No Free Lunch
Pushing equity
By Cielito Habito
Philippine Daily Inquirer
First Posted 23:30:00 06/01/2008
Filed Under: Macro Economics, Poverty, State Budget & Taxes
MANILA, Philippines--It's an established fact that the growth of the Philippine economy has not been accompanied by improved income distribution.
Official data, in fact, reveal that the gap between rich and poor was actually wider in 2006 than in 1988. This perverse trend is symptomatic of skewed asset endowments and skewed opportunities in our society, something not unique to us but, in fact, common in countries with a colonial past. Countries typically try to deal with this via progressive taxation (translation: tax the rich more heavily than the poor) and progressive government expenditures (translation: spend government money to benefit the poor more than the rich).
The problem is that in actual practice, our overall tax system is, in fact, regressive. Through the years, studies have determined that our taxes taken all together actually impose a heavier burden on the poor than on the rich. Fortunately, government spending has been determined by similar analyses to be generally progressive. But this merely offsets the income gap-widening effect on the tax side.
Asset reform
All this means that a move to greater equity and broad-based development will not happen if government relies on fiscal (i.e., tax and spending) tools alone. For more substantive equity improvements to take place, it must also take deliberate action to address the skewed asset endowments.
Consequently, asset reform has been a key element in the country's development agenda in the last two decades. Four major asset reform thrusts have been pursued by the Philippine government, each addressing particular vulnerable asset-deprived segments of Philippine society:
Agrarian reform as embodied in the Comprehensive Agrarian Reform Law (CARL) or R.A. 6657 of 1988, to address small farmers.
Urban land reform as embodied in the Urban Development and Housing Act
(Udha) or R.A. 7279 of 1992, to address the urban poor.
Ancestral domain reform as embodied in the Indigenous Peoples Rights Act (Ipra) or R.A. 8371 of 1997, to address indigenous peoples.
Aquatic resources reform as embodied in the Fisheries Code (R.A. 8550) of 1998, to address small municipal fishers.
Common elements
How does asset reform work? As a generic process, it involves redistribution of a critical resource asset (land, housing, ancestral domains, fisheries) to target marginalized sectors through a process that gives them ownership or security of tenure over the subject asset. A tenurial instrument (e.g., Certificate of Land Ownership Award or Cloa, Certificate of Ancestral Domain Title or CADT) is awarded to beneficiaries as documentary proof of ownership or tenure.
Clearly, asset redistribution alone will not be sufficient. This must be accompanied by various support services (credit, infrastructure, extension services, etc.) designed to enable the beneficiary to make the most productive use of the redistributed asset. Further complementing the package are management and governance mechanisms (e.g., agrarian reform communities or ARCs, fisheries and aquatic resources management councils or FARMCs) to provide the necessary enabling environment.
Report card
A civil society initiative to assess our progress on asset reform was launched recently with a multistakeholder audience, representing the very first systematic attempt to establish an asset reform "report card" in the country, and possibly the world. Spearheaded by the Philippine Partnership for the Development of Human Resources in Rural Areas (PhilDHRRA) and enlisting the cooperation of the wide network of NGOs nationwide, the asset reform report card project undertook a scientifically designed statistical survey of thousands of beneficiaries of the four programs nationwide. With technical guidance from Ateneo de Manila University social scientists, the assessment surveyed beneficiaries on the processes, participation and management mechanisms, support services, and threats of reversal associated with each of the four asset reform programs. The survey results were then examined by a multisectoral group from government, civil society and academe, who rated performance as "very good," "good," "poor" or "very poor" in the various specific components of the programs.
Wake-up call
The overall report card generally showed that asset reform processes have been woefully slow, participatory and management mechanisms highly inadequate, support services deficient, and threats of reversal persistent. Taken together, our asset reform performance after 20 years of CARP, 16 years of Udha, 11 years of Ipra and 10 years of the Fisheries Code merited a rating of "poor." Notwithstanding this, the bulk of respondents attested that their families became better off after the asset reform. All these reinforce the desirability and need to sustain our asset reform efforts, while identifying key areas for improvement to further optimize their wide positive benefits.
With asset reform having all but disappeared from the government's priority development agenda, PhilDHRRA's Asset Reform Report Card is a timely wake-up call, especially in the face of the recently reported worsening of poverty that accompanied years of steady economic growth.
Comments welcome at chabito@ateneo.edu.
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