Is bottom-up budgeting the answer to pork barrel mess?

The current furor over the graft-ridden Priority Development Assistance Fund (PDAF) has renewed interest in bottom-up budgeting, or BUB, as an alternative mechanism to the reviled pork barrel for funding projects at the local level.

BUB has been adopted as official policy of the government, and has been enthusiastically endorsed by some well-known economists and political analysts.

The rationale behind BUB is easy to grasp and to appreciate.

Who, so the reasoning goes, should know best what local government projects will be most beneficial to the community than the intended beneficiaries themselves?

It goes without saying that if the local folk, through their directly chosen councils and elected officials, are given the prerogative to determine their preferred projects, there will be reasonable assurance that the budgetary funds allotted to them will be put to good use.

By contrast, under the present pork barrel system, higher-level elected officials decide what projects are to be implemented for their constituencies, through which non-government organizations (NGOs) or government-owned and controlled corporations (GOCCs) these projects shall be coursed, and under what specific contractual arrangements these are to be implemented.

Under this system, it is easy to see how funds can be misappropriated—from the choice of bogus NGOs and complicit GOCCs with which erring politicians are in cahoots, through the divvying-up of budget funds with crooked contractors and suppliers, to the outright diversion of budget funds to non-existent projects and beneficiaries.

However, for all its obvious democratic and populist appeal, BUB is not the source of deliverance from evil that it is purported to be.

Forest for the trees

The ultimate concern of public policy should be the wellbeing of society as a whole, and not that of specific communities or segments of society.

Public policy, according to my Web source, “…manifests the common sense and common conscience of the citizens as a whole that extends throughout the state…” (emphases supplied).

By contrast, BUB, and the much-condemned pork barrel system, is focused on local concerns and interests, often to the neglect of those of other communities and of the whole of society.

Granting that the local citizens of a community are the best judges of what’s good for them, it is too much to expect that their choices will take into account the conflicting interests of the adjoining communities, much less those of the whole of society.

All communities in our society are parts of a vast and complex ecosystem that consists of highly interconnected and interacting elements.

Widespread effects

Any change that takes place anywhere in the system—for example, an improvement of the sewage disposal system in a municipality, or the regulation of fishing activities in a coastal village—is bound to have some effects, often adverse, elsewhere in the system.

All too often, in the choice and implementation of local projects, only the perceived benefits to the community, and the costs that the community itself will bear, are explicitly taken into account.

While the net benefit to the community in question might be substantial, the overall effect to all the adjoining communities and to the entire ecosystem could very well be negative if all relevant external costs and benefits are factored into the choice process.

Since this obviously will not be the case with the uncritical and haphazard implementation of BUB, one is inclined to conclude that its adoption as public policy will lead to a decline rather than an enhancement social wellbeing overall.

It is, to apply a commonly used term, counterproductive.

Related issue

Our arguments are equally relevant to the helter-skelter manner in which the Internal Revenue Allotments (IRA) available to all local governments are applied.

By virtue of the Local Government Code (RA 7160), all local government units (LGUs) from the barangay up to the provincial levels enjoy local autonomy and are more or less at liberty to utilize their IRA funds as they please.

Again, to the extent that their choices of projects do not reflect the external effects on the other communities and on the entire ecosystem, the net impact on the whole of society is bound to be negative.

But our case does not end here. It goes even deeper into the IRA that is guaranteed by the Local Government Code.

Even where the local communities enjoy some gains from their individual projects, it can be argued that these benefits, when viewed holistically from the national perspective, are not as large as they should be. This is because by the very manner in which the IRA is allocated, well-endowed local governments—Makati and Cebu cities, for example—are assured of the larger share of the booty, both in relative and absolute terms, while poor communities such as San Luis, a third class town in Agusan del Sur, get pittance.

This manner of allocating funds is grossly inefficient because it provides the least resources to where they are needed most, one reason why economic growth in our country is appallingly non-inclusive!

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is a former Professor of Management in UP Mindanao. Feedback at [email protected] and [email protected].  For previous articles, please visit map.org.ph.)