Wednesday, October 5, 2005

Budget analysis of graft at election commission

The Jakarta Post, Jakarta | Tue, 05/10/2005 4:40 PM | Opinion

The Supreme Audit Agency has submitted its audit report on the General Elections Commission (KPU) to the House of Representatives (DPR). The report found strong indications of corruption involving Rp 90 billion (US$9,625,668) out of the total Rp 800 billion ($85,561,497) in its procurement budget.

The suspected abuse was about 11.28 percent of the procurement budget or 2.3 percent of the KPU's total operating budget of Rp 3.9 trillion.

From the macroeconomic point of view, the House disappointment with the auditors' findings raised questions. Why was the House unsatisfied with the discovery of such a massive abuse of state funds.

Was the House not institutionally involved in planning the KPU budget last year? Why did the House ignore the mark-up in the proposed budget that left a lot of room for corruption?

Analyzing the case by macroeconomic perspectives can be done based on the 1945 Constitution and Law No. 17/2003 on state finance, which stipulate, among other things, that the state budget is compiled and proposed by the government to the House for approval. Consequently, the state budget is an agreement between the government and the House.

Based on Law No. 17/2003, the state budget (including the allocation for KPU) is a part of the mechanism for accountability and management and economic policy. As an instrument of the economic policy, the budget functions to produce economic growth, stability and income equity.

One of the yardsticks used to assess the state budget, as stipulated in the law on state finances, is the implementation of Performance Based Budgeting, meaning output and outcome oriented budget plan.

For example, in the planning of the funds allocated for the KPU, the output was the ballots, envelopes, ballot boxes, voting booths, ink and information technology that were needed to hold the 2004 general elections. The outcome would be the 14,000 legislative members, 128 members of the Regional Representatives Council and the President and Vice President for 2004-2009 term of office.

The 2004 general elections consisted of the April 5 legislative race, the July 5 first round of the presidential election, and the Sept. 20, second round. for the implementation of the elections, the KPU provided 585,000 polling stations and distributed some 60,000 tons of election materials (see table) all over the country. The organization of the elections involved some five million people. Even though the election system was completely new and the KPU had very little experience before in holding elections, the international community praised the elections as fairly transparent and peaceful.

From a macroeconomic perspective, the alleged corruption case involving the KPU can be analyzed against a performance-based budgeting system. It is a fact that both the output and outcome have been produced. The materials that were procured fully supported and facilitated the holding of the elections. Thus, from a macroeconomic point of view, the KPU performance was good.

However, the alleged abuses of funding should apparently be followed up according to laws.

Most of The KPU members -- well-known academic figures -- had been hailed for their idealism and good integrity. However, it is worth noting that the machinery of the KPU secretariat was operated by government bureaucrats. And it had been said that some of the public officials assigned to the KPU were not the best ones -- and thus vulnerable to corruption. Consequently, there was a possibility that the KPU officials had been influenced by the corrupt working environment.

The legal process will provide the truth.

Another macroeconomic dimension is evaluating the efficiency of the 2004 election budget. With a measurable scope of activities, the executive and legislative bodies should be able to account for the budget needed for the procurement of ballot materials and equipment for 150 million voters.

Since the KPU had little previous experience and the areas of distribution were spread out across the world's largest archipelago, the task was indeed quite challenging. And since not all areas had adequate public transportation, the KPU had to provide one billion ballot sheets. If the price of each ballot was Rp 260, the cost of ballot procurement would be Rp 260 billion, larger than the allocated budget of Rp 189.2 billion.

The question is was the Rp 260 ballot price fair? Did the procurement of information technology (8,000 PCs plus its system) and infrastructure truly cost Rp 225.6 billion?

If it is proven that the funds allocated for the elections were excessive, the blame should be laid upon those who approved the election budget -- both the executive and legislative branches. The executive and legislative bodies should have assessed the budget proposal much more carefully instead of approving a budget that was too big and provided broad leeway for price markups and opportunities for corruption.

Law No. 17/2003 on state finances requires that the KPU budget provide enough for a successful election. Meanwhile, the outcome was the newly elected legislative members and President and Vice President. Consequently, based on the principles of performance-based budgeting, the KPU budget actually was successful in terms of the outcome of the 2004 General Elections.

As an instrument of economic policy, the KPUD (provincial branches) budget also functioned in supporting economic growth, stability and income equity, because the budget had been spent across the whole country.

Economists assumed that the 2004 general elections was one of the factors supporting the economic growth and the election budget also promoted equitable distribution of income because it directly provided temporary jobs for around five million people and indirectly created jobs for millions of others who were engaged in the production of balloting papers and equipment.

However, the law on state finances also stipulates that the state budget must be strictly managed. Based on that, there are several things that do still require our attention.

Concerning the aspects of a strictly managed budget, implementing laws and regulations, we should consider that the 2004 general Election was a monumental task.

As it concerns the economics of effective management of the state budget, it should have been the responsibility of the government and the House to design and formulate the budget for the election in such a way that minimized opportunities for corruption.

If the KPU members or staff members abused the funds and all election materials for the elections had still been adequate, the executive and legislative branches of the government must also be morally and legally responsible.

Concerning the effectiveness of the budget, it was quite obvious that, set against the objective of fair, clean and smooth elections, the budget implementation had indeed been quite effective. The elections were lauded even by the international community as fair and clean.

With regard to accountability by considering justice and acceptability, it was possible that there had been violations of procedures and regulations. However, one also must remember that the KPU encountered very tight deadlines and was required to implement a completely new election system.

Moreover, the procedures of cash flow analysis and accountability reports were rather complex, and most regional KPU offices were not familiar with accounting systems.

The writer is an economist living in Medan. He is also as lecturer in the Economic Development department at North Sumatra University. He can be reached at

No comments:

Post a Comment