State of the Nation Address of His Excellency

Benigno S. Aquino III

ENGLISH TRANSLATION:

Speaker Feliciano Belmonte; Senate President Juan Ponce Enrile; Vice President Jejomar Binay, Chief Justice Renato
Corona, Former Presidents Fidel Valdez Ramos and Joseph Ejercito Estrada; Members of the House of Representatives
and the Senate; distinguished members of the diplomatic corps;

My beloved countrymen:

Our administration is facing a forked road. On one direction, decisions are made to protect the welfare of our people; to
look after the interest of the majority; to have a firm grip on principles; and to be faithful to the public servant’s sworn
oath to serve the country honestly.

This is the straight path.

On the other side, personal interest is the priority, and where one becomes a slave to political considerations to the
detriment of our nation.

This is the crooked path.

For a long time, our country lost its way in the crooked path. As days go by (since I became President), the massive scope
of the problems we have inherited becomes much clearer. I could almost feel the weight of my responsibilities.

In the first three weeks of our administration, we discovered many things, and I will report to you some of the problems
we have uncovered, and the steps we are taking to solve them.

This report is merely a glimpse of our situation. It is not the entire picture of the crises we are facing. The reality was
hidden from our people, who seem to have been deliberately obfuscated on the real state of our nation.

In the first six years of this year, government expenditure exceeded our revenues. Our deficit further increased to
PhP196.7 billion. Our collection targets, which lack PhP23.8 billion, were not fully met, while we went beyond our
spending by PhP45.1 billion.

Our budget for 2010 is PhP1.54 trillion. Of this, only PhP100 billion - or 6.5% of the total budget – can be used for the
remaining six months of the current year. Roughly 1% of the total budget is left for each of the remaining month.

Where did the funds go?

A calamity fund worth PhP2 billion was reserved in preparation for anticipated calamities. Of this already miniscule
amount, at a time when the rainy season has yet to set in, PhP1.4 billion or 70% was already spent.

The entire province of Pampanga received PhP108 million. Of this, PhP105 million went to only one district. On the other
hand, the province of Pangasinan, which was severely affected by Typhoon Pepeng, received a mere PhP5 million, which
had to be used to fix damages inflicted not even by Pepeng, but by a previous typhoon, Cosme.

The funds were released on election month, which was seven months after the typhoon. What will happen if a typhoon
arrives tomorrow? The fund has been used up to repair damage from typhoons that hit us last year. Our future will pay
for the greed of yesterday.

This is also what happened to the funds of the MWSS. Just recently, people lined up for water while the leadership of the
MWSS rewarded itself even though the pensions of retired employees remain unpaid.

The entire payroll of the MWSS amounts to 51.4 million pesos annually. But this isn’t the full extent of what they receive:
they receive additional allowances and benefits amounting to 81.1 million pesos. In short, they receive 211.5 million pesos
annually. Twenty four percent of this is for normal salaries, and sixty six percent is added on.
The average worker receives up to 13 th month pay plus a cash gift. In the MWSS, they receive the equivalent of over thirty
months pay if you include all their additional bonuses and allowances.

What we discovered in the case of the salaries of their board of trustees is even more shocking. Let’s take a look at the
allowances they receive:

Attending board of trustees and board committee meetings, and you get fourteen thousands pesos. This totals ninety eight
thousand pesos a month. They also get an annual grocery incentive of eighty thousand pesos.

And that’s not all. They get a mid-year bonus, productivity bonus, anniversary bonus, year-end bonus, and financial
assistance. They not only get a Christmas bonus, but an additional Christmas package as well. Each of these amounts to
eighty thousand pesos. All in all, each member of the board receives two and a half million pesos a year exclusive of car
service, technical assistance, and loans. Let me repeat. They award themselves all of these while being in arrears for the
pensions of their retired employees.

Even the La Mesa watershed wasn’t spared. In order to ensure an adequate supply of water, we need to protect our
watersheds. In watersheds, trees are needed. Where there should be trees, they built homes for the top officials of the
MWSS.

We cannot remove them from their positions quickly because they are among the midnight appointees of former president
Arroyo. We are investigating all of these things. But if they have any shame left, they should voluntarily relinquish their
positions.

Now let’s discuss funds for infrastructure. The DPWH identified two hundred forty six priority safety projects to be funded
by the motor vehicle user’s charge. This needs a budget of 425 million pesos. What they ended up funding were only 28
projects. They disregarded 218 projects and replaced these with seventy projects that weren’t in the plans. The 425
million pesos originally asked for became 480 million pesos, increasing because of projects allocated for a favored few.

These projects make no sense: unstudied and unprepared for, sprouting like mushrooms.

The era of such projects is at an end. Under our administration, there will be no quotas, there will be no overpricing, the
funds of the people will be spent for the people.

