PUBLIC SECTOR-LED PLANNING

Context and Rationale

Ernesto M. Serote
Professorial Lecturer
School of Urban and Regional Planning
University of the Philippines

SCURP 2019
A Basic Course in Urban and Regional Planning
Training and Extension Services Division
3/F Cariño Hall, School of Urban and Regional Planning
University of the Philippines - Diliman, Quezon City
11- 15 March 2019
Discussion flow
• Government, business, and the rise of the
“Third Pillar”
• The three-folding image of society today
• The State as “first among equals”
• Reserve powers of the State relevant to planning
• Planning as a primary function of the State
Government, business,
and the rise of the “third pillar”
 Throw back to pre-EDSA years
• Prior to martial law private business, led by a small but powerful
elite known as the oligarchs, wielded tremendous power and
influence, controlling much of the country’s resources and the
public and private bureaucracies. The Private sector was
paramount.
• Under martial law this oligarchy was supposedly dismantled. A
politico-economic system known as state corporatism run by
technocrats and bureaucrats coupled with authoritarian rule was
installed. Under this setup the state was the sole power that
determined the social, political and economic life and fortunes of
the nation and society. The State was paramount.
 During martial law
• Some of the old oligarchs were able to regain their privileged
relationship with government and, together with the
technocrats and bureaucrats established a new oligarchy.
The new oligarchs, this time called “cronies”, also exploited
opportunities for graft and corruption and misuse of
influence in government much like their predecessors did.
State corporatism took on a new name: crony capitalism.
Under crony capitalism, the State and the business sector
became close allies.
 The rise of the “third pillar”
“In any society, there is the state (manifested by but not equivalent to,
the government) and there is business (the private enterprise sector).
Both wield tremendous power impacting directly the people’s lives and
their environments, shaping their futures with what they do and how
they do it. Often both are accused of consolidating their power in an
unholy alliance that corners society’s benefits … at the expense of the
general public. … In 1990 the term “civil society” came in vogue to
represent what may be considered the third pillar in society. Known
variously as NGOs, PVOs, POs, CBOs, etc., civil society is a collection of
individuals and organizations which are independent of the government
and who manifest the will and interests of citizens.”
(Dr. Cielito F. Habito, former NEDA Director-General, quoted from his column “No Free Lunch”, Philippine
Daily Inquirer, 11/20/2012)
 From Government to Governance
• The rise of the third pillar created a three-folding image of
society and brought to the fore the concept of governance.
• Governance refers to the process by which individuals join
together to make collective decisions that are binding on all
participants. It is rule ordered and identifies the
mechanisms by which individual preferences are
aggregated into collective choices, and the mechanisms
governing how these choices are implemented and
administered. (Robert Stein 1990)
 Governance a broad concept
Governance is a broader concept than government. It is an
inclusive concept; it embraces the state, the private sector and
civil society: three critical agents for sustaining human
development.
The state creates a conducive political and legal
environment;
The private sector generates jobs and income;
Civil society facilitates political and social interaction –
mobilizing groups to participate in economic, social and
political activities. (UNDP)
The three-fold image
of contemporary society
 THE THREE-FOLD IMAGE OF SOCIETY
Social & Spatial Equity
Participatory Governance
Filipino Culture Promotions & Enrichment
•Knowledge
•Clarity & Coherence of Values
•Public Interest •Democratic Governance
•Advocacy CIVIL SOCIETY STATE •Securing Justice & Equity
(Culture) (Polity) •Safeguarding Public Interest

