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Linkage Master Programmes Double Degree FIA-UNIBRAW and Japanese Universities Universitas Brawijaya 2006

Linkage Master Programmes Double Degree FIA-UNIBRAW and Japanese Universities Universitas Brawijaya 2006

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  • 1. THE THEORY OF PUBLIC ADMINISTRATION Linkage Master Programmes g g Double Degree FIA-UNIBRAW and Japanese Universities Universitas Brawijaya Lecturer : Prof. Dr. Ir. Ginandjar Kartasasmita jgkar@cbn.net.id www.ginandjar.com g j Assistant Professor : Dr.Ir. Deddy S. Bratakusumah, BE, MURP, M.Sc. deddys@bappenas.go.id
  • 2. PLANNING AND BUDGETING
  • 3. DEVELOPMENT THEORIES 1. THE LINEAR-STAGES THEORY 2. STRUCTURAL-CHANE 2 STRUCTURAL CHANE MODELS 3. THE INTERNATIONAL-DEPENDENCE REVOLUTION 4. THE NEOCLASSICAL COUNTERREVOLUTION 5. THE NEW GROWTH THEORY (TODARO, (TODARO 2000) 3
  • 4. THE LINEAR-STAGES THEORY LINEAR STAGES 1. ROSTOW’S STAGES OF GROWTH 1. 1 THE TRADITIONAL SOCIETY 2. THE PRE-CONDITION FOR TAKE OFF INTO SELF- SUS SUSTAINING GROWTH GG O 3. THE TAKE OFF 4. THE DRIVE TO MATURITY 5. THE AGE OF HIGH MASS CONSUMPTION 2. THE HARROD-DOMAR GROWTH MODEL Y/Y = s/k 4
  • 5. STRUCTURAL-CHANGE MODELS 1. THE LEWIS THEORY OF DEVELOPMENT LEWIS TWO SECTOR MODEL (TRADITIONAL AND MODERN) 2. STRUCTURAL CHANGE AND PATTERNS OF DEVELOPMENT SO O AGRICULTURE – INDUSTRY – CONSTRUCTION & SERVICES 5
  • 6. THE INTERNATIONAL- DEPENDENCE REVOLUTION 1. THE NEOCOLONIAL DEPENDENCE MODEL UNDERDEVELOPMENT IS SEEN AS AN EXTERNALLY INDUCED PHENOMENON 2. 2 THE FALSE-PARADIGM MODEL FALSE PARADIGM UNDERDEVELOPMENT IS CAUSED BY FAULTY AND INAPPROPRIATE ADVICE FROM INTERNATIONAL “EXPERT” 3. THE DUALISTIC-DEVELOPMENT THESIS THE EXISTENCE AND PERSISTENCE OF INCREASING DIVERGENCES BETWEEN RICH AND POOR NATIONS AND RICH AND POOR PEOPLES ON VARIOUS LEVEL 6
  • 7. THE NEOCLASSICAL COUNTERREVOLUTION 1. FREE MARKETS, PUBLIC CHOICE, & MARKET FRIENDLY APPROACHES PRIVATIZATIONS, GOVERNMENTS CAN DO NOTHING RIGHT, “NONSELECTIVE” INTERVENTIONS , 2. TRADITIONAL NEOCLASSICAL GROWTH THEORY OUTPUT GROWTH RESULTS FROM ONE OR MORE OF THREE FACTORS: INCREASES IN LABOR QUANTITY AND QUALITY, INCREASES IN CAPITAL, AND QUALITY CAPITAL IMPROVEMENTS IN TECHNOLOGY Y = AeµtKαL1-α 7
  • 8. THE NEW GROWTH THEORY ENDOGENOUS GROWTH SEEK TO EXPLAIN THE FACTORS THAT DETERMINE THE SIZE OF µ (THE RATE OF GROWTH OF GDP), THAT IS LEFT GDP) UNEXPLAINED AND EXOGENOUSLY DETERMINED IN THE SOLOW NEOCLASSICAL GROWTH EQUATION Y = AeµtKαL1-α Y = AeµtK 8
  • 9. DEVELOPMENT AS TRANSFORMATION OF SOCIETY A MOVEMENMT FROM TRADITIONAL RELATIONS, TRADITIONAL WAYS OF THINKING, TRADITIONAL WAYS OF , DEALING WITH HEALTH AND EDUCATION, TRADITIONAL METHODS OF PRODUCTION TO MORE “MODERN” WAYS (STIGLITZ,1998) 9
  • 10. THE SUCCESSFUL TRANSFORMATION OF SOCIETY 1. RAISE THE GDP PER CAPITA 2. RAISE STANDARD OF HEALTH AND LITERACY 3. REDUCE POVERTY 4. 4 SUSTAINING THE ENVIRONMENT (STIGLITZ,1998) 10
