I. Economic Program

We believe that the market is the best basis for providing opportunity and prosperity. Government’s role should be to guarantee competition, through;

1. Ensuring that the market works as effectively as possible. This means liberal markets and open competition, both domestically and internationally. It means action to remove barriers, to lower costs of entry into the marketplace (this is of particular importance to small businesses and the self-employed), and to encourage individual enterprise. It means a market driven by consumer choice, rather than producer power. It means providing the public investment necessary to create the climate for private enterprise to prosper. This includes an infrastructure which allows efficient mobility of goods, and a social structure which provides the maximum flexibility of labor compatible with fair treatment of employees. And this in turn means moving towards the full protection of rights at work defined individually and protected by statute.

2. Taking action to correct market failures. This includes preventing industry and consumers from distorting the market by ignoring environmental costs. It means that barriers of discrimination that would otherwise exist – against women who are likely to have children, for example, or against people with disabilities – are dismantled. It means, crucially, correcting the unfettered market’s tendency not to invest in human resources – as a skilled and adaptable workforce will be necessary to meet the economic challenges of the new century. On a wider scale, it means setting a framework of long-term forecasting, thinking and research that the market left alone usually ignores.

3. Ensuring that ownership is spread as widely as possible at all levels (including in the workplace itself). This implies a commitment to equity considerations, job ownership and to participation in decision-making at work.

To enable such market to work, government must create stable conditions in the economy. Chief amongst these are low inflation, stable exchange rates, a vibrant domestic market and low tariff and non-tariff barriers to external trade.

To meet these objectives, the Liberal Party shall undertake:

1. Economic Stabilization

What the economy needs is a new impetus. The government’s proposals will not achieve this. Only new investment will provide the kick-start needed to escape from recession and reduce the waste of talents and escape which results from unemployment.

Liberals recognize the Philippines’ long-term needs. We are committed to a competitive and enterprising economy. We do not believe it is government’s job to run business-people do that much better. We see government’s role as encouraging competition, investing in skills involving employees in the success of their companies, nurturing small business, playing positive part in the construction of the new Southeast Asian economy and above all bringing greater stability to national economic management.

A. Turn the Country Around

The current recession is undermining our future success. Massive lay-offs, business closures, unemployment and underemployment lead to major wastage of talent and resources. At the same time, essential investment in infrastructure, in education and training and in innovation, is being neglected.

Liberals will introduce an emergency programme of investment to end the slump- major programme of public capital investment, jointly funded by the government and private investors (i.e., such as through the B.O.T. scheme), perhaps together with a prudent increase in borrowing. This combined with a freeze in interest rates and investment in education to increase the nation’s skills, will kick-start recovery and create jobs, we will:

• Invest in local economies. We will encourage Small Scale Enterprises to become strong, locally based, employer-led organizations providing business services, acting as an effective voice for business at local level, and overseeing training of those in employment. We will encourage decentralization of financial institutions. We will end the present Government’s policy of clawing back authority from local governments.
• Investment in infrastructure. We will provide support for transport infrastructure, including a dedicated expansion of our existing rail and navigation system to connect the capital with the major routes throughout the country, and the extension of electrification throughout the country. We will encourage the expansion of airports and seaports outside Luzon.

• Freeze-business rates this year, thus effectively reducing them in real terms, a larger reduction than that which the Government is prepared to do.

• Stimulate competition. We will take tough action against monopolies, combinations in restraint of trade and those who manipulate the financial and FOREX markets. We will introduce a Restrictive Practices Act to penalize anti-competitive behavior and end price-fixing by cartels. We well encourage greater competition in the banking sector.

B. Make the Philippine Economy Competitive

Creating long-term prosperity. We will change the ways in which economic policy is made and implemented to bring greater stability and a sensible framework to economic management – ending the present ‘boom, bust’ approach. Long-term private investment in the production of high-quality tradable goods and services is essential for long-term success. This will only be possible in a climate of investment, enterprise and partnership. This climate of enterprise and competition is vital if Philippine industry and products are to compete effectively is overseas market. We will:

• Break up monopolies. We shall level the playing field through the dismantling of monopolies in public utilities, agricultural trade and energy generation and distribution, and by ensuring that business incentives apply to all except for the industries targeted for accelerated development.

• Launch an all-out mobilization of Filipino capital in support of a vigorous program of industrialization and employment creation.

• Promote the accelerated transformation of the economy into a modern and industrializing one by targeting the high value-added industries that will allow the country to catch up in the development process.

• Promote consumer rights. We will take the lead to ensure that all products come with accurate, full and simple product and service information. We will give consumer watchdogs greater powers, and improve redress for inadequate goods and services.