•Wage Levels •Fiscal Policies

•Humane Labor Practices •Infrastructure Support
•Nationalist Economics PRIVATE SECTOR •Labor Policies
•Appropriate Technology (Economy) •Business Climate
•Community-Based Resource •Environment-Friendly Production
Management
•Gender-Sensitive Workplace
o Production & Distribution of Goods and Services for Profit
o Creation of jobs and employment
o Contribution to capital build up
 Government – CSO Interface
• Concern for social and spatial equity – rationale for targeted
social services provision and regional development policy and
planning
• Promotion and enrichment of Filipino culture – top General
Welfare goal (Sec. 16, RA 7160)
• Participation and empowerment especially of the marginalized
• Important laws passed owing to strong civil society advocacy:
• Indigenous people – RA 8371
• Artisanal fisher folk – RA 8550
• Urban poor – RA 7279
• Upland dwellers – RA 7586
 Government – Business Interface
• Conducive business climate – granted by government, e.g.
one-stop shops
• Job security – denied by business, e.g. labor-only contracting
prevalent
• Fiscal incentives to private investments – granted by
government, e.g. tax exemptions, credits and rebates
• Environment-friendly production – some businesses comply,
others comply but grudgingly, and many ignore government
rules with impunity
 Business – CSO Interface
• Humane labor practices – granted by business only after long
hard bargaining
• Gender-sensitive work place – possible under more
enlightened business sector
• Acceptable labor-capital substitution (appropriate
technology) – necessary under conditions of massive
unemployment
• Nationalist economics – an imperative in a regime of
globalization and regional economic blocs
The State as
“first among equals”
 State powers that cannot be shared
• Although the three entities are seen as co-equal, the state enjoys certain
powers that are unique to it which inhere from its most important
attribute - sovereignty - and which it cannot share with other sectors,
such as:
• Police power
• Eminent domain
• Taxation
• National defense
• Administration of justice
• Foreign affairs
• Reserve powers of the State essential to local planning and
development – eminent domain, police power and taxation
 Eminent domain
Eminent domain – the power of compulsory land acquisition
under which land is taken from its owner for acknowledged
public purposes. But no private property may be taken
without due process and just compensation.
The implementation of projects generated by the plan
invariably involves the use of land for putting up the various
government facilities and services for the benefit of the
public.
 Because most lands are now privately owned, the taking of
private land for public purpose seems inevitable.
 Eminent domain and local government planning
A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise its power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and landless, upon
payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws, provided:
 that a valid and definite offer has been made previously to the owner but
such offer was not accepted;
 that upon filing the expropriation proceedings and upon making a deposit
of 15% of the fair market value of the property, the LGU may take
immediate possession of the property to be expropriated; and
 that the amount to be paid shall be based on the fair market value at the
time of the taking as determined by the proper court. (Sec. 19, RA 7160)
Public use, purpose or welfare
where eminent domain may apply
• Socialized housing
• Construction or extension of roads,
streets, sidewalks, viaducts,
bridges, ferries, levees, wharves, or
piers
• Construction or improvement of
public buildings
• Establishment of parks,
playgrounds, or plazas
• Establishment of market places
• Establishment of abattoirs
• Land banking for socialized housing
• Construction of artesian wells or
water supply systems
• Establishment of cemeteries and
crematories
• Establishment of drainage systems,
cesspools, and sewerage systems
• Construction of irrigation canals or
dams
• Establishment of nurseries, health
centers, or hospitals
• Building of research, breeding, or
dispersal centers for animals
 Police power
Police power – the inherent power of the government to
exercise reasonable control over persons and property within
its jurisdiction in the interest of the general security, health,
safety, morals and welfare.
Planning often requires regulating the actions and behaviors
of individuals and groups in accordance with socially
acceptable norms conducive to attaining peace and prosperity
in the community.
Regulation helps prevent undesirable behavior that tends to
neutralize the beneficial effects of government policies,
programs and projects.
Land use planning as regulation
of transactions in land
The Congress shall give highest priority to the enactment of
measures that protect and enhance the right of all the
people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the
common good. To this end, the State shall regulate the
acquisition, ownership, use, and disposition of property and
its increments. (Constitution, Art. XIII, Sec. 1)
Land use planning as regulation
of transactions in land
The use of property bears a social function, and all economic
agents shall contribute to the common good. Individuals and
private groups, including corporations, cooperatives, and
similar collective organizations, shall have the right to own,
establish, and operate economic enterprises, subject to the
duty of the State to promote distributive justice and to
intervene when the common good so demands. (Constitution,
Art XII, Sec. 6)
 Local Sanggunian and regulation of land use
 In the case of cities and municipalities:
 Prescribe reasonable limits and restraints on the use of property
 Adopt a comprehensive land use plan for the municipality/ city
 Reclassify lands within the jurisdiction of the municipality
 Enact integrated zoning ordinances
 Approve subdivision plans for residential, commercial, industrial, and
other development purposes
 In the case of provinces:
 Review and approve the comprehensive land use plans and zoning
ordinances of component cities and municipalities and adopt a
comprehensive provincial land use plan.

