TO ENSURE POOR’S ECONOMIC RIGHTS: SC INITIATIVE NEEDS TO GO BEYOND JUDICIAL REVIEW

Research group IBON Foundation welcomes the initiative of the Supreme Court to improve the poor’s access to justice through its nationwide summit today. However, it said that the country’s economic policies have the most far-reaching harmful impact that should be addressed beyond judicial review.

For one, existing judicial remedies are extremely limited in addressing the far-reaching economy-wide violations of human rights. This is aside from how nominally the Commission on Human Rights (CHR) recognizes economic, social and cultural rights matters as part of its mandate to monitor government’s compliance with international obligations, such as the International Covenant on Economic, Social and Cultural Rights (ICESCR).

There also seems to be no concrete measures to apply the human rights approach to poverty reduction. For instance, the country has no official procedure that will assess economic policies according to an explicit economic, social and cultural rights framework. It also does not have specific mechanisms by which policy-makers can be held accountable for the effects of trade, investment and fiscal policies on human rights. Even the CHR does not have a monitoring of how economic, social and cultural rights are affected by macroeconomic policies, which have the broadest influence on realizing these rights.

As a result, the judiciary generally gives in to the Executive and Legislature on major economic policy decisions that are deemed unconstitutional, such as the Mining Act, Oil Deregulation Law, EPIRA etc., even as it is equally responsible for upholding constitutional guidelines.

IBON strongly recommends that the judiciary establish a legal framework wherein existing laws, rules, procedures and practices can be modified to conform with the ICESCR and the Philippine Constitution. Based on this, the SC should conduct a formal review to check if the country’s foreign trade and investment policies are consistent with its human rights obligations, and implement measures that will put these economic policies to public scrutiny.

Lasty, measures should be placed to ensure that the country’s main economic planners, trade negotiators, and lawmakers are fully aware of their obligations and commitments under the Covenant in crafting socioeconomic policies.

BON: AS MUCH AS P31/LITER OF PUMP PRICES:GOES TO WINDFALL PROFIT OF OIL FIRMS

Independent think-tank IBON Foundation estimates that as much as P31 per liter of the pump price of oil products may be windfall profits of transnational oil firms. This is based on IBON’s estimate of the real cost of oil at only US$31-US$32 per barrel, consisting of exploration cost, production cost and royalties to the Organization of Petroleum Exporting Countries (OPEC). Subtracting this from the May 2008 average Dubai spot price of US$117 per barrel means that the oil firms may have already earned windfall profits of US$86-US$87 per barrel of crude oil. Applying this figure to local pump prices (at 159 liters per barrel and an exchange rate of P43: US$1) and prevailing prices as of June 14 would reveal that for every liter of unleaded gasoline, P26-P31 goes to total windfall profits. For diesel, P23-P27 per liter goes to profits. This means that oil firms’ profits account for 47% to 54% of the retail price. The total windfall figures were obtained by combining profits from crude oil price, applying the US energy department’s data that crude oil accounts for 48% to 58% of the local pump price, and that 12% of the retail price goes to profits (which includes 3% that used to make up oil tariffs). This profiteering only proves that oil prices are artificially bloated at international and local levels because of the dominance of transnational oil firms over the industry, which gives them the upper hand to practice monopoly pricing and speculation. But although the government cannot control the activities of oil firms at the global level, it could minimize the impact of their profiteering and control excessive oil prices by implementing strict regulation of the domestic market.

FALLING PARTICIPATION RATES HIGHLIGHT NEED FOR MORE SOCIAL SERVICES SPENDING

One more child out of every 10 school-age children was not able to go to school, highlighting the need for higher government spending in social services, said research group IBON Foundation.

Figures from the Department of Education (DepEd) show that participation rate at the elementary level, or the percentage of children aged 7-12 who are enrolled in public and private elementary schools, has fallen from 96.95% in SY 1999-2000 to 83.22% in SY 2006-2007. At the secondary level, only 58.59% of children aged 13-16 were enrolled in high schools in SY 2006-2007 from 65.43% in SY 1999-2000.

These figures highlight the need for government to allocate more resources for social were ditional penditure) espectively7.s, 17 out of e of rising cost of livingh is way below int quality stdsservices spending. The 2008 national budget allocated just over P2,000 per Filipino for education, 14% less in real terms than what was allocated in 1998. For health services, another important social service, only P253 was allocated per Filipino, which was 28% less in real terms than what was allocated in 1997.

Such services should be prioritized over the paltry subsidies the Arroyo administration has been using recently to win popular support from the poor. It recently allocated some P2 billion to provide four million poor families a one-time P500 electricity subsidy, and promised other subsidies such as loans for poor students. However, its education spending is only 12% of public expenditure and 2.1% of the gross domestic product. These are way below the international quality standards of 22% (for public expenditure) and 6% (for GDP).

