The House of Representatives has passed on second reading a measure designed to be a three-year stimulus to set the stalled economy back on its high-growth path and an initial booster as well for President Duterte’s new initiative to decongest Metro Manila by creating a lot more infrastructure jobs in the countryside.
The chamber passed House Bill (HB) No. 6920, the substitute measure to HB 6709 or the COVID-19 Unemployment Reduction Economic Stimulus (CURES) Act of 2020, which Speaker Alan Peter Cayetano and Deputy Speaker LRay Villafuerte along with 212 more legislators have authored in a bid to further raise state spending on health, education, agriculture, local roads, livelihood, information and communication technology (ICT) and tourism (HEAL IT) infrastructure.
“CURES will at the same time boost President Duterte’s Balik Probinsya, Bagong Pag-Asa program.”
“This measure aims to blunt the impact of what the International Monetary Fund (IMF) expects to be the worst global recession since the Great Depression in the 1930s by stimulating economic activity and creating so many jobs in the countryside,” Villafuerte said. “In so doing, CURES will at the same time boost President Duterte’s Balik Probinsya, Bagong Pag-Asa program by encouraging city dwellers to return to their home provinces amid the prospects of more employment and livelihood opportunities in the regions outside the national capital.”
The CURES bill proposes a three-year, P1.5-trillion stimulus program anchored on infrastructure spending, particularly outside Metro Manila, as the “cures’ to reset the economy and generate a lot of jobs following the sudden work stoppage set off by the quarantine measures that were effected in mid-March to hold back the COVID-19 pandemic.
With infrastructure investments having the highest multiplier effect on the economy, Villafuerte said “the House passed the CURES bill in a bid to dramatically raise state spending on HEAL IT projects and thus spur the domestic economy’s quick recovery from the coronavirus pandemic’s economic fallout.”
The bill’s other main sponsors are Majority Leader Ferdinand Martin Romualdez; Deputy Speakers Paolo Duterte and Loren Legarda; and Reps. Eric Yap, Maria Laarni Cayetano, Michael Defensor and Jose Antonio Sy-Alvarado.
The CURES bill seeks to create, appropriate and automatically release a special outlay dubbed the CURES Fund equivalent to P1.5 trillion over a three-year period to bankroll infrastructure projects in the HEAL IT priority areas, at P500 billion-worth of projects per year.
Chosen projects should be “shovel-ready” or ready for construction within 90 days after the Department of Budget and Management (DBM) certifies actual fund release.
Villafuerte said the huge infrastructure projects outlined in the CURES bill shall be undertaken in conjunction with the “Balik Probinsya” program, which was first pushed by Sen. Christopher Lawrence Go and later institutionalized by President Duterte with his issuance of Executive Order (EO) No. 114.
The CURES Fund would be available for a wide gamut of projects ranging from barangay health centers and municipal and city hospitals to digital equipment for testing, “tele-health” services and e-prescriptions to post-harvest facilities, bagsakan centers and food terminals, among others.
Such funds would also be available for infrastructure projects like walking or bicycle lanes; bridges across creeks and irrigation canals; evacuation centers and disaster emergency facilities; and roads going to tourist spots, beaches, mountain parks, new business districts or economic zones, and hubs for small and medium-sized enterprises.
Funding would be available, too, for projects like farm-to-market roads (FMRs), roads connecting communities to schools and health facilities; along with the Enhanced Sustainable Livelihood Program of the Department of Social Welfare and Development (DSWD), the Enhanced Tupad Program and Barangay Emergency Employment Program (BEEP) of the Department of Labor and Employment (DOLE), and access of micro, small and medium-scale enterprises (MSMEs) to credit and financing.
“Infrastructure spending by the government directly increases employment.”
Moreover, the CURES Fund could be used to bankroll projects like the purchase and deployment of mobile network POPs (Telecommunications Point of Presence); implementation of digital platforms in doing government transactions; and acquisition of ICT equipment or laboratory facilities to enable immediate coordinated health response to suppress virus transmission or contact tracing.
“In the face of a global recession and unemployment among the workforce, it is incumbent upon the government to establish both palliative and curative interventions that would simultaneously support Filipino workers in the immediate term while laying out the foundations for a more resilient and sustainable future,” the bill’s authors said.
Given that infrastructure is the backbone of any economy, they said that “although palliative measures such as cash transfers, unemployment dole-outs, relief and other forms of immediate support are undoubtedly necessary at the moment, it is in the interest of both the government, the private sector, and the Filipino people at large that a lasting cure for economic resilience be established.”