(Ref. RA 7160, Sec. 447, 458 and 468)

 Police power applied in planning
• Zoning - an instrument of the police power implemented at the local
level (city and municipal) to ensure proper location of development.
The regulation by districts of the height, bulk, and use of buildings, the use of
the land, and the density of population. (ASPO)
The power of the government to intervene in the lives of private citizens for
the protection of public health, safety and welfare.
• Subdivision Regulation – another instrument of police power to
control the division of larger parcels of land into individual building
lots to ensure compliance with standards of lot size and shape, of
access roads and other facilities and utilities, and the requirement of
functional open space are properly complied with
Police power applied in planning

• Building Regulation – to see that the structural integrity

of all buildings; the safety of building sites; and the
standards of sanitation are followed.
• Implementation of environmental laws, e.g. Ecological
Solid Waste Management Act (RA 9003); Clean Air Act
(RA 8749); Clean Water Act (RA 9275)
 Taxation
oTaxation – the imposition by the State of financial obligation on
persons within its jurisdiction for property owned, income
earned, business or profession engaged in, for the purpose of
raising the necessary revenue to take care of the responsibilities
of government.
• Is a means to raise funds to finance essential public services
and facilities,
• As a mechanism to equalize social opportunities, and
• As a regulatory measure to ensure the proper use of land and
other resources for the general welfare.
 Land use planning and the real property tax
The basic real property tax – a tax levied on the owner of the
land, not for the use of the property but for the privilege of
owning it. This explains why squatters, renters, lessees, and
the like, do not pay taxes on the lands they occupy and use.
For the same reason, the practice of some LGUs of collecting
the realty tax from occupants of forest lands on the strength
of tax declarations is hard to justify.
Special levies on land – addition taxes imposed on the
property owner for specific purposes.
 Special Levy 1: Special Education Fund
• The Special Education Fund – an additional 1% tax the
proceeds of which is exclusively used for the maintenance
and operation of public schools (RA 7160, Sec. 235). A trust
fund, the SEF is administered by the local school board for
the construction and repair of school buildings, facilities and
equipment, conduct of educational research, purchase of
books and periodicals, and development of sports.
 Special levy 2 : Idle lands tax
 The Idle Lands Tax – an additional imposition of up to 5% of
the assessed value of properties considered as idle (RA 7160,
Sec. 236-239). Not so much a revenue-raising tool as a
regulatory measure to prevent speculative hoarding of land,
this tax also “compels” property owners to invest in the
improvement of their land for their own and the community’s
benefit as well as to increase the tax base of the local
government concerned. For purposes of land use planning,
the idle lands tax can be used to intensify development is
areas identified in the CLUP as areas for urban expansion or
redevelopment in accordance with the desired urban form or
approved spatial strategy.
Special levy 3: Special benefit levy
The Special Benefit Levy – an assessment on lands in the immediate