  • 11. THE STRATEGY INCLUDING 1. PRIVATE SECTOR DEVELOPMENT 2. PUBLIC SECTOR DEVELOPMENT 3. 3 COMMUNITY DEVELOPMENT 4. FAMILY DEVELOPMENT 5. INDIVIDUAL DEVELOPMENT (STIGLITZ,1998) 11
  • 12. THE PRIORITY 1. EDUCATION 2. INFRASTRUCTURE 3. 3 HEALTH 4. KNOWLEDGE 5. CAPACITY BUILDING (STIGLITZ,1998) 12
  • 13. THE UN MILLENNIUM DEVELOPMENT GOALS 1. ERADICATE EXTREME POVERTY AND HUNGER 2. ACHIEVE UNIVERSAL PRIMARY EDUCATION 3. PROMOTE GENDER EQUALITY AND EMPOWER WOMAN 4 4. REDUCE CHILD MORTALITY 5. IMPROVE MATERNAL HEALTH 6. COMBAT HIV/AIDS, MALARIA AND OTHER DISEASES 7. ENSURE ENVIRONMENTAL SUSTAINABILITY 8. 8 DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENT 13
  • 14. SOME DEFINITIONS OF PLANNING PLANNING IS THE APPLICATION OF SCIENTIFIC METHODS TO POLICY MAKING (FALUDI, 1983) PLANNING IS A PROCESS FOR DETERMINING APPROPRIATE FUTURE ACTION THROUGH A SEQUENCE OF CHOICES ( (DAVIDOFF AND REINER, 1983) O , 983) 14
  • 15. PLANNING A DELIBERATE AND CONCIOUS ATTEMPT TO FORMULATE DECISIONS FROM SOME ALTERNATIVES TO ACHIEVE THE GOALS THE ELEMENTS OF PLANNING: 1. GOALS 2. PRIORITY AND TARGETS 3. TIME FRAME 4. CONSTRAINTS 5. CAPITAL AND RESOURCES, AND ITS ALLOCATIONS 6. 6 IMPLEMENTATION POLICIES AND STRATEGIES 7. IMPLEMENTING AGENCIES AND HUMAN RESOURCES 8. MONITORING, EVALUATION AND CONTROL MECHANISM , 15
  • 16. PLANNING CRITERIA 1. COMPREHENSIVE AND INDICATIVE 2. CONTROL AND DIRECTING GOVERNMENT SPENDING IN ORDER TO STIMULATE THE PRIVATE INVESTMENT 3. STIMULATE MARKET MECHANISM 4. PEOPLE PARTICIPATION PROCESS 5. AFFIRMATIVE ACTION TO WHOM CAN’T SUIT THE MARKET MECHANISM 16
  • 17. THE SHIFT OF DEVELOPMNET PLANNING IN USA AND UK THE DEVELOPMENT PLANNING BEEN ABANDONED ABANDONED, THE NEW FOCUS ON: 1. DEREGULATION 2. PRIVATISATION 3. 3 URBAN ECONOMIC ZONE 17
  • 18. OTHER REASON DEVELOPMENT PLANNING AND PUBLIC REGULATION, NO MORE APPROPRIATE, BECAUSE IT HINDERS CREATIVITY,, PRIVATE INITIATIVE, BURDEN TO INOVATION, AND CREATE A HIGH COST ECONOMY CLASSICAL LIBERAL 18
  • 19. THE ROLE OF GOVERNMENT THROUGH PLANNING IRVING SVERDLOW (1963): OPERATION (PROVIDING PUBLIC GOODS) DIRECT CONTROL (TARIFF) INDIRECT CONTROL (STANDARDIZATION) DIRECT INFLUENCE (INCENTIVE) INDIRECT INFLUENCE (EXPORT MARKET INFORMATION) 19
  • 20. WHY WE DO PLANNING? DECREASING UNCERTAINTY INTEGRATING SOME RATIONAL METHODS AND TECHNOLOGIES INTO PROBLEM SOLVING PROCESS AND DECISION MAKING PROCESS 20
  • 21. WHY WE DO PLANNING ? PROVIDING THE CHANCE ANG BLUE PRINT TO CONTROL AND MONITOR THE PUBLIC EFFORTS FROM TIME TO TIME INCREASING PARTICIPATION FROM THE PEOPLE ON DECISION MAKING AT LEAST MAKING, WIDENING THE HORIZON OF THE PUBLIC EXPONENT 21
  • 22. OTHER REASONS IF WE COULD FIRST KNOW WHERE WE ARE, AND WHITHER WE ARE TENDING, WE COULD BETTER JUDGE WHAT TO DO AND HOW TO DO, DO IT (ABRAHAM LINCOLN) THE ROLE OF THE STATE IN THE ECONOMIC LIFE OF DEVELOPING COUNTRIES NEEDS TO BE REAPPRAISED…. NOT BY STRONG IDEOLOGICAL OVERTURES, BUT BY PRAGMATIC CONSIDERATIONS OF FEASIBLE ALTERNATIVES (M. SINGH) 22
