Abandoned
FIRST PERSON - Alex Magno (The Philippine Star) - August 1, 2019 - 12:00am

From all indications, the effort to shift our government from a unitary to a federal form has been abandoned.

There was deafening silence about the matter when the President delivered his SONA. There is little effort on the ground to undertake the public diplomacy needed to build acceptability for the proposal. Most of all, there is no more time to undertake a major revision of our constitutional order.

Shifting to federalism cannot be accomplished by some mere surgical operation on the 1987 Constitution. We will have to undertake a complete constitutional overhaul. Since we are at it, we might as well shift to a parliamentary form of government.

The entire shift will certainly require more than three years to complete. It will involve redefining terms of office, allocating for new forms of representation and rebuilding the bureaucracy that will support it.

If we had the resources to do all of these, we might be better off using them to support the Build, Build, Build program. The economic returns from doing so are immensely more certain.

To this day, very few Filipinos understand what federalism is all about. It is not sufficient to hold a few roadshows at public expense to build public support for it over a limited time period.

Even fewer Filipinos think a shift to a federal arrangement will make life better for all of us. Very few sound arguments have been put forward to convince the majority there is merit in the shift.

If government had the resources to reshape public opinion on the benefits of federalism, we will certainly be better off using those resources to rebuild our agriculture. Decades of stagnation in agriculture have not been due to the form of government. The stagnation results more from the hesitation to let market forces work to modernize our farms.

During the 2005 Consultative Commission on Charter Change, where I sat as commissioner, there were intense debates about shifting to federalism. The most glaring weakness of the proposal has been on its economic merits.

During those debates, I fought the advocates of federalism basically on two grounds: first, it will add another layer to government and therefore enlarge the public payroll; and, second, it will likely cause a fiscal meltdown since federalism basically means surrendering half the revenue to sub-national units.

The public payroll is too long as it is. This is why there is now talk of passing comprehensive legislation that will “right-size” our bureaucracy. Adding another layer to the crazy amalgam we already have will make things worse.

Our Congress is already too large. It is a beast that eats up public resources and then politicizes what should be technical policy decisions.

Worse, it is not even efficient as a means of representation. Congressional seats are controlled directly by the local elites through political dynasties and indirectly through the deeply flawed party-list system.

If we close down Congress tomorrow and redeploy the budget it allocated for itself, we will have more than enough money to fund universal healthcare. This institution is literally unhealthy for our people.

Recall that the federalism proposal involves organizing mini-legislatures in every sub-national entity. That will multiply the costs we now incur maintaining politicians in power. This will more than double the public payroll. Every “estado” will have local legislators and each of them will be supplied with offices and staff.

Not only will we double the public payroll, we will take money away from national programs. That will undermine our ability to undertake the urgent strategic modernization of our infrastructure backbone.

If the present bicameral Congress is inefficient because one chamber duplicates the work of the other, imagine how inefficient lawmaking will be if we have 12 or 18 sub-national legislatures. Each will craft legislation according to local whim. We will have cacophony in place of coherent national policy architecture.

Ultimately federalism is about revenue sharing. By shifting to a federal arrangement, its advocates hope to grab a larger share of the revenues that flow to the national treasury.

There is a reason why national government gets a larger share in the present unitary arrangement.

National government attends to the national debt, for which we automatically allocate funds. Otherwise, the interest rates we incur when we borrow to finance government operations will shoot through the roof.

National government also pays for national defense and, despite the provisions of the 1991 Local Government Code, manages the nation’s health care system. The DepEd likewise maintains the public school system so important to maintaining a sense of nationhood.

Recall what happened when the Soviet Union broke up in 1990. All the breakaway nations took the state resources within their boundaries. Russia was left holding the bag for the former entity’s debt obligations. Fortunately, Russia had most of the land and much of the natural resources to pay off debt – staving off fiscal obliteration. But to this day, however, Russia’s GDP is no larger than Sweden’s.

A shift to federalism will leave the National Capital Region accepting the accumulated national debt. That will not be reassuring to our creditors.

Our economic managers saw the possible fiscal meltdown down the road if we decide, on entirely political premises, to shift to a federal arrangement. They posed the tough questions to the constitutional commission assembled by President Duterte in his very first year in office.

If the federalism advocates could not give a convincing answer to the economic questions posed, it is because there are none. Federalism will cause fiscal calamity.

It is better this fanciful idea is abandoned.

CHARTER CHANGE FEDERALISM
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