vicinity of, and are specially benefited by public works projects (RA
7160, Sec. 240-245). The tax allows the LGU to recover up to 60% of the
cost of the project from contributions from property owners who stand
to benefit greatly from the project in the form of tremendous increase
in land values. The special benefit levy is consistent with the social
justice principle that anyone who is rendered worse off by a public
policy or action is entitled to “worsement compensation” and anyone
who is made better off by the same policy or action must return the
undeserved benefit to society.
Special levy 3: Special benefit levy
 Currently, only the worsement compensation is claimed by property
owners affected by eminent domain proceedings. The betterment levy
to which government is entitled remains uncollected, depriving society
of a substantial source of funds for public infrastructure projects.
 If worsement compensation and betterment levy are applied in tandem,
it may turn out that no actual payment needs to be made either way. In
effect, the affected property owner “donates” part of his land in
anticipation of the benefits he stands to reap from the remaining part
once the project becomes operational. The Americans call the practice
trading wipeouts for windfalls. In colloquial Filipino “kwits na tayo”.
Special levy 4: Socialized housing tax
Socialized housing tax – consistent with the
Constitutional principle that the ownership and
enjoyment of property bear a social function … all local
government units are hereby authorized to impose an
additional one-half percent (0.5%) tax on the assessed
value of all lands in urban areas in excess of fifty
thousand pesos (P50,000.00) (Section 43, RA 7279)
Planning as the principal
function of the State
What Filipinos want from the government
In a comparative survey of Filipinos, Thais, Taiwanese, South Koreans, Japanese
and Americans, on whether people hold their government responsible for
providing certain things or conditions for them, the International Social Survey
Program has found:
 that Filipinos are so much more demanding of government services than the
other nationalities as to appear to be seeking a full welfare state;
 that the Filipinos are the least demanding of government to reduce income
inequalities between the rich and the poor; and
 that Filipinos are paying the lowest tax to finance government services (i.e.
17% as against 21% Thailand, 25% in S. Korea, 26% I the US and 31% in Japan.
Full welfare stated like Denmark, Norway, Sweden and Finland tax away half of
their GDP.)
[Source: Social Climate, column by Mahar Mangahas, PDI April 28, 2018]
 Survey results:
What people demand from government
Government should …. (%) PH TH TW SK JP US
1. Provide health care for the sick 97 93 89 85 70 85
2. Give financial aid to university students from low- 97 92 85 83 58 87
income families
3. Provide a decent standard of living for the old 95 87 89 83 68 87
4. Keep prices under control 94 89 95 93 81 71
5. Provide a job for everyone who wants to work 92 83 76 58 38 35
6. Provide industry with the help it needs to grow 89 74 83 76 63 71
7. Provide decent housing to those who can’t afford it 88 77 75 74 32 74
8. Provide strict laws to make industry do less damage to 88 89 94 88 74 88
the environment
9. Promote equality between men and women 86 80 84 57 60 83
10. Provide a decent standard of living for the unemployed 82 67 64 65 46 55

