Federalism: Panacea or problem for regional development?

Written by Lila Ramos Shahani, Philippine Star.

Federalism in the Philippines has been the source of speculation for decades. But, today, the victory of president-elect Rodrigo Duterte has drawn this critical pivot of his campaign platform front and center, increasingly evoking intense political discussion. Will federalism be the long-sought solution to addressing discrepancies in regional development, or will it further exacerbate existing problems?

Members of the Moro Islamic Liberation Front prayed together in 2012 as a tentative peace deal was being signed in Manila. Federalism is touted as a path to lasting peace with the Bangsamoro.

Shifting to a federal system would obviously require constitutional change. What is the role of the legislature and the presidency when it comes to constitutional change? According to Article XVII of our constitution, any proposal for changing this fundamental law of the land will hinge on the amount of support it receives from Congress.

If three-fourths of both houses of Congress—voting separately—support the change, Congress can constitute itself into a Constitutional Assembly and draft the changes themselves. If only two-thirds of both houses support it, Congress can call for a Constitutional Convention. Delegate selection would then be thrown to Congress to decide. Since 1935, our Constitutional Convention delegations—including the Convention of 1971—have been chosen by general election balloting. With simple majority support for the change, Congress can call a general election for whether voters want a Constitutional Convention.

Much therefore depends on how closely Congress embraces the incoming President’s promise to pursue federalism. Like all presidents under our multi-party electoral process, he was elected by a plurality—not a majority. In effect, more people didn’t vote for him than did—and those same voters elected our Representatives and Senators. A three-fourths majority of the two houses is far from assured. A two-thirds majority—baring polarized political infighting—is quite possible, however.

In that case, we would be faced with a new question—how would delegates in a Convention be selected? General election is mere tradition—it is not specified in the 1987 Constitution. In two cases—the Malolos Convention and Cory’s 1986 Convention—the delegates were hand-picked by the presidents and their advisors. Would our legislators put the selection of delegates in the President’s hands? There is currently no way of knowing.

The political appeal of a three-fourths majority would be incumbents’ preference for an in-house assembly to protect Congressional privilege. A two-thirds majority might open the delegate selection process to executive-legislative horse-trading.

But the most democratic route would be to have an election to let the people themselves, rather than Congress, decide whether or not to switch to a federal system.

Our government configuration was largely inherited from the American colonial era and modeled after a Western notion of state sovereignty. It is a republic with a unitary system. Powers to set policies and frame laws are concentrated in the central government—composed of the executive, legislature, and judiciary. Local governments units (LGUs) are relatively subordinate, only exercising authority and controlling resources that the national government delegates to them.

A federal system, by contrast, is built on a constitutionally prescribed division of powers between the national and constituent state governments. The latter have primary responsibility for governing their respective regions, while the former maintains hold over nationwide concerns such as foreign affairs, national defense, education, taxation and constitutional issues. Historically, many federal governments came about by assimilating or admitting distinct political entities—as with the 13 colonies of the United States—or others, such as India, though starting with unitary governments, subsequently looked to federalism to hold their countries together in light of unstable ethnic or linguistic divides.

Here, the call for federalism has been fueled by the glaring gaps in the economic development among the different regions. Those arguing for federalism, including President Duterte, see it as a crucial step towards alleviating poverty, most especially in rural areas of Mindanao, where those developmental gaps can be closed. Federalism would devolve economic and political resources directly to the regions, thereby diluting the hold of “Imperial Manila.”

What does the comparative wealth of various regions currently look like?

The Asian Development Bank (ADB) reported in 2006 that Luzon dominated the national economy, generating over a third of the country’s Gross Domestic Product. The National Capital Region (NCR) was the wealthiest of all, with per capita income 2.75 times that of the national average—more than double the next richest region’s—and 12 times that of the poorest. From 1985 to 2003, regions on the poorer end of the spectrum grew more slowly than the national average of 3.1 percent, while NCR kept pace. Today this situation remains largely unchanged—35 percent of the 2015 national budget was allocated for Metro Manila, which represents no more than 14 percent of the population.

Of course, Manila also serves as the seat of political power. Because it houses the Office of the President and its cabinet departments; the Senate and the House; and the Supreme Court, the effect of national governance remains relatively thin and episodic outside the metropolis.

Is federalism really the solution to regional inequalities? Or could it lead to further problems of governance? To answer this, let’s look at the key legislation already addressing the relationship between the center and the periphery: the Local Government Code (LGC), envisioned as a path to regional development through decentralization.

Passed in 1991—during the twilight of the Cory Aquino administration—the Code devolved a number of governing functions to LGUs, mandating that they be given a share of national revenue through the Internal Revenue Allotment (IRA). It also granted LGUs autonomy to create their own revenue sources, to levy taxes and fees needed for their respective development objectives, and encouraged them to explore alternative sources of income through partnerships with the private sector.

The LGC was groundbreaking legislation. It provided opportunities for self-development at the local level, where previously the national government controlled virtually every aspect of governance. However, though enabling many LGUs to make commendable strides toward innovative and transparent administration, it has also engendered a host of problems. Among them are overlapping roles and responsibilities between the local and national governments, making accountability difficult; a lack of standardized procurement rules, leaving the process prone to inefficiency and corruption; and, the most frequent complaint of local officials: that the Internal Revenue Allotments (IRA) LGUs so greatly depend on are—at 40 percent—insufficient.