• Build partnership in industry. We will ensure that every employee has a right to participate in decision-making in their enterprise. We will set up a program for Industrial Partnership to help companies and their employees find the precise form of partnership which best suit them.

• Invest in research, innovation and design. We will immediately increase the science and technology budget and raise it steadily thereafter. We will establish regional technology transfer centers to bring together the resources of industry to invest in innovation and to provide seedcom capital.

• Reform taxation to increase investment. We will increase investment substantially in schemes to encourage innovation in industry, particularly in small and medium-sized enterprises, especially those involved in the manufacturing. We will reform corporation taxation of savings to achieve even treatment for different forms of savings.

• Encourage a long-term approach to private investment. We will reform the corporation and investment codes to require greater disclosure of information such as expenditure on research and development. We will further define the responsibilities corporate officers to ensure public accountability.

• Encourage small business and the self-employed, and ensure a level playing field for them in competing with their larger establishments. This will include relieving the administrative burden on overdue debt, and encouraging local chambers of commerce and local enterprise agencies to reorganize to form a network of business-led one-stop shops. We will encourage and if necessary legislate for banks to treat small business fairly. We will promote the establishment in the countrysides of local enterprise banks.

• Ensure the development of a balanced and dynamic agro-industrial structure featuring a sound mix of basic, intermediate and light industries and the active participation of all Filipino producers – the Filipino industrialists, the small and medium business, the family enterprises, the professionals, the artisan and craftsmen, the industrial workers, the OCWs, the farmers, the fisher folks, the tribal communities, etc.

• Share success in industry. We will legislate to establish the right of every private sector employee in a substantial company to have access to a share in ownership and/ or in the profit they help to create. We will encourage profit-related pay, employee share-ownership schemes and employee buy-outs. We will re-launch the Cooperative Development Authority. Strengthen the role of cooperatives, people’s organizations and other grass-roots organizations in community livelihood projects.

2. Generate Employments

• Attack unemployment by creating new employment opportunities. Our emergency program should reduce unemployment drastically over next two years. We will increase spending on public transport, housing, hospitals and schools, on energy efficiency and conservation projects and on education and training – all sensible investments for the country’s future. We will aim to guarantee everyone out of work for six months of more places on either a high-quality training program or a work program with a strong element of training. Vocational training would be directed at increasing the capacity of the work force for high-tech jobs.
• Create training incentives for firms that would encourage employers to release their employees aged under 20 for a minimum of one day in the workweek for further training. We will establish a fully integrated system of skills training, leading to recognized qualification. We will increase ‘access’ courses for mature students and retraining for women returnee’s and those in mid-career. We will fund crash courses in the main areas of skill shortage, aimed in particular at the long-term unemployed.

• Encourage decentralized wage bargaining. Our plans to spread employee ownership and participation will encourage wages to be set according to the profitability of individual firms. We will encourage greater decentralization of wage bargaining at company level.

• Encourage flexibility in working patterns, including part-time and flexi-time work, job-sharing and home working.

3. Taxation

Taxation is a key feature of economic policy. The way in which taxation is applied and explained, however, is crucial. The purpose of taxation is to provide opportunity by expanding public sector services. It shall be our duty to indicate how taxes can be used to fulfill this purpose. We believe that, to be acceptable to those who pay, a taxation system should have five virtues. It should be effective at providing a wider distribution of opportunities; it should be appropriate to the prevailing conditions of the economy; it should be used to exact the full price for actions or goods whose market price would otherwise be lower than their true cost (such as those which produce pollution); it should, as far as possible, allow the maximum freedom to the individual; and it should be just, and be seen to be just. For this reason an efficient modern system of tax would levy less charge on wealth, value added and jobs, but impose more on the use of finite raw materials and the production of pollution.

Our long-term aim is to shift the burden of taxation away from the things the country needs more of – income, saving and value added – and on to the things we want less of, such as pollution and resource depletion.

• Taxes and public spending shall be set to reach a savings target for the country over a period of years. We will set a target as a total of private- and public-sector savings, and adjust fiscal policy to achieve the target over the medium term. If the country does not save enough to achieve the target, we will alter taxes and public spending accordingly, to ensure adequate long-term investment and keep the economy developing in a non-inflationary way. We will encourage individual savings by giving tax relief on all income paid into new Registered Savings Accounts.

• Provide a taxation and licensing regime for oil and gas, which will ensure sustained exploration and continued development to gain the maximum yield from our potential energy resources.
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• Reform of the annual budget. We will publish a draft budget before the final version is submitted to Congress, to promote open discussion of economic and taxation policy. This will facilitate the integration of spending and revenue-raising, a measure we have long advocated. This will also make it easier to measure the impact of economic policy on the environment, and on the other needs of society.