There’s more. Five days before the term of the previous administration ended, they ordered 3.5 billion pesos to be released
for the rehabilitation of those affected by typhoons Ondoy and Pepeng. This was supposed to fund eighty-nine projects.
But nineteen of these projects amounting to 981 million pesos didn’t go through public bidding. Special Allotment Release
Orders hadn’t even been released and yet the contracts were already signed. It’s a good thing Secretary Rogelio Singson
spotted and stopped them. Instead, they will all go through the proper bidding, and the funds will be used to provide relief
to those who lost their homes due to typhoons Ondoy and Pepeng.

Let’s discuss what happened in Napocor. From 2001 to 2004, the government forced Napocor to sell electricity at a loss to
prevent increases in electricity rates. The real motivation for this is that they were preparing for the election.

As a result, in 2004, NAPOCOR slumped deeply in debt. The government was obligated to shoulder the 200 billion pesos it
owed.

What the public thought they saved from electricity, we are now paying for using public coffers. Not only are we paying for
the cost of electricity; we are also paying for the interest arising from the debt.

If the money we borrowed was used properly, then there would be added assurance that constant supply of electricity is
available. However, this decision was based on bad politics, not on the true needs of the people. The people, after having
to sacrifice, suffered even more.

This is also what happened to the MRT. The government tried again to buy the people’s love. The operator was forced to
keep the rates low.

In effect, the guarantee given to the operator that he will still be able to recoup his investment was not fulfilled. Because of
this, Landbank and the Development Bank of the Philippines were ordered to purchase the MRT.

The money of the people was used in exchange for an operation that was losing money.

Let us now move on to the funds of the National Food Authority (NFA).

In 2004: 117,000 metric tons (of rice) was the shortage in the supply of the Philippines. What they (the government)
bought were 900,000 metric tons. Even if you multiply for more than seven times the amount of shortage, they still
bought more than what was needed.
In 2007: 589,000 metric tons was the shortage in the supply of the Philippines. What they bought were 1.827 million
metric tons. Even if you multiply for more than three times the amount of shortage, they again bought more than what
was needed.

What hurts is, because they keep purchasing more than what they need year after year, the excess rice that had to be
stored in warehouses ended up rotting, just like what happened in 2008.

Is this not a crime, letting rice rot, despite the fact that there are 4 million Filipinos who do not eat three times a day?

The result is NFA’s current debt of 177 billion pesos.

This money that was wasted could have funded the following:

- The budget of the entire judiciary, which is at 12.7 billion pesos this year.
- The Conditional Cash Transfers for the following year, which cost 29.6 billion pesos.
- All the classrooms that our country needs, which cost 130 billion pesos.

This way of doing things is revolting. Money was there only to be wasted.

You have heard how the public coffers were squandered. This is what is clear to me now: change can only come from our
determination to stamp out this extravagance and profligacy.

That is why starting now: we will stop the wasteful use of government funds. We will eradicate projects that are wrong.

This is the point of what we call the zero-based approach in our budget. What used to be the norm was every year, the
budget merely gets re-enacted without plugging the holes.

Next month we will be submitting a budget that accurately identifies the problem and gives much attention on the right
solution.

Those that I have mentioned were only some of the problems we have discovered. Here now are examples of the steps we
are undertaking to solve them.

There is a case of one pawnshop owner. He purchased a vehicle at an estimated cost of 26 million pesos.

If he can afford to buy a Lamborghini, why can’t he pay his taxes?

A case has already been filed against him. Through the leadership of Finance Secretary Cesar Purisima, BIR
Commissioner Kim Henares, Customs Commissioner Lito Alvarez, and Justice Secretary Leila de Lima, every week we
have new cases filed against smugglers and against those who do not pay the right taxes.

We have also already identified the suspects of the cases of Francisco Baldomero, Jose Daguio and Miguel Belen, 3 of the
6 incidents of extralegal killings since we assumed the Presidency.

Fifty percent (50%) of these incidents of extralegal killings are now on their way to being resolved.

We will not stop the pursuit of the remaining half of these killings until justice has been achieved.

We will hold murderers accountable. We will also hold those who are corrupt that work in government accountable for
their actions.

We have begun forming our Truth Commission, through the leadership of former Chief Justice Hilario Davide. We will
search for the truth on the alleged wrongdoing committed in the last nine years.

This week, I will sign the first ever Executive Order on the formation of this Truth Commission.

If the answer to justice is accountability, the answer to the dearth in funds is a new and creative approach to our long-
standing problems.

We have so many needs: from education, infrastructure, health, military, police and more. Our funds will not be enough
to meet them.

No matter how massive the deficit is that may keep us from paying for this list of needs, I am heartened because many
have already expressed renewed interest and confidence in the Philippines.