  • 23. OTHER REASONS MARKET FAILURE RESOURCE MOBILIZATION AND ALLOCATION ATTITUDINAL OR PSYCHOLOGICAL IMPACT FOREIGN AID ? (TODARO, 2000) 23
  • 24. THE ROLE OF PLANNERS WHAT IS OR SHOULD BE THE TOPIC OR FOCUS OF PLANNING? WHO DOES THE PLANNER WORK FOR? WHAT IS THE GOAL OF PLANNING? (IS EQUITABLE DISTRIBUTION OF RESOURCES POSSIBLE?) HOW DO WE ACHIEVE OUR GOALS? (IS RATIONAL DECISION MAKING POSSIBLE?) WHAT IS PRACTICAL EXPECTATIONS? (LEW, 1996) 24
  • 25. PLANNING APPROACH (1) POLITICAL (2) TECNOCRATIC (3) PARTICIPATIVE (4) TOP-DOWN (5) BOTTOM-UP 25
  • 26. THE PLANNING APPROACH 1. RATIONAL PLANNING SYNOPTIC PLANNING, COMPREHENSIVE PLANNING BASIS FOR MOST PUBLIC PLANNING 2. INCREMENTAL PLANNING 3. ADVOCACY PLANNING 4. TRANSACTIVE PLANNING 26
  • 27. RATIONAL PLANNING THE STEPS: 1. IDENTIFY A PROBLEM 2. IDENTIFY A GOAL 3. COLLECT BACKGROUND DATA 4. IDENTIFY A MEANS OF ASSESSING ALTERNATIVE PLAN SCENARIOS 5. IDENTIFY ALTERNATIVE PLAN SCENARIOS CONSISTING OF POLICIES AND GUIDELINES TO ACHIEVE THE GOAL 27
  • 28. RATIONAL PLANNING 6. ASSESS ALTERNATIVE PLAN SCENARIOS 7. SELECT THE PREFERRED ALTERNATIVE 8. IMPLEMENT THE PLAN 9. MONITOR, EVALUATE AND REVISE THE IMPLEMENTATION 10. IDENTIFY NEW PROBLEMS AND BEGIN THE PROCESS AGAIN 28
  • 29. RATIONAL PLANNING PRACTICE TYPICALLY MORE COMPLEX THAN THE STEPS A. COMPLETE AGENCY PRE-PLANNING ACTIVITIES 1. 1 CLARIFY AGENCY MISSION, ROLE, MISSION ROLE RESPONSIBILITIES 2. DELINEATE INTENDED PURPOSE AND USE OF THE PLAN 3. DETERMINE PLAN FRAMEWORK AND FORMAT 29
  • 30. RATIONAL PLANNING PRACTICE B. ESTABLISH GOALS, GUIDELINES, AND STANDARDS 4. DEVELOP A PLANNING PROCESS TO DO THIS: - METHODOLOGIES DATA REQUIREMENTS - PARTICIPANTS ORIENTATION/EDUCATION - COORDINATION ORGANIZATIONAL STRUCTURE - EVALUATION PROCEDURE 5. 5 DEVELOP A WORK PROGRAM TO DO THIS 6. ESTABLISH GOALS 7. ESTABLISH GUIDELINES AND STANDARDS 30
  • 31. RATIONAL PLANNING PRACTICE C. IDENTIFY NEEDS & PRIORITIES, ESTABLISH OBJECTIVES, AND DEVELOP PLAN IMPLEMENTATION STRATEGY 8. 8 DEVELOP THE PLANNING PROCESS 9. DEVELOP THE WORK PROGRAM AND TIME SCHEDULE 10. IDENTIFY NEEDS 11. DETERMINE PRIORITIES 12. ESTABLISH OBJECTIVES 13. DEVELOP THE PLAN IMPLEMENTATION STRATEGY 31
  • 32. RATIONAL PLANNING PRACTICE D. PUBLISH AND IMPLEMENT THE PLAN E. EVALUATE RESULTS & REVIEW, REVISE AND UPDATE THE PLAN 32
  • 33. CRITICS ON RATIONAL PLANNING RATIONAL PLANNING IS OFTEN CRITICIZED BUT IT STILL REMAINS THE MOST COMMON APPROACH TO PLANNING BECAUSE IT IS: RATIONAL AND THEREFORE EASIER TO JUSTIFY (LEW, 1996) 33
  • 34. ASSUMPTIONS 1. ASSUMES THAT PEOPLE BEHAVE RATIONALLY - THAT RATIONALITY IS A PART OF EVERYDAY LIFE - THAT PEOPLE AND EVENTS ARE PREDICTABILITY 2. ASSUMES UNLIMITED PROBLEM SOLVING CAPABILITIES AND PERFECT INFORMATION - COST OF INFORMATION COLLECTION IS AFFORDABLE - ABILITY TO IDENTIFY ALL ALTERNATIVES (‘SYNOPTIC’) 34