11. Reduce income differences between the rich and the 66 84 83 81 56 54

poor
The State as responsible for planning
Provides social goods and services
Facilitates market transactions
Arbitrates between contending social groups
 Engages in social engineering
 The State as reliable provider of goods and services
(Or, when the market is reluctant to provide)

• Presence of natural monopolies involving huge capital

investments (airports, seaports)
• Non-rival goods, i.e., only the State can provide (national
defense, foreign affairs, justice administration)
• Merit goods, e.g. clean safe water, are perceived to be every
individual’s entitlement and people help themselves by all
means, fair or foul
• The “free rider” problem: when non-paying consumers
cannot be excluded
 The State as reliable provider of goods and services
(Or, when the market is reluctant to provide)
• Presence of externalities – unintended effects of providing a good or
service
- Positive, when those who are not involved in the activity reap the
benefits of the service provided free of charge, e.g. public health, its
spillover (healthy community) is perceived as unprofitable for private
practitioners, the service tends to be under-provided [concept of herd
immunity]
- Negative, when those who are not involved in the activity are made to
suffer but the producers are allowed to “get away with it”, e.g.
environmental pollution, there is a tendency to over-produce [practice of
impunity]
Concept of herd immunity
“[Public health] vaccines work by providing immunity for
strains of prevalent diseases, not only for individuals, but also
for the community. This is due to herd immunity.
“The concept of herd immunity means that if a significant
portion of the group is already immune or vaccinated, even
those who are not vaccinated have a measure of protection.
“The refusal of parents to have their children inoculated, isn’t
just a personal decision but also a public health concern,
because the refusal of a few can affect the health of many. “
- Dr. Kay Chua Rivera (in IAMGENM column, PDI, Feb. 9, 2018)
 IMPUNITY IN PRACTICE
“Paradise Lost”
(Excerpts from The Inquirer editorial, Feb 15, 2018)
• Boracay was visited by 2 M tourists,
grossing Php 56 B in revenues and creating
thousands of jobs in 2017.
• Pres. Duterte threatens to close down the
1,032 ha island resort due to sewage and
garbage problems. Items:
- coliform bacterial levels on the east side
are well above the acceptable standard;
- green algae coating the water and foul
smell are blamed on untreated sewage
draining into the sea.
• Greed has played a major part in Boracay’s
deterioration. Items: Only 25 out of 150
business establishments are connected to
sewer lines to cut operation costs.
- 293 out of 340 lodging houses are in
violation of the 30 m easement
prescribed by local ordinance.
- Trash piles abound everywhere or
thrown into the sea.
• There are enough national laws and
local ordinances but these are not
implemented strictly. Citizens note:
“Local officials have been complacent,
helpless and easily impressed by big
business…have been extremely remiss in
their duties…even those in DENR are
sleeping on the job.”
“There is a great deal of corruption that
has piled up for 40 years.”
The State as facilitator
of market transactions
Modes of Facilitating the Market
Examples of facilitation: The production function

 Production support infrastructure (efficient transport &

communications, post-harvest facilities to minimize losses)
 Reduction of tariffs on import and export of materials & finished
products
 Reduced transaction costs through one-stop shops, programmatic
ECC, no graft and corruption
 Absorbing part of the risk of new investors, e.g. guaranteed profit
levels, assurance of peace and order, stable foreign exchange rate
 Maintaining livability and attractiveness of the locality for both living
and making a living.
Examples of facilitation: Consumption
Direct transfers to the poorest of the poor to meet basic
needs (CCT)
Unemployment insurance
Promotion of full employment and job security in the
private sector
Raise in salaries and wages
Grant of non-wage benefits
Price control or stabilization of basic commodities
Public sector-created jobs
The State as arbitrator
between contending groups
Existing Infrastructure for Arbitration
Extensive infrastructure for justice administration
 Municipal trial courts
 Metropolitan trial courts
 Court of Appeals
 Supreme Court
Special courts
Peace and Order Councils
Lupong Tagapamayapa
The State as
social engineer
 Social Engineering Role of the State
Capacity to produce comprehensive rational solutions to
social problems
Maintaining social equity, harmony and peace
Restructuring social relations through diffusion of the locus
of power
 Soft approach – values formation
(families, schools, churches, etc.)
 Hard approach – restructuring society
(land reform, land use planning and zoning, etc.)
 How to achieve social equity: Soft approach
Social equity is a matter of
the heart. It cannot be
promoted by means of
legislated rules. What is
needed to achieve it is the
soft approach to social
engineering – values
formation.
If only everyone moderated
their greed. . .
Spatial planning:
A hard approach to social engineering

Spatial planning is the control or regulation

of the acquisition, ownership, use and disposition
of land (or more generally, space)
to influence social and economic processes
in order to achieve economic prosperity,
social equity, and environmental integrity.
Without planning . . .
• If the logic of the market is given free rein, and
people are free to follow their natural tendencies,
economic and social processes will control the
acquisition, ownership, use, and disposition of land
(and space, in general) – mediated by GREED –
resulting in economic inefficiencies, social
inequalities, and environmental degradation.
URBAN DEVELOPMENT
If unplanned can lead to social
inequalities, economic inefficiencies,
and environmental degradation.
 With
planning ….

Through proper
urban planning
and effective
regulation, living
in cities need not
be a horrible
experience. In
fact, it should be a
pleasurable one.
CODA
For planning to succeed,
the State
must exercise its reserve powers
as the
“first among equals”.

