All that money…for what?

I was browsing through the 2013 budgetary note from the Ministry of Finance and made this chart (sorry, too lazy to translate it into English):

Obvious thing that I wanted to point out is how wasteful we are for spending our money on mostly energy subsidies (fuel and electricity) which amounts to a total of 274.7 trillion IDR. I made an argument about why I’m against fuel subsidies previously on my other post, but this time I’m going to mention a bit about measuring impact. If Indonesian politicians and/or decision-makers finally had some sense to lift the subsidies, would they spend the money wisely into developing good programs for its citizens?

Program evaluations are not something novel for development work – since the taxpayers of the donor countries would like to scrutinize whether the aid money they’re giving goes into the right directions (or else it’s better to be spent in their own countries). And so, the eval wonks should have something similar to the “impact chain” tool to measure whether what they’re doing  is indeed helping the world to be a better place.

So let’s say you want to distribute some boats for some needy group of fishermen, you don’t only give them the boat put perhaps some capacity development to teach them how to fish better (inputs). The tangible output would be the new boats themselves, and the outcomes would be an increase of their catch when they go out to sea, which subsequently lead to an increase to their welfare (impact). Of course this is an over-simplification and the real stuff would involve baseline data, rigorous methodologies, and resources (time, money and the right brains – oh hey, maybe an MPP degree would help). But doing evaluations is indeed a worthwhile exercise because in the end you get to find out which programs deserve to stay and which ones deserve to be terminated.

Now, how often do we hear the results of the program evaluations made by the government (assuming that they are even evaluated)? Do we even know what are all the programs that the government actually oversees?

The thing is, government spending increases year by year, and it is quite a common knowledge for Indonesians that it is usually spent late in the year. Some attribute it to procurement issues, but most of the time it’s just poor planning. And they can’t make better plans if they don’t evaluate the previous programs beforehand.

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3 thoughts on “All that money…for what?”

  1. The other side of the coin is that tax revenue and tax collection are insufficient. Let me share a personal experience. We recently paid the land tax on a 500m2 piece of land that we own. How much do you think the yearly tax assesment is? A whopping US$1.60 (IDR 15,000!

    A related issue is that with such low tax rates the state not only receives very little but also fails to provide incentives for the productive use of land. If you face a tax burden of only $1.60 a year, what incentive do you have to bust your balls and make the land produce?

  2. To put it in perspective, (IDR 15,000) is roughly 1.4% of the official monthly minimum wage where the land is located.

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