  • 35. ASSUMPTIONS 3. ASSUMES THAT ONLY FACTS EXIST - NO VALUES (SUBJECTIVE BELIEF SYSTEMS) ( ) - ALL VARIABLES EXIST WITHIN AN INTERCONNECTED AND CLOSED SYSTEM (NO UNFORESEEABLE VARIABLES) 4. ASSUMES A RATIONAL-DEDUCTIVE SEQUENCE OF EVENTS - IF ‘A’ HAPPENS, THE ‘B’ WILL FOLLOW - NO NEED FOR POLITICAL STRATEGIES - NOT SUITED FOR CRISIS OR UNFORESEEN EVENTS 35
  • 36. INCREMENTAL PLANNING AN ALTERNATIVE THEORY THAT ACCEPTS MOST OBVIOUS SHORTCOMINGS OF RATIONAL PLANNING DEVELOPED FROM THE PEACE CORPS IN THE 1960S 1. LIMITED TIME PERIODS/HORIZONS 2. POLITICAL DECISION MAKING 3. LIMITED AND IMPERFECT INFORMATION 36
  • 37. INCREMENTAL PLANNING 4. LIMITED TIME AND MONEY FOR DATA COLLECTION 5. SOCIETAL VALUES ARE AS IMPORTANT AS FACTS 6. OPEN, RAPIDLY CHANGING SYSTEM; UNFORESEEABLE EVENTS 7. PLANNING IS DISJOINTED, INCREMENTAL AND SERIAL (SERIAL = ONE EVENT AFTER ANOTHER WITH NO GIANT STEPS) 37
  • 38. ADVOCACY PLANNING CAME OUT OF 1960S, CONSIDER AS AN ADVERSARIAL APPROACH IN THE LEGAL PROFESSION 1. DEFENDING THE WEAK AGAINST THE STRONG WEAK MEANS: THE POOR; DISENFRANCHISED; ENVIRONMENTAL CAUSES 2. 2 SUCCESSFUL IN BLOCKING INSENSITIVE PLANNING ESPECIALLY ‘URBAN RENEWAL’ URBAN RENEWAL 38
  • 39. ADVOCACY PLANNING 3. MAJOR TOOL: DEVELOPMENT OF ‘PLURAL PLANS PLANS’ DIFFERENT PLANS FOR DIFFERENT SECTORS OF THE COMMUNITY 4. CRITICIZED FOR BLOCKING EFFICIENT PLANNING 5. SOCIAL POLICY & ENVIRONMENTAL JUSTICE BECAME IMPORTANT PLANNING ISSUES 6. SUSTAINABLE DEVELOPMENT IS THE ‘MAINSTREAMING’ OF ADVOCACY ISSUES MAINSTREAMING 39
  • 40. TRANSACTIVE PLANNING ALSO CALLED ‘POST RATIONAL PLANNING’ A RESPONSE TO THE FAILURES OF ADVOCACY PLANNING BASED ON: 1. SOCIAL LEARNING THEORY HOW DO SOCIETIES LEARN (AND CHANGE) 2. INTERPERSONAL INTERACTION DIALOGUE AND MUTUAL LEARNING 40
  • 41. TRANSACTIVE PLANNING PLANNERS JOB: 1. 1 FACILITATE SHARED UNDERSTANDING AMONG PEOPLE 2. 2 ENGAGE IN MUTUAL LEARNING WITH CLIENTS/PEOPLE BOTH REQUIRE ‘DIALOGUE’ Q MAJOR CRITICISMS: - VERY TIME CONSUMING AND DIFFICULT - VERY PERSONAL & SUBJECTIVE 41
  • 42. MUTUAL LEARNING PROCESS PLANNER CONTRIBUTES quot;PROCESSquot; KNOWLEDGE 1. THEORY AND SCIENTIFIC METHODOLOGY 2. LARGER SOCIETAL PERSPECTIVE & CONCERNS CLIENT CONTRIBUTES quot;PERSONALquot; KNOWLEDGE 1. DIRECT PERSONAL EXPERIENCE 2. KNOWLEDGE OF LOCAL CONDITIONS AND NEEDS BOTH ARE OF EQUAL VALUE AND IMPORTANCE 42
  • 43. KNOWLEDGE SHARED PROCESS & PERSONAL KNOWLEDGE BECOME FUSED THRU: 1. PERSONAL AND VERBAL INTERACTION (DIALOGUE) PUBLIC GOOD IS ACHIEVED 2. EFFORTS TO CREATE INTELLIGENT INSTITUTIONS INSTITUTIONS WHICH ARE SELF LEARNING / SELF-LEARNING EDUCATING / ADAPTING 43
  • 44. COMPARISON OF APPROACHES Rational Planning Advocacy Planning Transactive Planning Audience decision maker / power holder a community group society / quot;the people” View held by client goal oriented / rational goal oriented / rational experiential View of self (planner) rational analyst & technician rational analyst catalyst / inventor & change agent Methodology science science & politics dialogue & politics Techniques analytical analytical process / synthesis Data objective & processed objective & processed objective / processed & subjective/personal Goal one best solution solution perceived best a working solution & by client continuing process 44