Our solution: public-private partnerships. Although no contract has been signed yet, I can say that ongoing talks with
interested investors will yield fruitful outcomes.
There are some who have already shown interest and want to build an expressway from Manila that will pass through
Bulacan, Nueva Ecija, Nueva Vizcaya, until the end of Cagayan Valley, without the government having to spend a single
peso.

On national defense:

We have 36,000 nautical miles of shoreline, but we only have 32 boats. These boats are as old as the time of (US General
Douglas) MacArthur.

Some had this proposition: they will rent the Navy headquarters on Roxas Boulevard and the Naval Station in Fort
Bonifacio.

They will take care of the funding necessary to transfer the Navy Headquarters to Camp Aguinaldo. Immediately, we will
be given 100 million dollars. Furthermore, they will give us a portion of their profits from their businesses that would
occupy the land they will rent.

In short, we will meet our needs without spending, and we will also earn.

There have already been many proposals from local to foreign investors to provide for our various needs.

From these public-private partnerships, our economy will grow and every Filipino will be the beneficiary. There are so
many sectors that could benefit from this.

We will be able to construct the needed infrastructure in order to help tourism grow.

In agriculture, we will be able to have access to grains terminals, refrigeration facilities, orderly road networks and post-
harvest facilities.

If we can fix out food supply chain with the help of the private sector, instead of importing, we will hopefully be able to
supply for the needs of the global market.

The prices of commodities will go down if we are able to make this efficient railway system a reality. It will be cheaper and
faster, and it will be easier for travelers to avoid crooked cops and rebels.

A reminder to all: creating jobs is foremost on our agenda, and the creation of jobs will come from the growth of our
industries. Growth will only be possible if we streamline processes to make them predictable, reliable and efficient for
those who want to invest.

We make sure that the Build-Operate-and-Transfer projects will undergo quick and efficient processes. With the help of all
government agencies concerned and the people, a process that used to take as short as a year and as long as a decade will
now only take six months.

The Department of Trade and Industry has already taken steps to effect this change, under the leadership of Secretary
Gregory Domingo:

The never-ending horror story of registering business names, which used to take a minimum of four to eight hours
depending on the day, will be cut down drastically to fifteen minutes.

What used to be a check list of thirty-six documents will be shortened to a list of six, and the old eight-page application
form will be whittled down to one page.

I call on our local government units to review its own procedures. While we look for more ways to streamline our processes
to make business start-ups easier, I hope the LGUs can also find ways to implement reforms that will be consistent with
the ones we have already started.

All will certainly benefit from this streamlining -- be it businessmen, soldiers, rebels and ordinary Filipinos. As long as the
interests of Filipinos will not be jeopardized, we will explore all available avenues to make this a reality. We must start
now, and we should all help achieve this and not stand in each other’s way.

The time when we will no longer be made to choose between our people’s security and the future of our children is upon
us now.
Once we implement these public-private partnerships, we will be able to fund public service in accordance with our
platform.

This will enable us to fund our plans for education.

We will be able to expand our basic education cycle from seven years to the global standard of twelve years.

We can build more classrooms, and we will fund service contracting under the Government Assistance to Students and
Teachers in Private Education Program (GASTPE).

Conditional cash transfers that aim to lessen the burden of education on parents will also be funded if this partnership
becomes a reality.

Our plans for improving PhilHealth can now be within reach.

First, we will identify the correct number of Filipinos who sorely need PhilHealth coverage, as current data is conflicting
on this matter. On one hand, PhilHealth says that eighty-seven percent (87%) of Filipinos are covered, then lowers the
number to only fifty-three percent (53%). On the other hand, the National Statistics Office says that only thirty-eight
percent (38%) of Filipinos are covered by Philhealth.

Even as we speak, Secretary Dinky Soliman and the Department of Social Welfare and Development are moving to
implement the National Household Targeting System that will identify the families that most urgently need assistance. An
estimated 9 billion pesos is needed in order to provide coverage for five million poor Filipinos.

Our country is beginning to see better days ahead. The private sector, the League of Provinces headed by Governor
Alfonso Umali, together with Governors L-Ray Villafuerte and Icot Petilla, are now ready to do their share when it comes to
shouldering the financial burden. I know that the League of Cities under the leadership of Mayor Oscar Rodriguez will not
be far behind.

If the local governments share in our goals, I know that I can surely count on Congress, the institution where I began
public service, to push for our agenda for change.

Our Cabinet has already showed it skill by identifying not just problems but also proposing solutions in a matter of three
weeks.

In the aftermath of Typhoon Basyang, we were told by those in the power sector that we would be without electricity for
four days. The quick action of Secretary Rene Almendras and the Department of Energy resulted in the restoration of
power to almost all those affected within twenty-four hours.

The so-called water shortage in Metro Manila was quickly attended to by Secretary Rogelio Singson and the Department of
Public Works and Highways. Secretary Singson did it without prodding, which alleviated the suffering of those affected.

