Government News Analysis

Expense of freedom

For example, in the 2017 Economic Freedom Index (EFI), Sudan – 164th out of 186 countries world wide, denoting economic freedom there is “repressed” – comes 2nd globally for its ‘Government Spending’ marks; Denmark, the 18th economically freest country on the list makes 174th place for its government-spend assessment.

Arguably, the biggest financial scandal to hit the Philippines in recent years was the 2013 Pork Barrel outrage which resulted in PHP10 billion of public money being scammed by certain members of the Philippine Congress. Intended to be used by legislators for “pet projects” in their constituencies, the money (allocated under the Priority Development Assistance Fund, or PDAF) was rerouted via a devious system of bogus companies and ghost NGOs to their true pet projects – growing their personal bank balances.

We’ll probably never know exactly how muck pork ended up in the pockets of politicians, but between 2006 and 2013, under the PDAF, House of Representatives members received PHP70 million and Senators received PHP200 million worth – annually; each.

So, over those eight years, PHP204.72 billion in pork was divvied out to legislators. In 2013 that would have been equivalent to PHP2,078 for every man, woman and child in the country –enough to buy a lechon, or suckling pig, for every one of them.

Public anger resulted in the largest mass protest of Benigno “Noynoy” Aquino’s administration – and an uncharacteristically fast resolution by the Supreme Court. Just five months after the scandal broke, the PDAF was declared unconstitutional by the overwhelming decision of 14 justices. Just one abstained.

That shameful abuse of public funds aside, government spending is difficult to evaluate in terms of its impact on economic freedom. In a catch-all sense it shows the burden imposed by government expenditures, which includes consumption by the state and all transfer payments related to various entitlement programmes.

What it can’t capture is how government spending accurately tabulates economic freedom for an index of countries – ideal spending levels vary from country to country and depend on a host of factors from culture to the respective levels of economic development.

For example, in the 2017 Economic Freedom Index (EFI), Sudan – 164th out of 186 countries world wide, denoting economic freedom there is “repressed” – comes 2nd globally for its ‘Government Spending’ marks; Denmark, the 18th economically freest country on the list makes 174th place for its government-spend assessment.

That said, it does provide an indicator – and here, for the Philippines, a positive one. Under the pillar ‘Government Size’, the 2017 EFI (produced by the prestigious Washington-based think tank, The Heritage Foundation), ‘Government Spending’ – despite the problems of delineation – is regarded as an important factor of a country’s overall economic freedom.

This is how the Philippines shapes up in the company of its peers in the Association of Southeast Asian Nations (Asean). The Asean states’ global rankings for Government Spending in the 2017 EFI are as follows: Singapore, 16th; Indonesia, 18th; Philippines, 22nd; Cambodia, 24th; Thailand, 32nd; Myanmar, 43rd; Malaysia, 52nd; Laos, 61st; Vietnam, 67th; Brunei, 111th.

Third in Asean then for the Philippines – and what largely got it there were the following data. Over the past three years, government spending in the Philippines has amounted to 18.8% of total output (gross domestic product, GDP); budget surpluses have averaged 0.4% of GDP, and public debt has been equivalent to 37.1% of GDP.

Of course, what isn’t covered by this assessment is how wisely – or unwisely – the government spends the money it collects by way of taxes and customs duties for example. That really warrants an index all of its own. And, given the Philippine public sector’s propensity for wasteful spending – departmental junkets to off-site seminars at the beach; the Presidential Commission on Good Governance (PCGG) dispensing with the board room to hold meetings in 5-star luxury hotels, for example – we’re not so confident that the Philippines would fair so well in such an index in either the global or the Asean league table.

Thankfully, the excesses of the past at the PCGG have now been stopped – the Edsa Shangri-La, the Makati Shangri-La, the Manila Peninsula and the Marriot, along with a clutch of fine-dining establishments across Pasay City and Makati are no longer approved venues for gatherings of the PCGG board. And that’s good because economic freedom is certainly not best served when public servants feel free to spend the people’s money on filet mignon washed down with Sirius Rouge Bordeaux at PHP609 a glass.

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