  • 45. COMPARISON OF APPROACHES View of change process controlled / stability controlled / stability guided / responsive to change View of future comprehensive / time-driven partial / short term evolutionary / long-term Worldview elitist / structural efficiency benevolent / functional participatory / structural & efficiency functional efficiency Problem environment isolated (closed system) isolated (closed system) open system Implementation not planner's problem not planner's problem part of solution process Focus th problem the bl the bl th problem & potential actors t ti l t the th problem & potential actors bl t ti l t (LEW, 1996) 45
  • 46. ECONOMIC DEVELOPMENT PLAN A SPECIFIC SET OF QUANTITATIVE ECONOMIC TARGETS TO BE REACHED IN A GIVEN PERIOD OF TIME, TIME WITH A STATED STRATEGY FOR ACHIEVING THOSE TARGETS 46
  • 47. ECONOMIC DEVELOPMENT PLAN A COMPREHENSIVE PLAN SET ITS TARGETS INCLUDING ALL ASPECTS OF THE NATIONAL ECONOMY A SECTORAL AND PARTIAL PLAN ELABORATING ONLY A SPECIFIC SECTOR, FOR EXAMPLE, AGRICULTURE, INDUSTRIAL OR TRADE SECTOR 47
  • 48. MODELS FOR PLANNING 1. AGGREGATE GROWTH MODELS: INVOLVING MACROECONOMIC ESTIMATES OF PLANNED OR REQUIRED CHANGES IN PRINCIPAL ECONOMIC VARIABLES 2. MULTISECTOR INPUT-OUTPUT MODELS: WHICH ASCERTAIN THE PRODUCTION, RESOURCES, PRODUCTION RESOURCES EMPLOYMENT, AND FOREIGN-EXCHANGE IMPLICATIONS OF A GIVEN SET OF FINAL DEMAND TARGETS WITHIN INTERINDUSTRY PRODUCT FLOWS 3. DETAILED SELECTION OF SPECIFIC INVESTMENT WITHIN SECTOR: THROUGH THE TECHNIQUE OF PROJECT APPRAISAL AND SOCIAL COST-BENEFIT ANALYSIS (TODARO, 2000) 48
  • 49. PLANNING STAGING 1. AGGREGATE 2. SECTORAL 3. PROJECT 49
  • 50. THE PLAN 1. WARTIME PLANNING 2. 2 TOWN AND COUNTRY PLANNING 3. ANTICYCLICAL PLANNING 4. DEVELOPMENT PLANNING - NATIONAL - REGIONAL (WATERSTON, 1982) 50
  • 51. DECISION MAKING PROCESS PLANNING PLANNING FROM FROM TECNOCRATIC POLITIC POINT OF VIEW POINT OF VIEW DISTORTION ACCORDANCE PLAN 51
  • 52. GOOD PLAN * ECONOMICALLY EFFICIENT * POLITICALLY ACCEPTED * ADMINISTRATIVELY WORKABLE * IN ACCORDANCE WITH SOCIO CULTURAL AND ETHICS 52
  • 53. THE FAILURE AN EXAMINATION OF POSTWAR PLANNING HISTORY REVEALS THAT THERE HAVE BEEN MANY MORE FAILURES THAN SUCCESSES IN THE IMPLEMENTATION OF DEVELOPMENT PLANS (WATERSTON, 1989) 53
  • 54. THE CAUSES GAP BETWEEN THEORY AND PRACTICE PLANNING PROCESS FAILURE - INSUFFICIENT AND UNRELIABLE DATA - UNANTICIPATED ECONOMIC TURMOIL - INSTITUTIONAL WEAKNESSES - POLITICAL ASPECT - NO IMPLEMENTATION MANUAL 54
