Palace: Re-enacted budget will affect economy badly

Malacañang warned yesterday that the government’s continued operation under a re-enacted budget, which has been in place for the past two years, would have adverse effects on the poor and the economy.

In reiterating the Palace’s appeal for lawmakers to break their impasse over the proposed P1.126-trillion national budget, Press Secretary Ignacio Bunye said the government is now in a better position to spend more for social services and infrastructure but is constrained by the lack of a new approved expenditure program from Congress.

"A re-enacted budget will fall short of providing full social payback to the people in terms of jobs and social services," Bunye said. "Filipinos deserve nothing less than a new budget this year in return for their hard work, which has triggered our economic bull run."

The Senate and the House of Representatives remain at loggerheads over the proposed budget, particularly President Arroyo’s school feeding and rice subsidy programs that senators allege is an election gimmick.

The Palace and administration lawmakers, however, maintain that the nutrition program has been in place in the past two years and accused senators of being callous for depriving poor school children and their families of rice.

The government is currently operating on the 2005 P907.6-billion General Appropriations Act (GAA).

Budget Secretary Rolando Andaya Jr., meanwhile, assured the country’s local governments that they would receive their Internal Revenue Allotment (IRA) this year "in full and on time" regardless of the fate of the 2007 national budget.

Andaya said the release of the IRA "is no longer contingent on the enactment of the national budget."

"The IRA and the GAA have been de-linked. The IRA is deemed automatically appropriated. So even if no new budget for a year is passed, the IRA will be released based on the level for that year," he said.

Andaya said the policy shift made its debut in 2006, and this is why, even with a re-enacted budget for 2006, all local government units received their IRA in full.

"Henceforth, this will be the template used in treating the IRA," he said.

For this year, allocation to local government units or ALGU will reach P197.4 billion, of which P183.9 billion is for IRA. The P197.4 billion is inclusive of the P2.5 billion prior year’s obligation representing the first year installment under the IRA monetization program.

Other ALGU items include the share of LGUs from VAT collections (P3.5 billion) and the premium subsidy for indigent families under the Philippine Health Insurance Corp. program (P3.5 billion).

Meanwhile, a militant youth group said yesterday the country will experience the "worst education crisis" in history if Congress does not pass this year’s budget.

"Budget re-enactment spells tuition hikes and more dropouts in state schools. A re-enacted budget could trigger the worst education crisis in history," Kabataan Party president Raymond Palatino said in a statement.

Palatino said a re-enacted national budget would only mean huge cutbacks in education spending, as the government will have to make do with the budget it had in 2005.

"The budget two years ago cannot in any way compensate the growing needs and population of the education sector, not to mention the urgency to modernize and upgrade school facilities," he said.

Palatino said a re-enacted education budget would worsen the state of education in the country and make it more difficult for Filipino youths to take up tertiary education.

He said the unresolved controversy over the alleged illegal provisions of the Commission on Higher Education (CHED) Memorandum No. 14 or the guidelines for proposed tuition and miscellaneous fee hikes is bound to create more confusion in February, when private schools file their applications for tuition hike next semester.

Palatino said a bigger problem is also set to affect tertiary education institutions. With a decreasing budget for state schools every year, he said many state universities and colleges may soon adopt the 300 percent tuition hike passed by the University of the Philippines Board of Regents last month.

Education spending dropped from 19.3 percent of total government expenditures in 1997 to 15.5 percent in 2004. 

The average government spending on education per student is $170. This pales in comparison to Thailand, which spends $550 per student; and Malaysia at $930.

"The UP example and a re-enacted budget will certainly attract other state school administrators to take the easier path and increase tuition, to the detriment of poor but deserving students," Palatino said. — With Sandy Araneta