Zero-based budgeting

THE bedrock principle of the 2011 national budget is that the taxes paid by the people will be spent for the people.

Upon assuming office, I directed the Department of Budget and Management (DBM) and all departments to evaluate existing government programs and projects and see if the program objectives/outcomes are being achieved.

This is the essence of the zero-based budgeting approach which we applied both for the remainder of the 2010 and in formulating the 2011 budget – to ascertain the continued relevance of ongoing programs, prioritize key projects, and justify the need for funding, i.e., that programs/projects have an impact on the welfare of the people and the economy – as opposed to the traditional practice of incremental budgeting which relies on automatic increases or augmenting the previous budget.

Programs and projects that did not perform well over the years and that proved prone to leakages, based on Commission on Audit (COA) reports and other studies, were overhauled or redesigned.

We cannot continue with business as usual. We needed to evaluate not just whether the right things were being done but, equally important, whether these were being done right.

As a result of the zero-based approach, we terminated and cut programs, such as the Department of Education’s (DepEd) Food for School Program, which can be better administered by the Department of Social Welfare and Development (DSWD) by means of the proper targeting and identification of beneficiaries; the Department of Agriculture’s Input Subsidies, which we found benefitted the rich instead of the poor; and the Kalayaan Barangay Program, which no longer delivered its intended outcomes.

In the case of such programs as the DepEd’s Textbooks, Teacher Deployment and School Building Construction, and the Technical Education and Skills Development Authority (TESDA) Training for Work Scholarship, we had to resort to a conditional release of funds pending resolution of bottlenecks in project identification and implementation, and program improvements.

Savings generated from these cuts/reductions were channeled to existing programs that are performing well, such as the DSWD’s Conditional Cash Transfer program, the DepEd’s scholarship program (Educational Service Contracting), and the National Health Insurance Program (NHIP).

These programs have, in fact, been expanded to address the critical gaps in social services, particularly in the areas of education and health. The NHIP, for instance, could, and should, include preventive healthcare insurance under its coverage.

We have likewise rationalized spending of governmentowned and/or controlled corporations, such as the National Food Authority (NFA), to stop the bleeding of government funds due to inefficiencies.

The “buy high/store long/sell low” policy of the NFA for local and imported rice has resulted in huge financial losses for the state. Since 2003, the NFA has been the top subsidized GOCC of the NG to partially cover its losses from trading, and to fund the rice import tariff.

To rectify the situation, we shall undertake several reforms – reduce rice importation, limit the selling of low-priced rice to the poorest of the poor, and push for a Congressional amendment of the NFA Charter to make possible the separation of its proprietary function from its regulatory and buffer-stocking functions.

With zero-based budgeting, we can be assured that we are putting the people’s money to where it ought to be. (Excerpts from President Benigno Aquino III’s message to the 15th Congress on the 2011 budget)