  • 55. PUBLIC SECTOR MANAGEMENT Decision making Policies for Planning Budgets Nat. Planningg for programs (Seek to achieve) (Defines) (Finance) Implementation Outcomes Outputs Inputs (effectiveness) ( ff ti ) (efficiency) Control indicators Impacts Production Costs indicators Monitoring Evaluation Value-for-money Cost accounting tools Audits & financial audits
  • 56. LINKING POLICY, PLANNING AND BUDGETING IN THE ANNUAL PLANNING AND RESOURCE MANAGEMENT CYCLE (1) REVIEW POLICY R i h i Review the previous planning and l i d implementation period (2) (6) SET POLICY AND UNDERTAKE EVALUATE AND AUDIT PLANNING ACTIVITY Policy activities, effectiveness and Establish resource frame work, set out feed the results into future plans objectives, policies, strategies and expenditure priorities (3) (5) MOBILIZE AND ALLOCATE MONITOR activities and RESOURCES ACCOUNT for expenditures Prepare Budget (4) IMPLEMENTATION PLANNED ACTIVITIES Collect revenues, release funds, deploy personnel, undertake personnel activities Source : World Bank, “Public Expenditure Management Handbook”, 1998
  • 57. BUDGET AND BUDGETING BUDGET IS AN ESTIMATION OF THE REVENUES AND EXPENSES OVER A SPECIFIED FUTURE PERIOD OF TIME THE PURPOSE OF BUDGETING: TO CONTROL OVER PUBLIC MONEY AND ACCOUNTABILITY TO PUBLIC AUTHORITY 57
  • 58. BUDGET’S ROLE BUDGETS DIRECT EVERYTHING A GOVERNMENT DOES THEIR PROCESSES DOES. ARBITRATE OVER THE ALLOCATION OF SCARCE RESOURCES AMONG THE COMPETING DEMANDS OF AGENCIES WHOSE BUSINESS IT IS TO SEE PUBLIC NEEDS FULFILLED (XAVIER, 2001) 58
  • 59. BUDGET BUDGET IS A PLAN THAT SETS OUT: 1. 1 THE OBJECTIVES AND STRATEGIES OF THE GOVERNMENT IN A BUDGET YEAR, 2. 2 THE PROGRAMMES AND ACTIVITIES THAT WOULD BE CARRIED OUT TO EXECUTE THE STRATEGIES TO ACHIEVE THE OVERALL OBJECTIVES, 3. THE RESPECTIVE OBJECTIVES OF THESE PROGRAMMES AND ACTIVITIES THAT REFLECT THE DISAGGREGATION OF THE OVERALL OBJECTIVES OF GOVERNMENT 59
  • 60. BUDGET 4. THE RESOURCES ALLOCATED ACROSS THESE PROGRAMMES AND ACTIVITIES, 5. 5 THE REVENUES PROJECTED TO BE COLLECTED TO FINANCE THE EXPENDITURE IN CARRYING OUT THE PROGRAMMES AND ACTIVITIES ACTIVITIES, 6. PERFORMANCE TARGETS – IN TERM OF THE DELIVERY OF SERVICES IN THE RIGHT QUANTITY, QUALITY AND IN A TIMELY AND COST-EFFECTIVE FASHION – THAT WOULD NEED TO BE ACHIEVED TO MEETING THE SUB-OBJECTIVES AND, THEREBY, THE OVERALL OBJECTIVES OF THE GOVERNMENT (XAVIER, (XAVIER 2001) 60
  • 61. BUDGETING PRINCIPLES TRANSPARENCY AND ACCOUNTABILITY COMPREHENSIVENESS OF BUDGET PREDICTABILITY OF RESOURCES & POLICIES FLEXIBILITY CONTESTABILITY EXISTENCE AND SHARING OF INFORMATION 61
  • 62. BUDGETING THEORIES PPBS PLANNING, PROGRAMMING PLANNING PROGRAMMING, AND BUDGETING SYSTEMS DEVELOPED IN 1960s BY US DEPT OF DEFENSE BUDGETING BASED ON LONG-TERM PLANNING NEEDS 62
  • 63. BUDGETING THEORIES MBO MANAGEMENT BY OBJECTIVE DETERMINING OBJECTIVES BASED ON OVERALL GOALS CLOSE COOPERATION BETWEEN A MANAGER AND HIS/HER SUBORDINATES 63
  • 64. BUDGETING THEORIES ZBB ZERO BASED BUDGETING LARGER BUDGET BROKEN INTO SMALLER “DECISION PACKAGES” MANAGERS OF EACH DECISION PACKAGE JUSTIFIES ENTIRE BUDGET FROM SCRATCH EACH YEAR (ZERO- (ZERO BASE) 64