But how is the State doing

so far?
“The creeping privatization of government”
(Joel Ruiz Butuyan, “Flea Market of Ideas”, Philippine Daily Inquirer)

• The sole justification for government’s being is to • Private sector conquest of public services has
perform services needed by the people. extended to security and judicial services as
shown by the ubiquitous “blue guards” and the
• There was a time when the range of public
growing trend towards arbitration rather than
services was extensive. The government was the
court cases to settle disputes.
principal provider of community needs.
• When people get increased incomes they shift to
• When government encountered problems of
paying for privately provided public services,
inefficiency and insufficiency of funds, it
private schools, private hospitals, private cars.
encouraged the private sector to engage in the
Thus, any income increase attained by people is
business of providing public services.
captured by private companies providing public
• Big private companies enthusiastically responded services.
and found that tremendous income can be
• This may be one reason many of our people
gained from any business that provides public
continue to feel poor not withstanding the
services.
unprecedented growth in our economy.
• Privately provided services like schools, hospitals
• It is time to pause and rethink this creeping
and transport are patronized by the rich while
government schools, hospitals and public privatization of the government.
transport are patronized by the poor. (This is a paraphrase from the original for the sake of brevity.)
“To those who are fully alive, the
future is not ominous but a
promise…”
John Dewey
 DOLE Dept. Order 174 “End to ENDO”
Prohibits the following acts:
• Labor-only contracting.
• Farming out works by a principal to a
“cabo” (a person or group supplying
workers with or without any monetary or employees of principal.
other consideration, whether in the
capacity of the employer’s agent or an
independent contractor).
• Contracting work through an in-house
agency or cooperative.
• Contracting work because of strike or
lock-out.
• Contracting work being performed by
union members.
• Requiring employees of contractor
or subcontractor to do work
currently performed by regular
• Requiring employees to sign an
antedated resignation letter; a blank
payroll; a waiver of labor standards,
including minimum wages and social
or welfare benefits, or a quitclaim
releasing the principal or
subcontractor from liability in paying
future claims; or requiring them to
become members of a cooperative.
DOLE Dept. Order 174 “End to ENDO”
Prohibits the following acts:
• Requiring employees to sign a
contract fixing the period of
employment to a term shorter
than the term of service
agreement, unless the contract • Other practices, schemes or
is divisible into phases for which
substantially different skills are
required and this is made
known to the employee at the
time of engagement.
• Repeated hiring of employees
by contractor or subcontractor
under a contract of short
duration.
employment arrangements
designed to circumvent the
right of workers to security of
tenure.
 “Re-municipalization of public services”
(Excerpts from Human Face by Ma. Ceres P. Doyo, Inquirer, 2/22/18)
• The Asia Europe People’s Forum -Thematic Circle on • Selected cases of remunicipalized public
Social Justice held a forum recently on the subject of services:
how public services are now being reclaimed by  In Oslo, Norway, waste collection was taken
citizens who had been in the grip of private back from a private service provider in 2017.
enterprises that made profit out of dispensing public
 In Delhi, India, a winning political party
services. delivered on its promise to provide affordable
• AEPF notes how public services essential to a life of health care by putting up 1,000 community
dignity and security have become increasingly clinics.
inaccessible to millions world- wide while in private  In Grenoble, France, the city became the
hands and states continue to cut subsidies. States pioneer in water remunicipalization when it
have relinquished to profit-making corporations the ended the contract of a corrupt multi-national
task and duty to provide public services. This has provider in the 2000s.
ffected mostly the vulnerable sectors.  In Lithuania, central heating was
remunicipalized after investigation showed
• Remunicipalization is the process by which people price manipulation.
reclaim privatized public services and bring them
back to be managed by local governments. The Transnational Institute has recorded 835
other examples in1,600 cities in 45 countries.
• Other newly coined terms like renationalization and
deprivatization are directed to fighting the ills of
privatization.
Good luck to all of us!