4. Environmental Protection

There are two major environmental challenges to be confronted: excessive use of resources, particularly of finite raw materials, and excessive output of pollution. The global population explosion hugely amplifies these threats. But these challenges must also be seen as opportunities – opportunities to create a local environment, both natural and man-made, which will improve individuals’ quality of life, and communities’ civic pride; opportunities to create a more efficient economy, with industry which concentrates on clean technology and energy conservation; and opportunities to create a public transport system which is both efficient and pleasant to use.

We have to find the ways to alter our economic system, change the way we behave and restructure our society in order to live sustainably – defined as leaving a stock of knowledge and understanding, of technology, of manufactured capital and of environmental assets no smaller than that which we inherit. This applies not just at the national but, even more importantly, at the global level.

In Philippines, this implies changes in energy use and production, in patterns of transport and mobility, of housing and planning, in methods of production and habits of consumption, and, crucially, in the measurement of progress. But these objectives will not be accomplished successfully by asking people to give up either their liberty or their prosperity.

So although government has an indispensable role as setter of standards, the task is not to abandon the market and individual choice in favor of command economy and tougher limits on individual behavior. It is. Rather. To incorporate environment costs into the market wherever feasible, and thus educate and encourage individuals and firms to use their choice in favor of the environment and to penalize those who do not. There is plenty of evidence to show that in principle people are ready and want to do this; our task is to find ways to mobilize and channel this public support.

Liberals know that we have a duty, not only to each other but to the generations which follow us, to protect the environment. We believe that this is best achieved not by making people poorer or less free but by building true environmental cost into the market so as to reward those who conserve and penalize those who pollute.

The accelerating destruction of the environment is one of the most serious challenges we face today. Its symptoms are becoming clearer with year, from global warming and holes in the ozone layer to poisoned rivers and polluted air at home. They threaten not just our ability to enjoy our towns and countryside but our health and our children’s future. Liberals aim to cut pollution and cleanup the local environment. We will create new incentives to follow environmentally sensitive strategies and behavior.

Liberals are determined to ensure that the country changes its ways so that it becomes as leader, not a laggard, in facing the environmental challenge. Polluters will pay and conservators will be rewarded. Taxation will be gradually shifted from the things we want more of – income, savings and value added – to the things we want less of: pollution and resource depletion.

A. Protect the National Patrimony

Conserving and enhancing the physical environment, especially the countryside, forests and national parks, as well as the town centers and barangays, is of crucial importance to everyone’s quality to life. We will:

• Improve countryside protection policies for conservation Areas, heritage coasts, areas of outstanding natural beauty, and sites scientific interest. We will tighten controls against exploitation, we will create more Conservation Areas and will improve access to the countryside. We shall also ensure the strict enforcement of criminal sanctions against traders in endangered species.

• Introduce Countryside Management Agreement for farmers and landowners. These will be drawn up in conjunction with local planning authorities with the aim of managing the countryside to animal wildlife, and preserve traditional landscape features.

• Reform land use planning so that the protection of the environment is integrated to the planning system. We will decentralize planning decisions as much as possible, giving a key role to the local plan drawn up by the local authority.

• Clean up the cities. We will improve public transport, reduce traffic congestion, and encourage pedestrianisation and cycling schemes. We will encourage more parks, gardens and green spaces. We will provide more resources for local councils to deal with noise complaints and make compensation for excessive commercial noise more widely available.

• Promote better waste management. We will provide grants for recycling schemes, introduce regulations on the use of packaging materials, and encourage local; authorities to clean up litter. We will clean up beaches and coastlines by ensuring full treatment of sewage.

B. Control Pollution

We will use market mechanisms, where feasible, to reduce pollution by ensuring that environmental costs and benefits are fed in to the economy. Direct controls will still be needed in some cases. We will:

• Set targets for cutting pollution. These include a 30% reduction in carbon dioxide emission from the Philippines by the year 2010; our energy policy is geared to this target. We will ban the use of CFC and other greenhouse gases and encourage the use of alternatives.

• Introduce a system of tradable emission licenses. We will issue factories and power stations with licenses setting a ceiling on permitted emissions of pollutants such as sulfur dioxide. These will be tradable: those who are most efficient at reducing pollution would have surplus licenses which they could then sell either to those less efficient, or therefore to government. The targets for emissions- and therefore the number of licenses available – will by reduced year by year, leading to steady fall in pollution.