  • 65. BUDGETING THEORIES BUDGETING FOR PERFORMANCE LINKING: INPUTS, OUTPUTS, AND OUTCOMES 65
  • 66. BUDGETING THEORIES BUDGETING FOR PERFORMANCE INPUT CASH/ACCRUAL OUTPUT PERFORMANCE DATA/INDICATORS/STANDARDS AUTHORITY ACCOUNTABILITY OUTCOME CLEAR OBJECTIVES INDICATORS EVALUATION 66
  • 67. BUDGETING THEORIES BUDGETING FOR PERFORMANCE CLASSIFICATION FUNCTIONAL PROGRAM ORGANIZATIONAL MULTI-YEAR 67
  • 68. BUDGETING THEORIES MTEF MEDIUM TERM EXPENDITURE FRAMEWORK FISCAL TARGETS (WHAT IS AFFORDABLE) FORWARD ESTIMATES OF EXISTING POLICY INSTITUTIONAL MECHANISMS FOR MAKING THE TRADE-OFFS A FOCUS ON PERFORMANCE ENHANCED PREDICTABILITY 68
  • 69. STAGES OF A MTEF Top-Down T D Stage 1 Stage 4 Stage 5 Stage 7 Macroeconomic Detailed Approval Review of f framework k dit expenditure f of ti estimates i t in availability of framework & ceilings by MOF and resources sector/ministry Cabinet presentation ceiling for 3 yrs to Cabinet and Parliament Stage 2 Stage 3 Stage 6 Step 1 St Step 3 Sector review Costing Hearings to Preparation of 3-year of ministry (recurrent & agree on estimates by objectives, capital) of objectives & ministries within outputs & p programs/ priority p y Cabinet approved pp activities i ii sub-programs programs ceilings ili for 3 years Step 2 Agreement on sectoral/ministry programs & sub- programs Bottom-up (ADAPTED FROM GERVAIS, 1999)
  • 70. BUDGET CYCLE AND FISCAL POLICY
  • 71. BUDGET CYCLE THE BUDGET CYCLE IS MADE UP OF THE MAJOR EVENTS OR STAGES IN MAKING DECISIONS ABOUT THE BUDGET, AND BUDGET IMPLEMENTING AND ASSESSING THOSE DECISIONS DECISIONS. THE SPECIFIC CHARACTERISTICS OF THE BUDGET CYCLE DIFFER FROM COUNTRY TO COUNTRY. NONETHELESS, IN MOST , COUNTRIES, THE BUDGET CYCLE IS LIKELY TO HAVE FOUR STAGES 71
  • 72. BUDGET CYCLE STAGE 1 BUDGET FORMULATION THE BUDGET PLAN IS PUT TOGETHER BY THE EXECUTIVE BRANCH OF GOVERNMENT STAGE 2 BUDGET ENACTMENT THE BUDGET PLAN MAY BE DEBATED DEBATED, ALTERED, AND APPROVED BY THE LEGISLATIVE BRANCH OF GOVERNMENT 72
  • 73. BUDGET CYCLE STAGE 3 BUDGET EXECUTION THE POLICIES OF THE BUDGET ARE CARRIED OUT BY THE GOVERNMENT STAGE 4 BUDGET AUDITING AND ASSESSMENT THE ACTUAL EXPENDITURES OF THE BUDGET ARE ACCOUNTED FOR AND ASSESSED FOR EFFECTIVENESS 73
  • 74. PUBLIC FINANCE GOVERNMENTAL FINANCES TODAY ARE “IN THE PUBLIC EYE” AS NEVER BEFORE (ROSENBLOOM AND KRAVCHUCK, 2005) 74
  • 75. FISCAL FUNCTIONS THE MAJOR FUNCTION OF FISCAL FUNCTIONS ARE: 1. ALLOCATION 2. DISTRIBUTION 3. STABILIZATION 75
  • 76. ALLOCATION FUNCTION THE PROVISION FOR SOCIAL GOODS, OR THE PROCESS BY WHICH TOTAL RESOURCE USE IS DIVIDED BETWEEN PRIVATE AND SOCIAL GOODS AND BY WHICH THE MIX OF SOCIAL GOODS IS CHOSEN THIS PROVISION MAY BE TERMED THE ALLOCATION OF BUDGET POLICY (MUSGRAVE AND MUSGRAVE 1989) MUSGRAVE, 76
  • 77. DISTRIBUTION FUNCTION ADJUSTMENT OF THE DISTRIBUTION OF INCOME AND WEALTH TO ENSURE CONFORMANCE WITH WHAT SOCIETY CONSIDERS A “FAIR” OR “JUST” STATE OF DISTRIBUTION, HERE REFERRED TO AS THE DISTRIBUTION FUNCTION (MUSGRAVE AND MUSGRAVE, 1989) 77
