Speech for the Top Level Management Conference of KBP

Posted on November 10, 2016

Sec. Benjamin E. Diokno (42nd Top Level Management Conference of KBP, 10 November 2016, Taal Vista Hotel, Tagaytay City)

To senior officials of the KBP, my colleagues in government, members of the media, guests, ladies and gentlemen: Good morning!

Swift and decisive – such was Mayor Duterte’s ascent unto the Presidency. Initially perceived as an outsider in national politics, he captivated the electorate with a promise of real change. A breath of fresh air from “traditional politics”, he guaranteed courageous and compassionate governance.

Four months into office and the administration is in full swing. Indeed, our goals are ambitious and our promises grand. But we are confident that these are realistic given well-crafted policies and decisive leadership.
On the political front, this administration will forward numerous reforms. It’s no secret that the current political climate deters development and unity. Hence, we will overturn this state of affairs. Square one is peace and order.
The safety of our people is a primary concern. True progress cannot be achieved if criminality is rife. Business will collapse and jobs will be lost if hooligans are free to raid and extort enterprises. But the true cost of crime is not measurable by monies lost. Victims are robbed of a bright future. Worse, lives are senselessly lost.

Our response is as straightforward as it is difficult: enforce the rule of law. Formidable enemies await, from armed criminal groups, to narco-politicians and other lawless elements. Therefore, it is imperative to have a prepared armed forces and police force.
This justifies our increased support for the PNP and the AFP. They play a vital role in securing peace and risk their lives by doing so. It is only just that they receive adequate compensation for their services.
In this regard, Executive Order No. 3 was issued by the President increasing the combat duty pay to P3,000 per month. Meanwhile, combat incentive pay has been doubled to P300 per day. Once the military pension system is reformed, we will also gradually increase the base pay of uniformed personnel. Our efforts to promote peace and order extends to capacitating and professionalizing the men and women who implement our security measures.
Still, peace will be fleeting if we cannot secure resolutions to ongoing conflicts. The government has already undertaken steps to expedite the peace process in Mindanao. An Executive Order has already been signed by the President for a more inclusive Bangsamoro Transition Council (BTC). This will allow numerous stakeholders to sit at the negotiation table, from the MILF, to the MNLF and even the Indigenous Peoples. The BTC will resume work on the proposed law that will create the Bangsamoro Region.

Not only is Mindanao laden with potential, but the people there have suffered enough. They have been deprived of prosperity for numerous decades. Can you believe that up to now, at least 50 percent of the population in ARMM fall below the poverty threshold? It’s time to put an end to the violence. Let us give Mindanao a fair chance at development.
The government has also engaged the CPP-NPA-NDF in peace talks to put an end to the longest running communist-insurgency in Asia. A third round of negotiations is scheduled for early next year in Oslo, Norway. Beyond releasing political prisoners, President Duterte has appointed personalities from the Left in his Cabinet. Lest we forget, he also declared a unilateral ceasefire during his first State of the Nation Address. Evidently, this administration is serious in forging lasting peace with all stakeholders.

The government is also keen on regaining the trust of our people. I reiterate that this will be a clean government. We will sustain efforts to crack down on corruption. Implementing the Freedom of Information Law in the Executive Branch was a key first step. We uphold the citizens’ right to demand information, bolstered by transparent, accountable and participatory governance.

We have also established a 24/7 Citizens’ Complaint Center to discipline erring officials. As Budget Secretary, I also assure everyone that we will do away with DAP and PDAF. We shall follow pertinent rules and regulations, particularly the Constitution.
Now, let me speak in terms of economic reforms. Nevertheless, reality dictates that politics and economics are impossible to divorce. They speak of similar objectives, only with different languages. This means that our political and economic policies are intertwined and mutually-enhancing for the improvement of human lives.
We have inherited an economy with strong macroeconomic fundamentals – benign inflation, consistent growth, ample international reserves, upgraded credit ratings et cetera. However, the robust growth has failed to trickle down to the masses.

Recently, full year estimates by the PSA revealed that poverty incidence fell to 21.6 percent in 2015. This is welcome news, but we can certainly do better. For a consistently growing economy, the rate of poverty reduction has been disappointing.
Our administration will foster strong market fundamentals, but we won’t lose track of what matters most: reducing poverty and inequality. We have made it a point to reduce poverty by 1.25 to 1.5 percentage points annually. The lagging regions, especially the agricultural sector, will be prioritized for more equitable growth. By the time we’re through, we expect the Philippines to be a high middle income country with poverty rapidly falling.

Tax reform will be pursued for a simpler, fairer and more efficient tax system. Infrastructure will be developed to address the traffic crisis and boost productivity. Most importantly, we will equip our young population with health and education interventions to ensure that they will grow into an agile and competent workforce.
In fact, I just came from the Philippine Development Forum in Davao City. Soon, the Philippine Development Plan will shed more light on these economic policies. Let me not preempt it, so instead, let me focus on our fiscal policy.
For the next six years, the DBM will commit to an expansionary fiscal policy. This implies a higher deficit – from 2 percent to 3 percent of GDP. This strategy will allow heavy investments on public infrastructure and human capital development.
Deficit spending solicits worries, and rightfully so. But I assure you that it is prudent as long as the money is spent on worthwhile projects. More so, we will outgrow our debt burden. Debt-to-GDP ratio is expected to decline from 45 percent in 2015 to 35 percent in 2022.

We are in dire need of public infrastructure, evidenced by the worsening traffic, poor trade logistics, and weak connectivity of lagging regions to growth centers. The harsh truth is that we have the worst public infrastructure among our Asian peers. So, we either close the infrastructure gap or risk closing our doors on increased growth and foreign direct investments.
The budget for 2017 keeps this in mind. It allocates P860 billion for infrastructure development. This is equivalent to 5.4 percent of GDP, and we’re just getting started. We intend to hike infrastructure spending to as much as 7.2 percent of GDP by 2022. All in all, I estimate that P8.2 trillion will be spent on public infrastructure for the next six years.

The private sector will also play a crucial role in infrastructure development. Public-Private Partnerships will be revitalized. We have changed the rules on PPP as we now accept unsolicited proposals, subject to Swiss challenge. We also won’t use PPP as a revenue-raising mechanism. We feel that this is taxation without representation.
Lastly, we will pursue Hybrid PPPs, where the government takes care of the financing and construction, while the operations are entrusted to the private sector. This way, the government can take advantage of lower borrowing rates while enabling the private sector to efficiently manage operations. Indeed, the next six years will be our country’s Golden Age of Infrastructure.

Social services – education, healthcare, housing, social protection etc. – is also given its rightful place. It represents 40 percent of the P3.35 trillion national budget. This is necessary to uplift the living standards of families, as well as to mold our greatest asset, our people, into productive members of society. Spending on social services will continue to rise from 7.7 percent of GDP this year to 9.1 percent of GDP in 2022.
In particular, the budget beefs up the allocation for Conditional Cash Transfer (CCT). A rice subsidy of 20 kilos per month will now be given to eligible families on top of the other benefits. Education is also emphasized as it is allocated P650 billion. This will allow the full implementation of the K-12 Program, increased support to State Universities and Colleges, among other education programs.

The budget has already been approved by the Lower House in record time of 7 weeks. The next stop is the Senate and we are confident of its passage. In many ways, it represents the aspirations of our people and the platform of governance of this administration.

The way ahead is difficult and uncertain, but we have laid the foundations for what remains to be a bright future. Still, no less than collective action will suffice to build a prosperous society. It is incumbent upon all of us to partake in this difficult yet highly rewarding journey. Together, let us build the nation.

Thank you and mabuhay