Constitutional amendment and development - Benefits and budgetary costs - Part III

The discussion of constitutional amendments below answers two questions. (1) Which amendments will create the most lasting and immediate impact on the country’s economic development? (2) What are the budgetary implications of each of the amendments if undertaken?

Amending only the economic restrictions to foreign capital. Suppose the amendment undertaken retains the current provisions as provided in the constitution but these policies are simply integrated as ordinary provisions of law that can be amended under ordinary legislation. This is the most gentle revision of the current constitutional restrictive provisions.

What is the impact of this amendment on economic development? The most tangible and immediate impact of the amendment would be to remove the threat of constitutionality challenges to foreign direct investment decisions. The constitutionality issue that has created major delays in investment decisions disappears.

By itself this amendment changes the psychology of foreign investment promotion in the country. But to make the impact even stronger, the government must take steps to amend the restrictions but taking into account the separate voices of other stakeholders on the issue.

The second wave of increase in foreign investments would come when normal legislation will have led to the passage of improved foreign investment incentives legislation. This will have a transformative impact on the potential economic growth performance of the economy.

Will the amendment cost the country any new budgetary outlays? The only budgetary demand that this amendment will cost the government is the mobilization of support for the amendment during the year that the amendment is made. Thereafter, there would be no further budgetary costs.

When all the benefits and costs are considered, this amendment has the highest direct benefit among all the proposals to amend the constitution.

Adopt a parliamentary system to replace the current presidential system. (1) Impact of the new system on development. The main argument in favor of the parliamentary system is that there is no confrontation between the country’s leader and the parliament. The reason is that the leader (often a prime minister) leads the parliament. There is no potential for conflict unlike in the current system.

This is unlike in the presidential system patterned after the American system of separation of powers. The Philippine political system appears very divisive because the executive branch is always under tense relations with an independent legislature.

There are potential savings in the fusion of the executive branch and the legislature through the adoption of a parliamentary system. Through greater harmony in governing, greater speed and decisiveness could result.

But this is not a guarantee of success. There are many parliamentary governments that continue to struggle in their development efforts. The success of the parliamentary system depends on the laws that the country adopts and the manner in which those laws are implemented. Having a parliamentary system is not foolproof guarantee of success.

Will the amendment cost the country any new budgetary outlays? The adjustment in government will not necessarily be drastic. Integration of functions of the executive branch with the parliamentary branch could even lead to a reduction of the costs of governing.

Unnecessary agencies and institutions could be abolished, reformed, or simply made more responsive to the merged functions. Existing agencies and departments of government could produce synergy that leads to greater economy in the delivery of public services.

It must however be noted that success depends on the quality of leadership and the dedication of the workers in government. Problems and tensions arising out of efforts to solve the problems of government can take years and decades of experience and experimentation. That kind of adjustment takes place whether the government structure is presidential or parliamentary.

In short, the parliamentary system promises a future of governmental reorganization that cannot be calculated beforehand. Just as in a presidential system, the success or failure of government will take decades of experience and experimentation.

Adopt a federal system of government. (1) Impact of the new system on development. The radical nature of the change in government could bring about enormous expectations as well as early term frustrations. The transfer of powers between the central government and the federal states would require a period of adjustment and learning.

The demand for accountability and leadership at the local (state or regional, not federal) could go in different ways depending on the readiness of the local units. Some local units are far advanced in development but others are in a very backward state.

Regions that could deal with their own problems might be able to gain from this major change in power relationships. But the result could be very challenging if not disastrous for the poorer regions.

Will the amendment cost the country any new budgetary outlays? The shift to a federal form of government would be definitely more expensive compared to the parliamentary. This is because it requires the building of new infrastructure of government per new autonomous regional government.

The objective of a federal reform is to reduce the size of the national government by reducing its functions and transferring many of those functions to the regional or state governments. It is to be expected that this reorganization would expect to reduce the size and expense of the national government and the enlargement of the new functions to the states.

The transitional costs especially in the local government would be heavy. This would happen whether the new states are formed out of the most modern regional governments or out of the poorest and backward of the regions.

The success of a federal system is not a sure thing. As in the case of the parliamentary system, the proper evolution of the political system will require enormous experimentations and decades of institutional development. The costs of the adjusting to the new system are likely to be higher than in the case of the parliamentary system.

What is likely to happen in a federal system, there could be greater scope for competition among the member states regarding development effort. Much would depend on how economic and social policies would evolve at the national level.

Adopt a unicameral system and junk the current bicameral system of legislature. I believe that the current Senate can be dispensed with at great saving to the nation. The single parliament will pass laws more carefully if it became solely responsible for the crafting of legislation. The great leaders of the Senate today will even prove greater as leaders in single national parliament. The cost of maintaining the senate to the nation will be a great saving in budgetary resources for the nation.

Summary. Of all the amendments proposed, only the amendment of the constitutional economic restrictions promises to produce immediately beneficial results for the improvement of the economy. It is also the least cost alternative without the risk of additional costs on the fiscal budget of the nation.

The other proposals have uncertain outcomes because of the long term period of experimentation to make each of them more successful. Also, their costs are likely to be high in terms of new fiscal demands on the nation’s budget.

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