Vote:
a) Of course not! Subsidies are baaad.
b) It’s a source of corruption. Mark my words!
c) It’s a band-aid solution, but a few pesos are better than nothing.
d) Everybody’s doing it. The US and other countries are giving subsidies. Sige na nga, pwede na (It’s okay).
e) Hey, let’s not look a gift horse in the mouth!
A lot has been said about the government’s decision to give out cash transfers or subsidies to the poor. Comments range from the totally absurd to pure wisdom.
There have been three forms of subsidies thus far: the P500 cash transfer to households that consume at most 100 kilowatt hours a month which will cost government P2 billion, a P2-per-liter discount for drivers of jeepneys and other public utility vehicles, and a P300 subsidy for every child that goes to school.
There is no official tally on the total cost, says Amando Doronila. He points out that these subsidies are on top of the P6.9 billion the government shelled out for the National Food Authority’s cheap rice as of May and the fertilizer subsidy to increase rice production amounting to P43.5 billion (P1,500 per farmer).
All across Asia — in Indonesia, Malaysia and Taiwan – governments are giving out subsidies. The Philippine Daily Inquirer’s editorial “Money for nothing” says the region is extremely tense. Now, whether the subsidies are being given to help the poor or to keep them from being a pain in the neck is anyone’s guess. We can talk till our throats are hoarse, but even the intelligentsia who figure it out will still have to deal with whether subsidies really work.
Presidential aspirant Senator Manuel Villar wants the administration to continue collecting value-added tax on oil and give the proceeds to the poor in the form of subsidies. Jaro Iloilo Archibishop Angel Lagdameo says giving subsidies is like putting money in a basket with a hole in the middle. Bicol region Governor Joey Salceda says subsidies can stimulate the economy. There’s more on this discussion over at Manolo Quezon’s blog The Daily Dose.
Government subsidies are matters of public policy, but there are certain personal finance principles that come to mind. Giving somebody in the pits a leg up is not bad, as long as you can afford it and it doesn’t turn him into a dependent sycophant.
Even on a personal level, whether you are the receiver or the giver, accepting or giving cash is a tricky situation. Receiving inheritance, for example, is well and good, but when my friend told me she didn’t have to save much money because she has an inheritance waiting for her, it triggered all sorts of warning signals in my head.
The League of Corporate Foundations (LCF) believes there is a better way to alleviate our people’s suffering than outright cash subsidies. During a press conference yesterday, Bill Luz of Ayala Foundation for example said government could spend that P500 on compact fluorescent lamps (CFLs) and ask low-income households to exchange their incandescent lightbulbs with CFLs.
“That P500 will be gone after a month but a CFL can help that family for the lifetime of that bulb. I think teaching them to lower their electricity consumption is much better than giving them cash for their electric bills,” Luz said.
Good point. In Day two of the CSR Conference on July 16 to 18, CSR Conference chairman Roberto Calingo said the LCF will challenge companies to find ways to lower consumption of electricity, gas and other commodities which are getting more expensive by the hour.
These days, who doesn’t need a leg up? Whether financial, spiritual, emotional or mental, there is a point in everyone’s life where he becomes a beggar. Giving that help may turn out to be a good immediate solution (think first-aid before rushing to the hospital), but we might have to think harder on finding the right way to give.
June 19th, 2008 at 7:53 pm
Subsidies and meager cash incentives are all most welcome and must be appreciated. However, these are all temporary solutions to a decade-long problems. I think, its a lot better to put the money into an investment that can generate jobs for poor people. A small but regular salary is better than one time P500 cash back from the government. A P7 billion pesos fund is more than enough to create livelihood programs in several provinces.
June 19th, 2008 at 5:27 pm
I’ll go for (c) band aid. One important consequence of high oil and food prices is Substitution Effect - go for alternatives like biking or soylent green (hehehe
) But of course substitution takes place gradually oer time when opportunity costs for fuel and food remain high. It’s near-impossible overnight, hence the need for subsidy for a short period of time until people can adjust to the new reality. Keep that subsidy for a long time and people will hold on to it and feel entitled to it. Something that only supports (a) - it’s baaaad.
June 19th, 2008 at 4:06 pm
I vote D. Agree with joey salceda. Government should do more social welfare and not just during crises because 1 out of 3 filipinos is below poverty line. But it should be pay for work not doleouts, even simple tasks like sweeping streets or planting kamote. Help those who help themselves.
June 19th, 2008 at 3:45 pm
Dole outs is a welcome relief for a short term crisis, it is better than nothing, especially when dealing with a long term problem like the oil crisis which will require a long term solution that will definitely take a long time to make. But these dole outs should be one time only that it shouldn’t sacrifice contingency and emergency funds (now that its typhoon season again)and overall fiscal health of the economy. With the inflation at all time high the dole out can feed into inflation on the demand side but I guess the economic planners has taken this into account so I’m assuming it will have little impact on inflation.
I also agree that tax on oil shouldn’t be removed. As oil price increases so is the tax revenue, so the government should use this revenue to make efficient transport system and lower mass transport costs instead. Removing tax on oil will affect the upper class of the Socio-Economic Class (SEC) first rather than the poorest of the poor. As to the middle class like me, owning a car is more of a choice now than a necessity. Many would want to commute if only mass transport is efficient and safe.