Perks for the few in GOCCs

It was with deep concern to learn that no less than Department of Budget and Management (DBM) Secretary Florencio Abad admitted they are tapping the earnings from government-owned and controlled corporations (GOCCs) and income from government operations for the proposed P22-billion supplemental budget for this year. The proposed supplemental budget was submitted to the 16th Congress for immediate approval.

All GOCCs are under supervision of the Governance Commission for GOCCs (GCG) of the Office of the President. The GCG was created by Republic Act No. 10149 which, among other things, mandates it to act as the central advisory, monitoring, and oversight body with authority to formulate, implement and coordinate policies. 

The DBM chief defended anew the request of the Executive Department for the P22-billion supplemental budget as something badly needed, especially to augment funding for the reconstruction and rehabilitation of provinces severely damaged by super typhoon “Yolanda” in November last year.

Of the total proposed supplemental budget, P9.5 billion would be set aside for Yolanda reconstruction. This is in addition to the P100 billion that Congress had budgeted this year for the same purpose. The rest of the proposed supplemental budget would be allocated to other government agencies.

While there is no quarrel additional funding may be needed for Yolanda reconstruction, the piggybacking of other agencies on the DBM’s proposed supplemental budget has placed this under cloud of suspicions. This is especially coming at the heels of the Supreme Court (SC) ruling that declared DBM’s Disbursement Acceleration Program (DAP) as illegal and unconstitutional.

In a unanimous decision, the SC nullified DAP as legal basis for the transfer and use of savings from one government agency to another that were not provided for in the Congress-approved budget law. The motion for reconsideration earlier filed by the Executive Department on the DAP ruling remains pending at the SC.

So while the High Court has yet to render the DAP ruling with finality, the DBM chief has to find where they could tap funds. Asked about the source of funding for the proposed supplemental budget, Abad told Senate reporters last week: “We are getting it from the income of treasury, from operations and GOCC dividends. These come from investments in money market placements.”

GOCCs are required to declare and remit at least half of their income as dividends to the National Government under RA No. 7656. Last year, the GOCC sector remitted a total of P32.31 billion worth of dividends and other remittances. The Philippine Amusement and Gaming Corporation (PAGCOR) turned over the highest total remittances of P9.791 billion.

The record-high remittances by GOCCs have thus become veritable source of funds that the DBM could dip into. “Because there is money that is still available. And many of these items are not in the appropriations. So that’s why we are going back to Congress so that there will be appropriation cover for this items, so therefore we can spend the extra money that is available in the treasury,” Abad pointed out.

That is obviously the DBM chief’s hard-earned lesson to avoid being caught again with his hand in the cookie jar.

Abad though failed to say how much of the supplemental budget would be sourced from GOCC remittances. When this news item came out, I was reminded of our discussions with Emil de Quiros, president and chief executive officer of the Social Security System (SSS) who was our guest at the Tuesday Club at the EDSA Shangri-La breakfast forum that day. The SSS is one of the government financial institutions placed under supervision of the GCG.

According to De Quiros, the SSS is one of the better-performing government corporate bodies. He cited the average annual net revenue of the SSS increased to P31 billion since they took over in 2010. It was a hefty increase compared to the average of just P8 billion from the years 2000 to 2009, an SSS report furnished to us showed.

When they first came in 2010, De Quiros noted, total assets of the SSS stood at P298 billion. By the end of December this year, SSS will post total assets of P436 billion. He boldly predicted the total assets of the SSS would reach P.5 trillion by the time they step down with President Aquino in June, 2016. De Quiros is a coterminous appointee of P-Noy.

De Quiros credited the solid financial performance of the SSS to the prudent management of the funds coming from the monthly contributions of its 31 million members all over the country, including the one million overseas Filipino workers (OFWs) registered as voluntary contributors. The bulk is composed of private sector employees and workers like me who contribute 11 percent of our monthly take-home pay to the SSS.

Other than putting up SSS branch offices in malls and key population centers all over the country and additional service offices abroad for OFW members of the SSS, there was no mention if there will be increases or improvements of benefits given to its members.

Except, however, an increase in the burial assistance to SSS members. De Quiros said the SSS board, headed by their chairman Juan Santos, endorsed a doubling of the burial assistance from the present P20,000 to P40,000. This is pending approval before the GCG, he added.

This is why, De Quiros disclosed, the SSS is launching by March next year a new program they call Voluntary Provident Fund, personal equity savings option or Peso Fund for short. SSS members who want to increase their monthly pension when they retire can opt to raise their monthly contributions for this purpose.

“It is an opportunity we are giving to our members to contribute their excess income which will give them tax-free earnings and increased retirement benefits,” De Quiros said. They are still ironing out the kinks of this new program, the SSS chief admitted.

Earlier, De Quiros, Santos and the seven other SSS board members came under fire for their controversial granting themselves of P9.5-million bonuses last year. However, they justified the grant of bonuses was in accordance with the law that created the GCG.

The GCG law also authorized the use of GOCC remittances to augment supplemental budget of the national government. At least it is for the greater good than only a few enjoying the perks of these state corporate offices.