Also, brief three-year tenures tempt local officials into an unfortunate proclivity to assure re-election through populist platforms, while disregarding much-needed reform. An ADB/World Bank study showed in 2005—a decade and a half after the LGC’s enactment—local communities continued to face declining literacy rates, uncertain access to electricity and potable water, environmental degradation, rising unemployment rates, lack of low-cost housing, and unreliable police and fire department services.

These ills are further compounded by the persistence of patronage and dynastic politicians seeking to perpetuate their own power at the expense of meaningful local development. The reign of dynastic families—as a 2012 Asian Institute of Management study substantiates—correlates directly with lower standards of living and higher levels of deprivation and inequality.

In frustration, many consider further decentralization through federalism the best solution. Rather than LGUs remitting the bulk of their income—retaining only a “pittance,” as Duterte has called the IRA—under federalism, they would keep more than they turn over to their respective states. This, presumably, would secure greater funding to “greenlight” projects without the stifling controls of the national government. Proponents rightly argue that each LGU has context-specific problems and needs that they—not the distant national government—are often best poised to address.

Federalism would also ostensibly generate regional growth by allowing different states to specialize in industries according to their own competencies and resources. Ideally, this would result in regional competition and job creation outside of Metro Manila, thus redounding to its decongestion and the easing of  urban poverty.

Among federalism’s most vocal proponents are those who also view it as the solution to the government’s protracted struggle with the Bangsamoro and indigenous peoples. Dr. Jose Abueva, Advisory Board Chairman of the Citizens' Movement for a Federal Philippines, believes federalism would genuinely address the interests of these groups, fostering “peace through unity in ethnic, religious, and cultural diversity.” The bottom line is that federalism would empower local government and spur pluralism and development where it has previously floundered.

Of course, perceived benefits must be weighed carefully against potential stumbling blocks. Some point out that separatists in Mindanao may not be satisfied with greater autonomy rather than independence—thus casting doubt on those touting federalism as the best path to lasting peace. And in light of the government’s precarious relationship with the Bangsamoro—bearing in mind that full implementation of federalism would be a years-long process—the Duterte administration must be cautious in asserting that the Bangsamoro Basic Law can simply be cast aside in favor of federalism “because they are the same concept.”

Government systems cannot be overhauled overnight. Installing federal institutions will certainly take longer than the incoming administration’s allotted term. Further, establishing a Constitutional Convention, holding state-level elections, and implementing the delivery of state services not only takes time—it is expected to cost billions.

Perhaps the most pressing problem with adopting federalism, however, lies in the structure of local government itself. Critics argue that LGC-developed LGUs are unprepared for the shift. Political scientist Francisco Nemenzo, Jr. explains that effectively adopting federalism assumes states have already undergone a transition period—having developed self-reliance and increased autonomy. Otherwise, contrary to proponent’s projections, federalism could aggravate uneven development rather than alleviate it. States with corrupt or ineffective leaders; those lacking natural resources or skilled labor—those that “cannot even stand on their feet,” as House Speaker Feliciano Belmonte Jr. has pointed out—will face great risks of being left behind, especially if the amended constitution fails to clearly delineate state and national roles.

Proponents argue that federalism can only improve accountability once local officials are unable to scapegoat the national government for delays in projects and services, but the chokehold of political dynasties remains a critical issue.

In the final analysis, federalism offers no cure for political dynasties. It’s more likely to allow greater hoarding of wealth and influence among them, further discouraging political competition at the cost of local development. By increasing their autonomy and removing mechanisms of accountability, federalism would tighten dynastic grip to the detriment of their communities. There is a strong possibility that federalism would effectively put an end to passing the Anti-Political Dynasty bill, the Freedom of Information bill, and the Political Party Development Act of 2014—all currently languishing in Congress.

We see, then, how the question of federalism is vast and complex. Given the costs and uncertainty of shifting to a federalist system, should we ask if it’s worth it? Isn’t the Philippine state, as many scholars have pointed out, already weak enough? Wouldn’t federalism further eviscerate it? Would it not make better sense to build upon the existing Local Government Code, making necessary changes in response to the specific needs and strengths of various regions? Wouldn’t it make more sense to address the serious insufficiency of revenue by refining the existing Bottom-Up Budgeting program that institutionalizes LGU participation in the budgeting process?

Even the proponents of federalism concede that it is no panacea for our nation’s ills. In our current environment of neo-liberal globalization, federalism may be recipe for increasing—rather than narrowing—inequality. It could readily leave some regions at a disadvantage to compete with other, more developed areas. And without the mechanisms of a centralized state to provide needed resources, much-needed infrastructures, health, education, environmental and labor protections, women’s rights and human rights could easily go by the wayside.

Most important of all, it remains unclear how changing the form of our government will do anything towards mitigating practices of corruption, cultures of impunity, ineffective governance, and the persistence of political dynasties. Will the cure be worse than the disease? Perhaps not. Only time will tell.  

Source: Philippine Star

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