  • 78. STABILIZATION FUNCTION THE USE OF BUDGET POLICY AS A MEANS OF MAINTAINING HIGH EMPLOYMENT, A REASONABLE DEGREE OF PRICE LEVEL STABILITY, AND AN APPROPRIATE RATE OF ECONOMIC GROWTH, WITH ALLOWANCES FOR EFFECTS ON TRADE AND ON THE BALANCE OF PAYMENTS. WE REFER TO ALL THESE OBJECTIVES AS THE STABILIZATION FUNCTION (MUSGRAVE AND MUSGRAVE, 1989) 78
  • 79. INSTRUMENTS OF STABILIZATION FUNCTION 1. MONETARY INSTRUMENTS - CONTROL OVER MONEY - INTEREST RATE - CREDIT CONDITIONS 2. FISCAL INSTRUMENTS - GOVERNMENT SPENDING - THE AMOUNT AND TYPE OF TAXES 79
  • 80. FISCAL-MONETARY MIX POLICY TO INFLUENCE MACROECONOMIC ACTIVITY 1. TIGHT-MONETARY AND LOOSE-FISCAL POLICY WILL TEND TO ENCOURAGE CONSUMPTION AND RETARD INVESTMENT 2. EASY-MONETARY AND TIGH-FISCAL POLICY WILL TEND TO DISCOURAGE CONSUMPTION AND ACCELERATE INVESTMENT 80
  • 81. PUBLIC SECTOR IN ECONOMY HOUSEHOLDS INCOME SAVING INCOME TAXES CAPITAL MARKET FACTOR SPEND MARKET PRODUCT PUBLIC SERVICE MARKET AND GOODS FIRMS TRANSFER BORROWING PURCHASE GOVERNMENT BUDGET (ADAPTED FROM MUSGRAVE AND MUSGRAVE, 1989) 81
  • 82. BUDGET DECISION MAKING
  • 83. PLAYING THE BUDGET GAME SOMETIMES BUDGETING TAKES ON THE AURA OF A GAME, WITH THE GAME VARIOUS AGENCY PLAYERS TRYING TO INCREASE THEIR SHARES AND ELECTED OFFICIALS TRYING, AT LEAST OSTENSIBLY, TO KEEP TAXES DOWN AND PROMOTE ADMINISTRATIVE ECONOMY (ROSENBLOOM AND KRAVCHUCK, 2005) 83
  • 84. A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING 1. VALUES OR OBJECTIVES ARE DETERMINED AND CLARIFIED SEPARATELY, USUALLY BEFORE CONSIDERING ALTERNATIVE POLICIES 2. POLICY FORMATION IS APPROACHED THROUGH ENDS-MEANS ANALYSIS, WITH ANALYSIS AGREED-UPON ENDS GENERATING A SEARCH FOR WAYS OF ATTAINING THEM 84
  • 85. A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING 4. A “GOOD” POLICY IS, THEREFORE, ONE GOOD THAT PROVIDES THE MOST APPROPRIATE MEANS TO SOME DESIRED END 5. EVERY IMPORTANT RELEVANT FACTOR IS TAKEN INTO ACCOUNT 6. 6 THEORY OFTEN IS HEAVILY RELIED UPON (MILLER, (MILLER 1991) 85
  • 86. OBSTACLE TO DECISIONS 1. 1 LACK OF GOAL CLARITY 2. CONFUSION OF THE PUBLIC INTEREST WITH THAT OF A CUSTOMER CLIENTELE CUSTOMER, GROUP, OR CONSTITUENCY 3. RIGID CONSERVATISM (IN THE SENSE OF STRICT ADHERENCE TO RULES, PROCEDURES, AND PAST PRACTICES 86
  • 87. OBSTACLE TO DECISIONS 4. THE TENDENCY TO OVERSIMPLIFY REALITY 5. “OVERQUANTIFICATION” AND TENDENCY TO DEEMPHASIZE OR IGNORE QUALITATIVE FACTORS 6. RELUCTANCE TO ENGAGE IN POLICY AND PROGRAM EVALUATION (ROSENBLOOM AND KRAVCHUCK, 2005) 87
  • 88. BUDGET DECISION MAKING PROCESS BUDGET BUDGET FROM FROM TECNOCRATIC POLITIC POINT OF VIEW POINT OF VIEW DISTORTION ACCORDANCE BUDGET 88
  • 89. INDONESIA NATIONAL BUDGET SCHEME (SINCE 2005) 20 YEARLY 5 YEARLY YEARLY PRESIDENT’S VISION LTDP MTDP GWP STRA-PLAN OF DEPT DEPT AP DEPT ABP STATE BUDGET 89
  • 90. THANK YOU 90