Top-down administrative incentives

It is generally acknowledged that decentralization in the Philippines has worked to a certain extent in enabling civic involvement in local public affairs and innovations in the ways that local public services can be financed and delivered (Bril-lantes, 2003). However, at the same time there is a sense that much more could be achieved and improved. Local government performance remains uneven, and there are at least as many or more bad practices as there are good ones. Possible explanations for variation in local government performance have been explored.

Some also argue that economic development level may play a role in determining the quality of public services - as much as we would like to acknowledge that better public services are likely to trigger local development (Capuno, 2005).

From the central government’s point of view, a performance management system is needed to ensure that LGUs deliver quality public services at the local level. The Philippines had already established the Local Productivity and Performance Management System (LPPMS) in the 1980s, but when decentralization began much of the focus was on local government capacity building rather than performance monitoring. The LPPMS was revived in 1998, and since then it has been further developed and supplemented with other systems. One of these is the Local Government Performance Management System (LGPMS), which helps LGUs to conduct self-assessment of how they are performing in their functions. Other systems include the Citizens’ Satisfaction Index, the Seal of Good Housekeeping, and Seal of Good Local Governance (Adriano and Estimada, 2014; Medina-Guce, 2016). A list of the tools to measure and improve LGU performance that have been implemented in the Philippines has been compiled by Capuno (2005).

The Seal of Good Local Governance (SGLG), which expands on the earlier Seal of Good Financial Housekeeping (SGFH), is awarded to LGUs that show satisfactory performance in three “core components” (good financial housekeeping, disaster preparedness, and social protection) and three “essential components” (business friendliness and competitiveness, peace and order, and environmental management) (Medina-Guce, 2016). The more comprehensive SGLG has raised the bar for performance: while as many as 1,535 LGUs passed the Seal of Good Financial Housekeeping in 2016, only 306 LGUs passed the SGLG that year.3

Aside from the standard, compliance-related performance management system described previously, the Philippines is also implementing the Performance Challenge Fund (PCF). This is a fiscal incentive for LGUs that initially pass the SGFH and ultimately the SGLG by providing a maximum of 50% “counterpart funding” for larger-scale local development projects that otherwise do not have sufficient resources for implementation.4 There are four categories of PCF-eligible projects: those that aim to improve the achievement of (1) the Millennium Development Goals, (2) local economic development, (3) disaster risk reduction and management, and (4) ecological solid waste management. The PCF started small in 2010 with a budget of P 30 million for 30 municipalities. In financial year 2015, as much as P 982 million was budgeted to 254 LGUs that qualified. As of May 2017, PCF had recorded a total of 2,698 encoded projects, of which 2,585 had been completed.5

A good performance management system does not reward only compliance but also innovations. In the developing world, the Philippines is among the first to acknowledge local public-sector innovations through awards. Started in 1993, not long after the country embarked on decentralization, the Galing Pook (GP) Awards were launched to “recognize innovation and excellence in local governance” (Brillantes, 2003). This started as a joint initiative of the Department of Interior and Local Government, with support from the Ford Foundation and

Improving city government performance 21 other high-profile national and local figures. Four judging criteria were used to determine the award winners: positive results and impact, promotion of people’s participation and empowerment, innovativeness, and efforts to ensure transferability and sustainability of the program. Now in its 24th year, the award organizers hold a wealth of data on innovative city governments and programs in the Philippines. Every year, the GP Awards are given to 16-20 local programs, reaching a total of338 awardees as of2015.6 These 338 local programs are spread over multiple sectors, ranging from economics/livelihoods to environmental protection and to community involvement in public affairs. The awarded programs have come from various regions of the Philippines, conducted by barangays, cities, municipalities, and provinces alike.

Some LGUs have won more awards than others. As many as 35 out of 81 provinces (43.2%), 59 out of 145 cities (40.9%), and 99 out of 1,488 municipalities (6.6%) have won a GP award at least once. Between 1993 and 2015, 14 cities won an award three or more times, and eight cities won at least four times: Naga City in Camarines Sur (ten times), Marikina City in the NCR (eight), Quezon City in the NCR (seven), Cebu City in Cebu (six), San Carlos City in Negros Occidental (six), Puerto Princessa in Palawan (five), Mandaluyong in the NCR (four), and Muntinlupa in the NCR (four).

Bottom-up political incentives

While national directives and incentives to improve local performance are indeed helpful, they address only one of the two characteristics that make the concepts of federalism and decentralization as argued by Tiebout (1956) so attractive. The other is the role of citizens in putting pressure on local governments to deliver the services that they require.

Decentralization in the Philippines has taken place simultaneously with democratization, whereby the autonomy of local government leaders from the central government is balanced by their accountability to the citizens who voted for them. Provinces, cities, municipalities, and barangays conduct local elections every three years. The mayor, vice mayor, and city councilors each serve a three-year term and can serve a maximum of three consecutive terms (nine years). The LGC 1991 provides the legal and institutional means for the people to participate in local government affairs beyond elections. These include joint ventures between the LGU and NGOs, people’s organizations, and the private sector. Members of the public are also eligible to participate as members in special committees or councils that govern how public services are to be delivered, such as the local school board, the local development council, etc. (Alinio, 2008).

Even in the presence of a democratic system of governance, decentralization in the Philippines has not resulted in better public services and more responsive local governments. Some authors have explored deep-rooted institutional factors to explain why this is so. One of the often-cited issues is elite capture of local institutions due to the existence of strong patronage systems (Shair-Rosenfield, 2016; Yilmaz and Venugopal, 2013). Political parties at the locallevel are arguably weak, and politics tends to be dominated by personalities (Kasuya, 2009); thus it is not uncommon to find political leadership at the local level dominated by strong families (“clans” or “dynasties”) and even alliances of corrupt bureaucrats, clan leaders, business interests, and criminals (Lacaba, 1995; Side!, 2004). The 1987 Constitution discourages political dynasties by stating that: “The State shall guarantee equal access to opportunities for public service and prohibit political dynasties as may be defined by law”.' However, to date there has been no legal definition of a “dynasty”, and thus the phenomenon has persisted (Querubin, 2012).

Despite this pessimistic note, society is not static, and the relationship between elites and citizens is constantly changing - although perhaps not as fast as regulations can change. Institutions can be tweaked, and, with the right form of intervention, voters can become more demanding and elites more accommodative. For example, one study found that when the performance rating of a local government was publicly announced to the people through accessible media and language, mayors and barangay captains showed signs of being more responsive to their citizens (Capuno and Garcia, 2010). Another study found that higher government spending on economic development projects tends to help an incumbent governor to win re-election (Solon et al., 2009). These seem to indicate that democracy and voter pressure can have an effect, even after controlling for the presence of clans.

This exploration of decentralization, top-down incentives, and bottom-up incentives of local government performance in the Philippines demonstrates, I would argue, that there has been an evolution in how decentralization is being managed, including small improvements in both top-down and bottom-up incentives. The Philippine case shows that progress is possible, though slow. Next, we turn to Indonesia, where the experience of decentralization is about 10 years younger than the Philippines.

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