, especially those who belong to “branded” political clans, would rather continue with the present system. 

It might be more productive for the members of the ConCom, if they truly believe reforming the constitutional order is a worthwhile undertaking, to focus on how to deal with the intransigent Senate. If they have a solution to that, they might be entitled to continue working even if their mandate has expired.

The much ballyhooed meeting with the economic managers might be unnecessary.

Some members of the ConCom seem to think the concerns of the economic managers might be solved by the wizardry of constitutional phraseology. That clearly cannot happen. This is a matter of numbers.

Under the terms of the Local Government Code, the local governments are entitled to as much as 40 percent of revenues. In practice, of course, they get their slice of the internal revenue allocation depending on the availability of funds after automatic debt service and other national expenditures are covered.

Under the proposed federal arrangement, the constituent states will get 50 percent of all revenues regardless of the needs of the national government. It is that provision that raises the possibility of a fiscal meltdown. Without the assurance of this larger revenue share, the federalism proposal loses all attractiveness.

Local governments, too, are worried the new layer of bureaucracy for the estados will cancel out whatever additional share of the revenue they might get. In which case, a shift to federalism will be a futile exercise.

Meanwhile, a shift to federalism could cause our credit ratings to fall through the floor and the budget deficit shoot through the ceiling. This is the “fiscal hell” our economic managers and business leaders speak of.

It is so telling of how badly thought out this federalism proposal has been that no public finance expert was invited to be a member of the ConCom. Now there is a large fiscal hole in their draft, a hole large enough to sink the whole enterprise.