ONE IN FIVE WORKERS DOES NOT EARN ENOUGH, SEEKS MORE WORK

Data from the April 2008 Labor Force Survey (LFS) shows that one in five employed workers reported that they were seeking more work because they were not earning enough for their and their families’ needs, according to research group IBON Foundation.

The April LFS showed that the underemployment rate, or the percentage of employed workers who said they were looking for more work, grew to 6.6 million workers during the survey period, from 6.4 million in the same period last year. More significantly, the growth was in those considered ‘invisibly’ underemployed, or those who already worked 40 hours or more a week.

This means that many wage and salary workers employed in the formal sector do not earn enough for their needs. These figures could even be understated, according to IBON, since only those surveyed who reported that they were seeking more work were classified as “underemployed”.

An earlier IBON study had shown that even after a recent round of wage hikes, adjusted daily minimum wages were still not enough to cover the basic cost of living. In its April survey, IBON reported that 71% of Filipinos was not earning enough to meet their families’ basic needs.

The government survey reflects the country’s employment situation where unemployment is in an all-time high and jobs are low-paying and low in quality that workers continue to seek more work. Amid rising prices, the country’s employment situation remains the greatest challenge for the Arroyo administration.

PROPOSAL TO EXTEND CARP TO INCREASE LAND RECONCENTRATION

Proposals of Malacañang and congressmen to reform and extend the Comprehensive Agrarian Reform Program (CARP) create more opportunities for land owners and agribusiness firms to further consolidate their control over agricultural lands, according to research group IBON Foundation.

IBON noted that proposals for CARP extension include the “farmland as collateral” provision, a key component of so-called market-oriented land reform. The research group said that farmers availing of the provision to access credit may find their lands foreclosed, resulting in reconsolidation of already-redistributed agricultural lands in the hands of landlords and large agribusiness firms. IBON pointed out that the present flawed program has failed to stop bankrupt farmers from selling or transferring distributed lands, despite 10-year prohibitions on such transfers.

Malacañang will also be able to use the proposal to push for its initiatives to develop corporate farms and facilitate foreign and local agricultural investment through the Agrarian Reform Community (ARC) concept, further increasing the insecurity of land tenure in the countryside. According to IBON, the proposal to extend CARP is meant to fine-tune the bankrupt program to continue restructuring local agriculture in order to suit the needs of big land owners and agro-corporations.

Bills filed at the House of Representatives are even more dangerous for small and landless farmers since introducing reforms to the flawed CARP undermines the historical and moral claim of farmers to own the land they till for free. Requiring farmers to pay for the land perpetuates one of the biggest flaws of CARP—that the program is essentially a real estate transaction between landlords and farmers, with the government as the middle man.

The present agrarian situation, according to IBON, proves that CARP in its 20 years of implementation has failed and has been used to legitimize various forms of land grabbing. Instead of extending the flawed CARP, IBON calls for a genuine program that is not designed to perpetuate landlord-business and agro-corporate interests but upholds land distribution as key for social justice.

LATEST WAGES SLIDE TO ONE-THIRD OF COST TO LIVE DECENTLY

Despite the recent round of wage hikes, daily minimum wages have actually slid to only 34% of the amount needed for decent living from 46% in January 2007, according to independent think-tank IBON Foundation.

Data from the National Wages and Productivity Commission (NWPC) of the Department of Labor and Employment (DOLE) show that on the national level, the average daily minimum wage, including the new increases, is just 34% of the average family living wage (FLW). The FLW is defined as the minimum amount needed for a family of six members to meet their daily food and non-food needs plus 10% allocation for savings.

In Metro Manila, the new daily minimum wage of P382 is 38% of the family living wage of P871, while in areas outside the capital the average daily wages are just 29% of the average FLW.

These figures highlight how far wages have been overtaken by price increases and how insufficient wage increases given by Regional Wage Boards are. These also underscore the urgent need for lawmakers to approve a decent legislated across-the-board wage hike as soon as Congress resumes next month.

LOW INFLATION NO REASON TO DENY WAGE HIKE

Various business groups have claimed that there is no basis to adjust the minimum wage because the erosion of the peso as of April 2007 was very insignificant. But it obscures the point that workers’ wages can no longer keep with high and rising prices, according to independent think-tank IBON Foundation.

While inflation in April did go down to 2% from 8% in the same period last year, this only indicated that the rate that prices were going up had slowed but prices of goods and services still remained high. In fact, the cost of living continues to escalate.

