Conditional Cash Transfers (CCTs): Temporary, Diversionary and Indefensible

June 11, 2015

by superadmin

IBON Features | October 2010 | The retrogressive character of the CCTs is most of all defined by its defense of neoliberal macroeconomic policies.

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IBON Features—The Aquino administration’s conditional cash transfers (CCTs), which take up the largest part of its Pantawid Pamilyang Pilipino Program (4Ps), have many points of appeal. Giving cash to poor families appeals to those inclined to charity. Those concerned about social welfare appreciate the focus on maternal and child health and on basic education. Technocrats in turn are comfortable talking about ‘human capital’, ‘household targeting systems’, ‘social resiliency’, ‘social protection’ and measurable deliverables.

Yet while CCTs at first glance seem unobjectionable, looking at them from a progressive social development perspective and in the concrete conditions of the Philippines raises some serious concerns. They may well provide welcome relief to beneficiary families but if the economy still does not get the radical reforms it so badly needs then the root causes of poverty will remain – and Filipinos will remain as poor as ever.

4Ps/CCT numbers

The mechanics of the Department of Social Welfare and Development’s (DSWD) 4Ps/CCT program are straightforward. It will give cash grants to beneficiary households complying with the following conditions: pregnant women avail pre- and post-natal care and have a trained health professional at childbirth; children 0-5 years old receive regular health check-ups and vaccinations; children 6-14 years old take de-worming pills twice a year; children 0-14 years old attend day care, pre-school, elementary or high school (as appropriate) at least 85% of the time; and parents attend ‘family development sessions’.

Beneficiary households will receive PhP500 per month upon complying with the health conditions (or PhP6,000 per year) and PhP300 per child per month, up to a maximum three children, for the education conditions (or PhP3,000 per child for the 10-month school year). A household with three qualified children can then potentially receive PhP1,400 per month during the school year or as much as PhP15,000 annually. The cash grants can be received for at most five years, most likely through a Land Bank ATM/cash card given to the mother.

CCTs were piloted in a few thousand households in the last half of 2007. Formal program implementation started in 2008 and was targeted to reach one million beneficiaries by 2010. The Aquino administration is dramatically expanding the program which now targets to reach 2.3 million households in 2011 (2.6 million by other reports) and up to four million beneficiaries by 2016. To achieve this, the 4Ps budget has been increased from PhP10 billion in 2010 to PhP29.2 billion for 2011, of which PhP21.2 billion is for the implementation of CCTs. The current secretary of the DSWD estimates that related administration costs are around PhP1.9 billion annually, reaching over PhP4 billion if other costs such as trainings to implementers, parent-leaders and communities are also included.

Disguising poverty

The large numbers have intuitive appeal especially considering the stubbornness, breadth and severity of poverty in the Philippines. Seven out of ten Filipinos (70%) try to meet their food, shelter, clothing, medical, education and other basic needs with just PhP86 per day; at the very bottom, one in three Filipinos (33%) try to live off PhP41 or much less per day.

The proposed cash transfers are significant amounts for the country’s poorest families. The poorest 10% of Filipino families have a monthly income of about PhP2,700, the next poorest 10% around PhP4,200 and the next poorest 10% around PhP5,400, according to the latest 2006 Family Income and Expenditure Survey (FIES). The maximum PhP1,400 could then increase monthly family incomes by 26% to, in the case of the poorest families, as much as 52% or more. Likewise, any genuine improvements in health and education outcomes for mothers and children are undoubtedly welcome. The program does however increase the work burden of poor women insofar as they will be the ones mainly responsible for ensuring compliance with the health and education conditions, and will also be attending the monthly family seminars.

The impact of the 4Ps/CCT scheme on genuine poverty eradication is however likely overstated and, indeed, the program even appears to be used for purposes that will actually worsen poverty and undermine the welfare of Filipinos in general.

The first concern regarding the scheme is that the supposed benefits in terms of improved ‘human capital’ are not certain especially in the specific conditions of the Philippines. The country remains saddled with insufficient and poor quality educational and health facilities which may not be able to absorb the additional users. Further straining limited classrooms and teachers might even drag down the quality of instruction for existing students, and similarly with overburdening health facilities and personnel. The desired health improvements or learning outcomes for beneficiaries may then not materialize for many. This underscores the important requirement of a responsible state in any CCT program, the ‘condition’ of which should be the state fulfilling its obligation to the people.

There are also grounds to believe that the billions of pesos committed will not all be going to their intended purposes. There is likely to be insufficient administrative capacity to properly implement the ambitious 4Ps targeting, monitoring and compliance procedures. Entering the 4th quarter of 2010, for instance, the DSWD is apparently still some 212,000 short of a supposed one million target household beneficiaries – yet it seeks to suddenly reach more than double this amount as soon as next year. The entrenched tendency to corruption and abuse for patronage purposes in national and local government, especially of such large lump sum funds as the CCT, is also a formidable problem. It is thus alarming to note that state ends up shelling out more revenues just to be able to implement the CCT program.

Significant numbers of the country’s very poorest are even beyond the reach of the program. This includes those without permanent residence (because lacking stable jobs or livelihoods, or informal settlers in contested communities), homeless families, poor elderly without children, and others. On the other hand, significant numbers of those reached might not even be among the most needy or might already be among those who were already complying with the CCT conditions even before the program reached them.

