The chairman of the House committee on appropriations warned Sunday that the cash-based budgeting system that Budget Secretary Benjamin Diokno insists on imposing would institutionalize corruption and result in poor quality national infrastructure projects.
Camarines Sur Rep. Rolando Andaya Jr., panel chairman, said Diokno must abandon his cash-based budgeting system under the 2019 national budget since that would only limit appropriations, bidding, completion of projects and payments within a single year.
“Instead of fighting corruption, it would only worsen and be widespread under Secretary Diokno’s cash-based budgeting system. This would institutionalize corruption in the Department of Public Works and Highways. And who would benefit? Small, ill-equipped suppliers or contractors,” he said.
Andaya, a former Department of Budget and Management secretary, said some DBM and DPWH employees had told him that the total amount of unpaid contracts for 2018 infrastructure projects soared from P44 billion in November 2018 to more than P100 billion at the end of the year.
Under the present obligation-based budgeting, the government could spread out the appropriations across two years to enable the projects to be completed, he said.
He also cited testimony from ex-DPWH secretary Rogelio Singson that he was against one-year cash budgeting for capital outlays because it would only encourage corruption in government contracts.
Singson also said such a system would limit projects to smaller amounts to ensure payment and completion within the year, jeopardizing the quality of the projects due to the absence of large, qualified contractors.
“During my term, I purposely packaged construction contracts above P150 million so that DPWH could attract qualified contractors who would be required to provide proper equipment considering that their contracts were big enough to warrant investing in good equipment. That’s why we now see many of the contractors with concrete or asphalt pavers and invested in appropriate construction equipment,” Singson told Congress.
“I suggest that the DBM secretary get a copy of the 2017 PIDS discussion paper of Rene Santiago, a fellow at the Foundation for Economic Freedom,” Andaya said.
“Mr. Santiago’s study on planning and programming of capital projects at the agency level cites the bad example UK had with cash-based budgeting. To meet its one-year time constraint, agencies were forced to cluster expenditures in the last few months of the year,” he added.