The National Wages and Productivity Board pegs the living wage for a family of six as of May 2007 at P786. But the daily minimum wage in Metro Manila is just P350 (P300 basi c p lus P50 cost of living allowance) or just over half of the family living wage.

Moreover, the low inflation rates are meaningless for the increasing number of Filipinos who are earning insufficient incomes or worse, do not have jobs. IBON estimates that close to a third of the labor force were either jobless or if employed, is still looking for more work.

The real value of workers’ wages had also seriously been eroded. The purchasing power of the peso in Metro Manila, or the amount of goods and services one peso can buy, had fallen to P0.70 in April from P0.72 last year. This means that over the past year, a worker has lost P2 of actual buying power for every P100 he or she earns. But between April 2005-2006 a worker actually lost P5 of actual buying power.

This loss in buying power underscores the urgency for a wage hike, particularly in light of workers’ increasing productivity. Workers’ productivity grew to P9,560 in the first quarter of 2007 from P9,265 in the same period last year. (end)

40th Year of Humanae Vitae

13 June 2008

Your Eminence/Graces/Excellencies:

Pax in Nomine Christi.

This year marks the 40 years of Humanae Vitae and as we commemorate this prophetic encyclical of the Servant of God, Paul VI, we as a Church are faced with yet another assault on our Family and Life values.

The Permanent Council has graciously approved our proposal of activities and mobilizations to mark this anniversary.  May I invite you to participate and ask your arch/diocese to support these activities:

04 July 2008,                        First Friday Day of Prayer and
Fasting for the Defence and Safeguard of the Filipino Family.

09 July 2008, 9:00 am        Concelebrated  Mass at the Manila
Cathedral marking the 40 years of Humanae Vitae

25 July 2008                          Culmination in  Manila of the
Caravan for Family and Life.  The Caravans will start from different
points in the country weeks/days prior to July 25

Such activities are meant to create a heightened awareness among our faithful with regard to the recent assaults on our  Family and Life values be it in the  national Congress,  local government units, and even at the other levels of public administration.

God willing, through the primers and manuals being prepared by ECFL, we shall be able to better inform our faithful and make them ever more committed to defend our Catholic values.  Clearly, after these activities, we shall plan and implement long-term formation programs
for our Family and Life workers.

Thanking your Eminences and your Excellencies for your constant pastoral concern and support for the Filipino family, I remain

Devotedly yours in Christ.

signed

+PACIANO B. ANICETO, DD
Archbishop of San Fernando
Chair, ECFL

PRIVATIZATION OF POWER SECTOR THE ROOT OF HIGH POWER RATES

The impetus behind the current crisis is the restructuring of the sector through the Electric Power Industry Reform Act, or EPIRA, one of the first laws signed by President Gloria Arroyo in 2001.

IBON Features– Amid the flurry of accusations between private distributor Manila Electric Company (Meralco) and state-run National Power Corporation (Napocor) over unjust charges, one fact remains clear: privatization and deregulation of the power industry– distribution, transmission and generation– is at the heart of high electricity bills.

For example, consider the multitude of unjust ‘pass-on’ charges levied by Meralco on its customers. These include system losses, in which power lost through pilferage and technical problems are passed on to consumers and P500-million a year of Meralco’s own power consumption which is similarly reflected in electric bills. There is also a reported plan to pass bad debts incurred by the power distributor on to consumers.

These charges have been approved by the government Energy Regulatory Commission (ERC), which is tasked to regulate the rates of electricity distributors. Although blame has been placed on the ERC’s lax regulation for such excessive ‘pass-on’ rates, in truth the regulatory environment has become lenient because of deregulation of the power sector and while moving towards full privatization.

It should also be noted that although Meralco is a public utility with a congressional franchise, its essential nature is a private, profit-oriented corporation listed in the Philippine Stock Exchange. Thus, it should not be surprising that the company exploits legal loopholes to levy such unwarranted charges in order to fatten its bottom line and make its stockholders and owners happy.

The privatization of the power sector created profit opportunities for private-sector independent power producers (IPPs). In order to quickly attract investors to the sector, government had to ensure the power producers’ profitability. Thus, onerous provisions such as ‘take or pay’ (which required Napocor to buy 70% to 100% of power producers’ output) and ‘fuel cost guarantee’ (which obligated Napocor to source and pay for fuel used by IPPs) were tacked onto IPP contracts. These provisions bloated consumers’ power bills through charges such as the infamous Purchased Power Adjustment (PPA). They also contributed to Napocor’s skyrocketing debt burden.

It will be remembered that a government-mandated review of 35 IPP contracts during the Arroyo administration found that only six were “clean” or without financial or legal issues. Five were found to contain “onerous” terms that were “grossly disadvantageous to government”. However none of these contracts were cancelled, and were instead “renegotiated”.

