Deductions

The Department of Education (DepEd) has its heart in the right place. The brain, however, is an entirely different matter.

Earlier this year, the agency that oversees primary and secondary educational institutions issued Department of Education Order No. 5 (series of 2018). That order makes it mandatory that our public school teachers receive a minimum net take home pay of P5,000 every month.

Without question, this order is humanely inspired even as it might not be brilliantly conceived. The educational authorities want to ensure the teachers do not borrow from lending institutions, using the automatic payroll deduction system, to the extent that their entire salary is committed to servicing their outstanding debt.

This is indicative of a “nanny state” attitude. The state goes out of its way to protect its citizens (mainly from themselves) even to the extent of limiting rights and constraining choices.

There is this story about Japanese tourists visiting the Grand Canyon in the US that perfectly illustrates the “nanny state” complex.

The tourists were bewildered there were no fences nor barriers on the ledges to prevent people from falling off the cliff as there would be in Japan. In the US, it is entirely the citizens’ responsibility to look after their own safety. In Japan, the state would not gamble with such a presumption. They would rather fence in the spectators.

This is exactly DepEd’s intent. They would rather presume they know better than the individual teacher about managing his private finances. But there are consequences to the said order. To begin with, the order tramples on existing contractual agreements between the teachers and private lenders. That produces so much uncertainty in the financial markets.

Should the minimum net take-home pay be breached, the authorities propose giving priority to government lending institutions such as the GSIS. One legislator even proposes the abolition of the “first-in, first-served” policy governing the Automatic Payroll Deduction System. That magnifies the uncertainty and could force private lenders to exit the market.

The old arrangement, where the individual teacher is allowed full responsibility in the management of his financial affairs, was beneficial to the teachers. With automatic payroll deductions, lenders took lesser risks and could charge lower interest rates.

They did not have to do individual credit background checks. That lowered the costs of lending and administering the loans. That redounds to the benefit of teacher-borrowers.

If we mess with this system, the teachers will be worse off. They will pay higher financing charges. Processing time for loans could be higher. They could run out of credit options during emergencies and fall prey to loan sharks as they did before.

How many teachers actually max out their salaries to merit DepEd Order No. 5? The DepEd should tell us.

At any rate, it is far better to allow citizens the responsibility to fail in managing their private finances than to cause the failure of the financing system.

Financial institutions are unfairly described as heartless when they assess risks and charge for them accordingly. But that is the very process that enables us to have viable financial institutions in the first place.

Meltdown

When we speak of infrastructure, we are not just referring to roads and bridges. In the new economy, the country’s digital infrastructure is just as vital.

There are two reasons we established the new Department of Information and Communications Technology (DICT). The first is to ensure policies that will help modernize our digital infrastructure. The second is to manage government’s information technology assets.

A few weeks ago, a major hardware failure hit government’s hosting service. Over 100 government websites were knocked out as a result. To date, the DICT has not fully explained what happened and what has been done to correct this.

Among those hit by the meltdown of the government’s hosting service is the Bureau of Internal Revenue (BIR). Most significantly, the failure affected operations of the BIR’s Large Taxpayer Unit that accounts for much of the revenues generated and the BIR’s Makati offices that oversee the country’s largest operations.

During the DOF’s executive committee meeting last week, BIR Deputy Commissioner Arnel Guballa reported that the digital system continued misreporting the numbers. As a result, the revenue agency had to revert to the slow and tedious process of manually reviewing the transactions and reconciling the numbers by hand.

Needless to say, both the BIR and the Customs Bureau might have to suffer setbacks in their revenue efforts. This is the worst time for this to happen. Both revenue agencies have been posting strong collections the past months. These collections regularly exceed the targets set for both agencies.

The BIR officially relayed to the DICT to express “very serious concern” over the delay in fixing this problem. Officials of the revenue agency, however, complain of apparent inaction on the part of the DICT.

The government web hosting service does not only keep the websites of government agencies running. It plays a role in all the e-governance initiatives to hasten transactions with government agencies, including real-time accounts settlement.

This web hosting service should operate 24/7. To ensure this, its systems must be redundant and stable. So much depends on the reliability of this system. So much could be lost when it fails.

The weeks it has taken for the DICT to get this system up and running is a scandal on its own. The agency owes both government and the public a clear explanation. That, unfortunately, does not seem forthcoming.