• Put forward plans for a powerful United Nation Environment Programme to lead global efforts to protect the environment, operating within the framework of an ‘Earth Charter’. We wish to see a world market in tradable emission licenses for carbon dioxide and other pollutants. This would not only provide incentives to cut pollution but also act as a channel for transferring resources to developing countries.

C. Country Energy

Without an effective energy policy, government cannot have an effective environment policy. The country’s national energy strategy must be set within an overall framework of sufficiency, with the aim of reducing pollution, improving energy efficiency and boosting the use of renewable sources. We will:

• Invest in energy conservation and efficiency. We will set new energy efficiency standards for homes, offices and factories, and for products such as lights bulbs, fridge and cookers. We will give incentives for the installation of solar panels, and introduce energy audits of building.

• Double government spending on renewable energy research. We will establish a Renewable Energy Office to promote research, development and application, in particular of wave power, hot rocks geothermal energy, passive solar design of building, small-scale hydropower schemes and wind energy. The non-fossil fuel obligation must be reformed to allow and adequate return which will encourage private energy production, most of which would be renewable.

• Encourage continued exploration for oil and gas, and ensure that the licensing system and the taxation regime encourage rather than inhibit enhanced extraction rates.

• Support a Community-wide Energy Tax on all energy sources. This will be related to levels of carbon dioxide emitted and will provide a strong incentive for saving energy and investing in cleaner sources. Extra revenue raised through the tax will be fed back into the economy by reducing other taxes such as VAT and by protecting those least able to adapt to the higher price of energy.

D. Make Transportation Clean and Efficient

By expanding the provision and quality of public transport and reducing society’s dependence on the private car, we will improve travel efficiency and protect the environment. We will achieve this by:

• Investment in public transport. Developing alternative modes of transportation especially in congested cities, increasing the frequency of service, speed and safety, and reducing the costs to the individual – especially in isolated rural areas where the need is greatest. We will encourage new schemes, building light rail systems in cities and train network between provinces. We will require local authorities to define minimum standards of accessibility in their areas and draw up transport plans that meet them.

• Immediate improvement in the rail network. Allowing more movement of goods and passengers by rail and causing less environment damage.

• A reduction in fuel consumption. Price increases in gasoline will not be brought in unless and until compensation schemes for individuals and rural communities which have no alternative to the use of cars are already to be introduced.

• Assist people in rural areas by developing improved schemes of concessionary fares for local public transport widely available. We will encourage the use of shuttle services and buses. Transport policy will be guide by specific measures to ensure that rural communities are not disadvantages.

• Take action against traffic congestion in urban areas. We will encourage local authorities to introduce peak-hour bans on cars, traffic, calming measures, car-sharing schemes and further pedestrianization. We will consider introducing a variety of road-pricing schemes, in which motorists pay a premium to use highly congested roads at busy times of the day.

• New priorities for road building. We will approve major hi-way or trunk road investment where it can be demonstrated that alternative transport provisions cannot meet the need at lower economic and e4nvironmental cost. Essential new roads and improvement will proceed, particularly to improve safety. However, we shall encourage some switch of passenger and freight transport to the railways once train systems are sufficiently developed.

• Reverse the decline in the Merchant Fleet. Both for economic and defense reasons, we will boost Philippine shipping and promote recruitment and training for Seamen and the Merchant Marines

• Develop environmental planning policies which will encourage the building of homes near workplaces, leisure facilities, shops and other services. Where this is not possible, public transport routes must be easily accessible. We will encourage the use of information technology to decentralize work.

E. Build a Sustainable Economy

Liberals aim to build an economy which is not only competitive and enterprising but also environmentally sustainable, leaving future generations a wealth inheritance – of knowledge, technology, capital and environmental assets – at least as great inherited by the current generation. A system of environment incentives and penalties will be set in place. We will make available grants and subsidies for environmentally friendly activities and help individuals and industry adjust to stricter standards for pollution control. We will penalize activities that harm the environment or deplete the stocks of raw materials through taxation, in order for prices to reflect the damage they do. A new energy Tax is a key proposal in this area. The revenue raised will be used to reduce other taxes such as VAT. Our proposals are:

• A better method of measuring economic progress. The conventional target of growth in GDP is a poor indicator of progress. We will modify GDP by incorporating measurements of pollution and resource depletion to create a figure for sustainable national income. We will also use indicators of social and personal quality of life such as changes in life expectancy, literacy rates and educational attainment to give a better measure of progress.

• Enable consumers to identify and choose sustainable products. We will introduce new product labels, showing information such as energy consumption during use and the environmental impact of the production process. We will introduce strict standards of life expectancy for companies, showing the environmental impact in their activities.