An initial P500 billion of this CURES Fund shall be released on the first year of this 2020-2022 economic stimulus and employment program, with P500 billion more for release on the second year, and the remaining P500 billion on the third and final year.
After the third year of the program’s implementation, the bill mandates the Congress to enact legislation either extending CURES or terminating its Fund. In case the program is terminated and there are un-obligated funds left in the Fund, the said balance shall be made available for the general budgetary requirements of the succeeding year after the project’s termination.
Funding for HEAL IT projects shall be based on the (1) actual need of chosen localities, (2) number of locally-sourced jobs to be created or sustained after the construction work, (3) and the potentials for forward and backward linkages with local businesses, suppliers and traders, small and medium-sized enterprises, and skilled and unskilled workforces.
Villafuerte said such a stimulus program is necessary to spur growth after the economic standstill, considering that from a pre-COVID-19 projection of gross domestic product (GDP) expanding to a high 6.5% this year on the back of sustained state spending on President Duterte’s signature project “Build, Build, Build,” analysts now forecast zero or negative GDP expansion.
Employment will suffer a big hit from the pandemic, Villafuerte said, as the National Economic and Development Authority (NEDA) projects COVID-19 to render jobless 4.5 million Filipinos while the DOLE expects a higher number of 3.2 million displaced workers.
The implementation of CURES-funded project shall be undertaken by the authorized national government agencies (NGs) themselves or, should they choose, have them carried out by local government units (LGUs) via a Memorandum of Agreement (MOA), according to the bill.
The bill proposes the creation of a Joint Congressional Oversight Committee to monitor the implementation of the CURES Act once enacted into law.
It also seeks to establish the CURES Fund Executive Cluster Committee to formulate guidelines in the administration of the CURES Fund and designation of the Executive Department or Agencies that shall receive applications, screen and vet and process for implementation of the HEAL IT projects.
“It is incumbent upon the government to establish both palliative and curative interventions.”
This Executive Cluster Committee shall be chaired by the Secretary of the Presidential Adviser for Flagship Programs, and with the Finance and Public Works Secretaries as vice chairperson.
Within fifteen (15) days from the approval of the CURES Act, the Executive Cluster Committee shall convene to formulate the implementing rules and regulations (IRR), which shall include the standard formula calculating the multiplier effect of the infrastructure project to be implemented, considering its effects on local employment and job creation as one of the primary screening factor in project selection and approval.
The Executive Cluster Committee shall establish and maintain an Open and Publicly Accessible Online Portal through which projects funded out of this Act may be monitored.
Villafuerte said a CURES Fund of P1.5 trillion is necessary because with the current global anti-COVID-19 response likened to a “war” against an invisible enemy, the effort to reverse its effects should similarly be as large as a postwar economic rehabilitation or recovery program.
He recalled similarly ambitious programs in the past, such as the Civilian Conservation Corps (CCC) program in 1933 to create three million jobs in the United States (US) during the Great Depression, the Economic Cooperation Act of 1948 or Marshall Plan that was enacted by the US Congress to rehabilitate its war-torn allies in Europe after World War 2, and the Emergency Employment Act of 1962 that was passed by the Philippine Congress to create an Emergency Employment Administration to carry out large-scale public works projects.
Villafuerte said this CURES proposal is akin to the “New York Forward” initiative of New York Gov. Andrew Cuomo to build back a State better than the pre-pandemic New York by addressing systemic issues that have limited opportunity and progress for all New Yorkers while making its economy and workforce more resilient to future pandemics.
As what the CURES Act’s authors hope to achieve through accelerated HEAL IT spending, Villafuerte said Cuomos’s “Build Back Better” plan aims to, among others, (1) harden the healthcare system for the next medical crisis by expanding tele-medicine and remote-healthcare options, (2) expand affordable housing while reducing density in crowded environments, (3) create new jobs in the field of manufacturing critical goods and supplies that the State now imports from foreign countries, and (4) widening equitable access to new technologies and broadband internet.
“The lessons of economic policy and history appear clear: infrastructure spending by the government directly increases employment because workers are hired to undertake construction projects,” Villafuerte said. “It also adds to demand for goods and services through purchases of material and equipment and through additional spending by the extra workers who are hired. This is what experts call the cumulative multiplier effect that makes infrastructure spending beneficial to economic recovery.”