House starts deliberations on proposed 2018 national budget

"The budget proposal took into account the Tax Reform for Acceleration and Inclusion (TRAIN) Bill which was approved by the House earlier this year."

Members of the House committee on appropriations  raised several issues related to the 2018 proposed national budget of P3.767-trillion, such as free tuition, rightsizing of the government, and the massive infrastructure program of the Duterte administration.

The committee chaired by Rep. Karlo Alexei Nograles (1st District, Davao City) started hearings on the proposed budget with a presentation by the Development Budget Coordination Committee (DBCC) on the macroeconomic parameters.

Those who gave the presentation were Budget and Management Secretary Benjamin Diokno, National Economic and Development Authority (NEDA) Secretary Ernesto Pernia, Finance Secretary Carlos Dominguez III, Bangko Sentral ng Pilipinas Governor Nestor Espenilla, Jr., and Deputy Governor Diwa Gunigundo.

Nograles said the budget proposal took into account the Tax Reform for Acceleration and Inclusion (TRAIN) Bill which was approved by the House earlier this year. “The economic managers used as basis for their assumptions the TRAIN Bill version of the House,” said Nograles.

Nograles added it would be a challenge for the government economic managers to find ways on how to meet the P134 billion projected revenue from the TRAIN if the measure is not enacted into law next year.

He said the question would be if the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) have to raise their collection targets or if the government has to resort again to borrowings.

On the rightsizing of the government, Nograles said P10 billion has been set aside for its expected implementation next year. The amount was based on the assumptions made by the economic managers such as the cost of the separation package and how many employees would opt to stay in the government service.

He said the rightsizing program will take two years to be fully implemented. “It will be halfway implemented in 2018 and fully implemented by 2019,” said Nograles.
Nograles said the P10 billion budget for rightsizing can be found in the Gratuity and Pension Fund of the 2018 budget. “If the Rightsizing Bill is not enacted into law, then the P10 billion stays in the budget. It will not be used,” he said.

He said there is no exact number of employees to be affected by rightsizing. A technical working group will be created that will conduct a study on what offices and agencies in the government will be affected by the program. The TWG will then present the result of its study to a committee composed of the DBM Secretary, Executive Secretary, NEDA Secretary and representatives of the Presidential Management Staff (PMS) and Civil Service Commission (CSC).

Of the 200,000 employees estimated to be affected, Nograles said only about five to 10 percent will actually be covered by the rightsizing. He explained rightsizing does not mean abrupt removal of employees.

Meanwhile, after the DBCC presentation, Rep. Tom Villarin (Party-list, Akbayan) asked what happened to the Public-Private Partnership (PPP) projects of the past administration and how the PPP approach will fit in the Duterte administration’s Build, Build Build program.
Dominguez said the Duterte administration did not stop any project of the Aquino administration.
“You remember when the Aquino administration took over, they stopped all the projects from the GMA (Gloria Macapagal-Arroyo) administration. We, we did not. We just continued with them and whatever PPP projects are on stream already, we just let them go (on).

However, for the future, we determined that the PPP takes too much time. Ang negotiations noon will already take you 30 months, so we decided to start the projects directly with the budget funds that we have. And then we will continue the PPP projects after they are started,” said Dominguez.

There are two benefits for this approach, said Dominguez. “One, we can start immediately, and Two, there are funds around the world that do not want to take the construction risks. So therefore, we are increasing the size of the potential bidders for the PPPs that we have already started,” said Dominguez.

He said another problem with the last administration’s PPPs is that they charge a huge premium. “Which really is taxation without representation because the PPP proponent will recover that huge premium that will be paid to the government for the users of the project.

So in effect, you are taxing the user of the project without passing through this august body. We are philosophically against that kind of raising funds. So therefore, we decided to do the projects and then do the PPP after,” said Dominguez.

On July 24 during his second SONA, President Rodrigo Duterte submitted to Congress the proposed 2018 national budget.