CCT: limited impact on poverty

Whoever is writing P-Noy’s SONA must be having a serious headache by now. It is bad enough P-Noy can’t give a report on accomplished major infrastructure projects… there is none. Neither can he give the assurance of inaugurating even one before he steps down… Now it seems he can’t even say much about CCT, his P40 billion flagship anti-poverty program.

A study by a researcher of the Philippine Institute for Development Studies (PIDS), a government think-tank, found out that CCT will not lift millions of Filipinos out of poverty despite its constantly increasing budget and widening coverage. It may help some poor families for a period of five years but it ends there.

Dr. Celia Reyes of PIDS explained why its impact is limited: “If you look at the current design, it is not going to promote the beneficiary children to get good jobs when they enter the labor force.”

She continues: The program has a maximum support period of five years. A six year old child at the time their families began to receive the benefit will not even be able to finish grade school. Thus, the program does not make the beneficiaries qualified to have jobs, an essential requirement for them to overcome poverty.

The program provides a monthly cash benefit of up to P1,400 to families belonging to the poorest of the poor as long as they meet certain conditions: the children must regularly go to school, get vaccinated, and mothers must avail themselves of pre- and post-natal care, among others.

“If we want it to become more effective, it shouldn’t stop at supporting at the elementary level,” Reyes said. “If you really want to break that intergenerational cycle of poverty, you have to make sure than when the child enters the labor force, he or she will have a decent wage that will enable him or her to move out of poverty.”

Reyes recommends that instead of expanding the coverage – the government should increase the beneficiaries from the current 3.9 million to 5.2 million by 2016 – the assistance should be “deepened.” This means extending the assistance until children finish high school at the very least.

The PIDS economist thinks the program should “target not only children aged 6–14 years old, but also those aged 15–18 years old. The recommended 18-year old cut-off reflects that the child is expected to complete the 12 years of primary and secondary schools by the time he/she reaches 18 years old based on the recently adopted K+12 program.

“If this happens, the program would not only become more relevant to the Philippine case, but would also be much closer to the Latin American models of conditional cash transfer (CCT) programs which target extremely poor families with children aged up to 17 years.”

After all, the PIDS policy note paper pointed out, “even without a grant, a poor family can send its children to elementary school because it is more accessible. However, resources are more limited when it comes to sending them to secondary schools…”

One prominent economist, a former NEDA chief, however said “CCT both here and Latin America was never meant to eliminate poverty for the current generation. It’s designed to make it more bearable and to reduce its inter-generational transmission.  Meanwhile, while we’re waiting for ‘true’ reforms’, CCT is a good thing.”

Another economist, also an ex-NEDA chief agreed up to a point. “The CCT at its inception was not meant as a poverty reduction measure, but rather a safety net measure. Poverty reduction involves giving people jobs and increasing their productivity so they can earn more, which CCT does not do, at least in the short to medium term. 

“I have long suspected that CCT at P40 billion has exceeded its point of diminishing returns and may result in an attitude of dependence on dole outs. If only half of what we spent on CCT were spent on agricultural productivity, poverty reduction would be more felt.”

But another economist opined that “the CCT definitely provides much more benefits for the poor than the totally untargeted growth in general GDP. At least CCT is deliberately targeted to the poor.

“Gains in agricultural productivity still have to be shared with agricultural landowners and capitalists (as in the corporate farms); there’s no research on how much landless farm workers will get. In general, there’s no research on factor shares per sector of the GDP.”

UP Professor Leonor Briones, who was national treasurer during the Erap watch, thinks the cost of implementing the program is too high. “Five years of continuous conditional cash transfers might develop dependency in a society which has very strong tendencies for dependency.”

P-Noy has made much of the CCT program and his aim to lift more than 10 million people out of poverty in less than two years. According to NEDA chief Arsenio Balisacan, they seek to cut the number of people living in poverty to 16.6 percent by the end of 2015, down from 27.9 percent last year.

Given that the program is getting a bigger and bigger bite of the National Budget, experts are divided on the wisdom of expanding it further without a good assessment of its impact thus far. The criticism of its design that leaves a beneficiary high and dry after five years also deserves a rethink.

In the meantime, P-Noy may have to temper his enthusiasm over this program in his SONA and include some realistic appraisal of the way ahead. Future expansion may require introducing other anti-poverty programs that picks up from where CCT leaves off.

$30 billion question

Dante Ang, publisher of the Manila Times had been writing a series of articles on that supposed attempt to extort $30 billion from a Czech train supplier. What makes it interesting is that some of the names rattled off by Mr. Ang, particularly the DOTC official and supplier, are close to Mar Roxas… indeed was appointed during his watch and got a negotiated contract to maintain MRT 3 signed by a trusted Mar subordinate.

I wonder… what is going on here? Studious and straight as Mar is, I wonder if he vetted those people well enough before he entrusted them to manage public service functions. I am not saying the allegations are true because things are still rather murky. But there is just so much smoke… so many unanswered questions one can’t help but wonder.

But such chutzpah on the part of whoever is behind the smear campaign… attempting to divert the blame by tarring close family members of P-Noy. Why isn’t P-Noy mad yet?

Congrats 

Now for some bit of good news… congratulations to the CAAP officials who worked hard to prove to the Europeans that their aviation air safety concerns have been properly addressed.

Philippine Airlines can start planning to fly to Europe as announced by Ramon Ang. Hopefully, an upgrade from the US FAA will come next. PAL needs to change those old B747s and A340s still being used in its trans Pacific routes.

Speaking of aviation safety, I heard that one possible aggravating circumstance in that Asiana crash at the San Francisco Airport is that the airport’s ILS or Instrument Landing System was not working. I find that hard to believe.

If that is so, the US FAA looks ridiculous ridiculing our safety situation with that Category 2 rating. It would also mean US infrastructure is fast deteriorating into Third World standards.

Another bit of good news, Sec. Jun Abaya confirmed to me that the much awaited project to get a Communications, Navigation and Surveillance / Air Traffic Management (CNS/ATM) System that will modernize our air navigation nationwide will start happening soon.

Sec. Abaya said the system will cover our national air space making it easier to track and bill airlines flying over our air space and most importantly, make local aviation a lot safer. It will also manage air traffic more efficiently, easing congestion. Sec Abaya told me he signed a contract with Sumitomo and Thales to restart the much delayed project.

“Thales is preparing to mobilize and should start soon. We expect according to the contractors to finish phase 2 in 2Q 2015 and phase 1 in 4Q 2015.”

This had been an overstudied project which also got delayed by COA while it was already being implemented. Ping de Jesus saw the urgency and was ready to go on with it but Mar stopped it and took a lot of time studying it.  Some movement now… at long last.

Broken rubber

This is a classic from my late friend, Dr Ernie E.

Two guys were hiking up a mountain when they came upon some people bungee jumping.

One said to the other, “How about it?”

The other replied, “No way. I came into this world because of a broken rubber. I’m not leaving it the same way.”

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco