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
27-31 May 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 of artesian wells
or water supply systems
• Construction or extension of
roads, streets, sidewalks, • Establishment of cemeteries
and crematories
viaducts, bridges, ferries,
levees, wharves, or piers • Establishment of drainage
systems, cesspools, and
• Construction or improvement sewerage systems
of public buildings • Construction of irrigation
canals or dams
• Establishment of parks, • Establishment of nurseries,
playgrounds, or plazas health centers, or hospitals
• Establishment of market • Building of research,
places breeding, or dispersal centers
for animals
• Establishment of abattoirs
• Land banking for socialized
housing
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 97 92 85 83 58 87
low-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 89 74 83 76 63 71

grow
7. Provide decent housing to those who can’t 88 77 75 74 32 74
afford it
8. Provide strict laws to make industry do less 88 89 94 88 74 88
damage to the environment
9. Promote equality between men and women 86 80 84 57 60 83
10. Provide a decent standard of living for the 82 67 64 65 46 55
unemployed
11. Reduce income differences between the rich 66 84 83 81 56 54
and the 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, - 293 out of 340 lodging houses are in
grossing Php 56 B in revenues and violation of the 30 m easement
creating thousands of jobs in 2017. prescribed by local ordinance.
• Pres. Duterte threatens to close down - Trash piles abound everywhere or
the 1,032 ha island resort due to thrown into the sea.
sewage and garbage problems. Items:
• There are enough national laws and
- coliform bacterial levels on the east local ordinances but these are not
side are well above the acceptable implemented strictly. Citizens note:
standard;
“Local officials have been
- green algae coating the water and
complacent, helpless and easily
foul smell are blamed on untreated
sewage draining into the sea. impressed by big business…have been
extremely remiss in their duties…even
• Greed has played a major part in those in DENR are sleeping on the
Boracay’s deterioration. Items: Only job.”
25 out of 150 business establishments
are connected to sewer lines to cut “There is a great deal of corruption
operation costs. 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 • Private sector conquest of public services
being is to perform services needed by the has extended to security and judicial
people. services as shown by the ubiquitous “blue
• There was a time when the range of public guards” and the growing trend towards
services was extensive. The government arbitration rather than court cases to
was the principal provider of community settle disputes.
needs. • When people get increased incomes they
• When government encountered problems shift to paying for privately provided
of inefficiency and insufficiency of funds, it public services, private schools, private
encouraged the private sector to engage in hospitals, private cars. Thus, any income
the business of providing public services. increase attained by people is captured by
private companies providing public
• Big private companies enthusiastically services.
responded and found that tremendous
income can be gained from any business • This may be one reason many of our
that provides public services. people continue to feel poor not
withstanding the unprecedented growth
• Privately provided services like schools, in our economy.
hospitals and transport are patronized by
the rich while government schools, • It is time to pause and rethink this
hospitals and public transport are creeping privatization of the government.
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. • Requiring employees of
contractor or subcontractor to
• Farming out works by a principal do work currently performed
to a “cabo” (a person or group by regular employees of
supplying workers with or without principal.
any monetary or other
consideration, whether in the • Requiring employees to sign an
capacity of the employer’s agent antedated resignation letter; a
or an independent contractor). blank payroll; a waiver of labor
standards, including minimum
• Contracting work through an in- wages and social or welfare
house agency or cooperative. benefits, or a quitclaim
• Contracting work because of releasing the principal or
strike or lock-out. subcontractor from liability in
paying future claims; or
• Contracting work being requiring them to become
performed by union members. members of a cooperative.
DOLE Dept. Order 174 “End to ENDO”
Prohibits the following acts:
• Requiring employees to • Repeated hiring of
sign a contract fixing the employees by contractor
period of employment to or subcontractor under a
a term shorter than the contract of short
term of service duration.
agreement, unless the • Other practices, schemes
contract is divisible into or employment
phases for which arrangements designed
substantially different to circumvent the right
skills are required and of workers to security of
this is made known to tenure.
the employee at the
time of engagement.
 “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 Social Justice held a forum recently • Selected cases of remunicipalized
on the subject of how public services are now
public services:
being reclaimed by citizens who had been in In Oslo, Norway, waste collection
the grip of private enterprises that made profit was taken back from a private
service provider in 2017.
out of dispensing public services.
In Delhi, India, a winning political
• AEPF notes how public services essential to a party delivered on its promise to
life of dignity and security have become provide affordable health care by
increasingly inaccessible to millions world- putting up 1,000 community
clinics.
wide while in private hands and states
continue to cut subsidies. States have In Grenoble, France, the city
relinquished to profit-making corporations the became the pioneer in water
remunicipalization when it ended
task and duty to provide public services. This the contract of a corrupt multi-
has affected mostly the vulnerable sectors. national provider in the 2000s.
• Remunicipalization is the process by which In Lithuania, central heating was
people reclaim privatized public services and remunicipalized after investigation
showed price manipulation.
bring them back to be managed by local
governments. The Transnational Institute has
recorded 835 other examples
• Other newly coined terms like renationalization in1,600 cities in 45 countries.
and deprivatization are directed to fighting the
ills of privatization.
Good luck to all of us!