The CCT program may also be overestimating the potential benefits from developing ‘human capital’. There are some 4.6 million unemployed Filipinos in the country of whom nearly nine out of ten (87%) are reasonably educated – 44% are high school undergraduates or graduates, and 43% are at least college undergraduates or graduates. This underscores how, in overall economic conditions of poor jobs prospects where even having a high school or college degree is no guarantee of getting work, it is unrealistic to assume that having attended school or being healthier as the CCT targets will result in eventually having productive and decent-paying employment.

Secondly, the 4Ps/CCT program will be a smokescreen to prop up support for the sort of neoliberal ‘free market’ policies of globalization that caused greater poverty and underdevelopment to begin with. The retrogressive character of the greatly expanded CCT program is most of all defined by its defense of neoliberal macroeconomic policies. The larger ‘social protection’ budget is going to be used to mitigate the social consequences of these exclusionary policies, rationalize their continued implementation, and to press for even more. The program could also conceivably improve the country’s poverty picture in time for the 2015 global deadline to meet the United Nations (UN) anti-poverty Millennium Development Goals (MDGs), when the neoliberal policy trends of the last decades will unavoidably come under greater scrutiny. Overall, however, the situation will likely be akin to the experience with ‘safety nets’ during the bygone era of structural adjustment and stabilization programs: short-term benefits of CCTs for a few beneficiaries will be more than offset by the long-term costs of ‘free market’ destruction of jobs and livelihood (including for erstwhile CCT recipients).

The affinity of CCTs to neoliberalism is evident. They are justified as ‘efficient’ in focusing on ‘deserving poor’, children are ‘human capital’ to be invested in for their future income-generating capacity, and the role of ‘individual responsibility’ in social poverty is overstressed – while the government is excused for privatizing essential social services because the welfare intervention has shifted to selective cash transfers. Yet it is precisely publicly-provided education and health services that offer the best prospects for genuinely universal access by all Filipinos, especially the poorest. Because it distributes cash only to selected targets, the program is not a step towards achieving the goal of universal access for all poor families.

Third, the CCTs provide vital short-term income relief but nonetheless remain dole-outs. The CCT is a dole-out because beneficiaries get money in exchange for something unrelated to their labor as productive individuals – thus contradicting the concept of ‘human capital’ for social investment. Moreover, it is discretionary in nature and beneficiaries will get money only as long as such a program is in place. The ingrained pattern in the national government budget to sacrifice social services during recurring periods of rising debt payments and fiscal austerity is a particular source of uncertainty and volatility.

Increased indebtedness

The CCT program and its undesirable outcomes will even come at the cost of increased debt for the country. The Philippine government has so far incurred at least US$805 million in debt to finance its CCT program, or some PhP35 billion at current exchange rates. The World Bank push for CCTs started with technical assistance for a National Sector Support for Social Welfare and Development Project in 2006. In November 2009, the WB approved a US$405 million loan for the Social Welfare and Development Reform Project (SWDRP) which among others covered cash transfers for some 376,000 households. Similarly, the Asian Development Bank (ADB) provided related technical assistance from 2007 to 2009 and, in September 2010, approved a US$400 million loan for a Social Protection Support Project (SPSP) providing financial support for 582,000 households. The World Bank and ADB have been among the most sustained advocates and sources of pressure for neoliberal globalization policies in the Philippines.

These are loans for uncertain or even doubtful ends. For instance, a UN flagship report on poverty launched in September 2010, referring to “[social protection programs that] target based on income and [that] impose conditionalities,” says: “These principles are questionable and do not necessarily produce the expected results, especially when investments in the programmes are minimal and not supported by efforts to tackle the structural causes of economic insecurity.” Tempering the pro-CCT hype and notwithstanding support for such initiatives by external donors, the UN report says that “the benefits of narrowly targeting social assistance are questionable” and that “targeting based on income entails high costs, stigma and fails to reach the poor”.

Indefensible expansion

All things considered, the conspicuous expansion in the program has raised justifiable suspicion. For instance, the multi-billion peso expansion does not appear justified by any comprehensive program assessment. The DSWD says that two assessments of the 4Ps were conducted – Pilot Spot Checks and Qualitative Evaluation and a Social Weather Stations (SWS) survey in the first quarter of 2010. If the pilot spot checks refer to the program’s pilot implementation in 2007, this experience only covered 6,000 households and an evaluation based on ‘spot checks’ of apparently just some 760 households is far from ample. Moreover, the results of this evaluation were not even of overwhelming success with poor or lackluster results on targets such as de-worming, full immunization, and deliveries being attended by trained health professionals.

The poor and worsening welfare of tens of millions of Filipinos is a serious development challenge. A genuine poverty-reduction effort means fundamental changes in economic policy towards improving the country’s domestic productive sectors. The severe income, wealth and asset inequities in the country also mean that radical redistributive reforms in favor of the poor majority are in order. Universal access by all Filipinos to health and education will be more likely achieved through strengthened public health and education systems, not privatized ones and certainly not by selective, targeted and temporary interventions. If these progressive socioeconomic policies were in place then programs such as the 4Ps/CCTs would not be necessary – and without such policies no amount of 4Ps/CCTs will ever be enough. IBON Features