We also witnessed the competence and initiative of those we appointed to be part of our Cabinet. It is but just that they
not be forced to go through the eye of a needle to be confirmed by the Commission on Appointments. Should this happen,
competent Filipinos will be encouraged to help our country through service to the public.

In the soonest possible time, we will convene the Legislative Executive Development Advisory Council (LEDAC) to discuss
the important bills that needs to be addressed. Rest assured that I will keep an open mind in order for our relationship to
be true to our people.

We will push for the Fiscal Responsibility Bill, where we cannot push for bills that will need funding, rather only those
that have already identified its sources of funding. We need 104.1 billion pesos to fund those laws already passed but
whose implementation remains pending because of lack of funds.

We will re-evaluate fiscal incentives given in the past. Now that we are tightening our purse strings, we need to identify
those incentives that will remain and those that need to be done away with.
We will not allow another NBN-ZTE scandal to happen again. Whether from local or foreign sources, all proposed
contracts must undergo the scrutiny of correct procedures. I now ask for your help with amending our Procurement Law.

According to our Constitution, it is the government’s duty to ensure that the market is fair for all. No monopolies, no
cartels that kill competition. We need an Anti-Trust Law that will give life to these principles, to afford Small- and
Medium-Scale Enterprises the opportunity to participate in the growth of our economy.

Let us pass into law the National Land Use Bill.

It was in 1935, during the Commonwealth, that the National Defense Act was passed. There is a need to amend this law
in order to make it more responsive to the current needs of national security.

I appeal to our legislators to pass the Whistleblower’s Bill to eradicate the prevalent culture of fear and silence that has
hounded our system.

We will strengthen the Witness Protection Program. We must remember that from 2009 to 2010 alone, cases which
involved the participation of witnesses under the program resulted in a ninety-five percent conviction.

There is a need to review our laws. I call on our lawmakers to begin a re-codification of our laws to ensure harmony and
eliminate contradictions.

These laws serve as the basis of order in our land, but the foundation of all rests on the principle that we cannot grow
without peace and order.

We face two obstacles on our road to peace: the situation in Mindanao and the continued revolt of the CPP-NPA-NDF.

Our view has not changed when it comes to the situation in Mindanao. We will only achieve lasting peace if all

stakeholders engage in an honest dialogue: may they be Moro, Lumad, or Christian. We have asked Dean Marvic Leonen

to head our efforts to talk to the MILF.

We will learn from the mistakes of the past administration, which sprung upon the people an agreement reached without
consultation from all concerned. We are not blind to the fact that it was done with political motivation, and that the
interest behind it was not that of the people.

We recognize the efforts of the MILF to discipline those within its ranks. We are hopeful that the negotiations will begin
during the first one hundred days of my administration as your president.

To the CPP-NPA-NDF: are you prepared to put forth concrete solutions rather than pure criticism and finger-pointing?

If it is peace you truly desire, then we are ready to call for an immediate cease-fire. Let us go back to the table and begin
talking again.

It is difficult to begin discussions in earnest if the scent of gun power still hangs in the air. I call on everyone concerned
not to waste a good opportunity to rally behind one goal for peace.

Our foundation for growth is peace. We will continue to be shackled by poverty if the crossfire persists.

We must understand that now is a time for sacrifice. It is this sacrifice that will pave the way for a better future. With our
freedom comes our responsibility to good unto our fellows and to our country.

To our friends in media, especially those in radio and print, to the block-timers and those in our community newspapers, I
trust that you will take the cudgels in policing your own.

May you give new meaning to the principles of your vocation: to provide clarity to pressing issues; to be fair and truthful
in your reporting, and to raise the level of discourse with the public.

It is every Filipino’s duty to closely watch the leaders that you have elected. I encourage everyone to take a step towards
participation rather than meddling. The former takes part in finding a solution; from the latter, never-ending complaints.
We have always known that the key to growth is putting the interest of others beyond one’s own. One thing is clear: how
do we move forward if we keep putting others down?

How will those without education secure quality jobs? How will the unemployed become consumers? How will they save
money for their future needs?

If we change all this, if we prioritize enabling others, we will open a world of opportunities not just for ourselves but for
those who direly need it.

We have already begun the process of change, and we are now able to dream of better things for our country. Let us not
forget that there are those who wish us to fail, so that they will once again reclaim power to do as they please at the
expense of our people.

I believe that God and the people have brought us to where we are now. While we focus on uplifting the lives of our fellow
men, we are assured of blessings and guidance from God Almighty. If we truly believe that we have God on our side, is
there anything that we cannot endure?

The mandate we received last May 10 is testament to the fact that the Filipino continues to hope for true change. The
situation is not what it was before; we can all dream again. Let us all become one in achieving a fulfilment of our hopes
and aspirations for our country.

Thank you very much.

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