High transmission charges have also been blamed as a factor in high power rates. But the National Transmission Corporation (Transco) is also set for privatization, and thus, needs to charge high rates in order to attract potential investors. It should also be noted that transmission charges are regulated by the ERC as well.

Open Access

The impetus behind the current crisis is the restructuring of the sector through the Electric Power Industry Reform Act, or EPIRA, which was one of the first laws signed by President Gloria Arroyo in 2001.

Before EPIRA the sector was composed of generation, transmission and distribution sectors. Napocor generated electricity on its own and bought electricity from IPPs, and transmitted this to distributors and large industrial customers through high-voltage wires. Distribution of electricity to end-consumers was done by privately-owned electric utilities, a few government-owned utilities and electric cooperatives.

Under EPIRA, the various components of the power sector are separated into generation, transmission, distribution and supply. Generation and transmission assets of Napocor would be privatized while distribution would continue to be handled by the private sector. The end goal of the sale of Napocor’s generation assets is “open access” which is government’s supposed answer to high electricity prices. “Open access” ostensibly aims to introduce competition into the industry by allowing consumers to select their supplier.

EPIRA advocates claim that competition would lower rates, particularly with a provision which states that no power generator should control more than 30% of supply in a given grid and ostensibly prevents monopolies. But the experience of the deregulation of the downstream oil industry demonstrates that such “competition” does not bring down prices. Deregulation has resulted in new players taking 12% of the market while the big three oil firms (Petron, Shell and Chevron) share the remaining 88% or an average of 29% per firm. This has not stemmed cartel-like behavior with oil industry players raising pump prices nearly simultaneously. It has also not resulted in lower prices, as pump prices of all petroleum products have raised an average of almost 580% since deregulation of the industry was implemented in 1996.

EPIRA also notably allows cross-ownership between distributors and generators. This has allowed the Lopez family to own a controlling share in Meralco while also owning IPPs. This situation has led to questions of conflicts of interest as Meralco would naturally be more inclined to buy power from its sister firms regardless of whether it is cheaper than electricity sourced from Napocor IPPs.

Reversing Privatization

In the light of high costs in power rates, the reversal of privatization of the entire power sector becomes an increasingly viable answer. This entails the repeal of EPIRA law, reversal of the privatization of Napocor’s generation assets, and government control over the entire power sector – distribution, generation, transmission and supply.

Of course many would question the return of state control over the industry, particularly in light of corruption allegations against Napocor such as its alleged overbilling of customers by some P10 billion and its purchase of overpriced coal for its power plants.

However there remains no substitute for responsible state control in an industry such as the power sector whose natural monopolies will inevitably be exploited by private interests for maximum profit even at the expense of the public. And as a state-run industry, the people must have the right to subject the power sector to scrutiny and demand transparency in its operations. Effective state control remains the best solution to address high power rates– even as it is acknowledged that leaving the power industry to an administration known for allegations of corruption, unaccountability, and subservience to elite interests compromises achieving a pro-people power sector.

RESTORE OIL INDUSTRY REGULATION TO ENSURE TRANSPARENT, REASONABLE PRICING

The recent announcement by local oil companies that they would need to increase oil prices by as much as P10 to P11 per liter highlights the urgency of reinstating regulation of the oil industry, according to independent think-tank IBON Foundation.

IBON said that deregulation has not affected the domination of the three major oil companies (Shell, Petron and Chevron) of the local petroleum market. Instead, it has merely given the oil giants more room to manipulate pump prices since their transactions with their parent companies abroad have become even less transparent with price adjustments no longer subject to public hearings. The unregulated environment gives oil firms greater freedom to overprice and engage in transfer pricing.

The think-tank further pointed out that the recent P1.50 hike in pump prices implemented at the end of May was the largest hike since October 2001 when average retail prices went up by P1.20 per liter. It added that the oil companies are threatening even higher weekly hikes of P2 per liter allegedly to speed up recovery of their costs.

Data from the Department of Energy show that the three major oil players continue to control the bulk of the downstream oil market since the 60 new entrants that have entered the sector since 1998 accounted for an average of only 12% of total market share since the oil industry was deregulated.

IBON added that high world oil prices remain a result of the dominance of a few giant oil transnational companies – such as Royal Dutch Shell, Chevron Texaco, Total and Exxon Mobile – over the global oil industry. Oil prices are pushed up further by unhindered speculation in global oil futures markets. The monopoly of the oil giants over the downstream and upstream levels of the industry makes them immune to the effects of supply and demand and allows them to dictate the prices at which they sell their products independent of changes in crude oil production.