2006 budget passed with few snags

rip Hudiono, The Jakarta Post/Jakarta

All ended well for the government's proposed 2006 state budget, with the House of Representatives passing the budget draft into law on Friday.

In a plenary session that began at 9 a.m. and lasted for some eight hours, nine of the House's 10 factions accepted the proposed budget draft, attaching several notes for the government to address in its implementation in January.

Only the opposition Indonesian Democratic Party of Struggle (PDI-P) faction refused to support the draft, with members detailing a list of criticisms of it.

The plenary session had reached the required half-attendance quorum of the House's 550 members, but only some 100 returned after the Friday prayers break.

The House's Budget Committee had earlier approved the draft after a two-month long deliberation with the government, whose final report was submitted to the plenary session by chairman Emir Moeis of the PDI-P.

The budget targets Indonesia's gross domestic product (GDP) to grow by 6.2 percent to Rp 3,040 trillion (some US$304 billion) next year, on higher development spending and assumes a deficit of Rp 22.4 trillion, or 0.7 percent of the GDP.

It is the first budget deliberation for both President Susilo Bambang Yudhoyono's administration and the 2004-elected House.

The previous administration of former president Megawati Soekarnoputri and the 1999-elected House earlier deliberated and approved the 2005 state budget.

That budget turned into a financial, and political, nightmare for the new government as soaring global oil prices forced it to twice revise what was a demonstrably unrealistic set of assumptions -- the first time in the country's history.

But the 2006 state budget deliberation had its own intrigue too, with a last-minute controversy -- a significant rise in next year's stipends for legislators and for the Presidential budget -- at a time when the public is struggling to cope with increasing prices after the Oct. 1 fuel price hike.

Minister of Finance Jusuf Anwar said the President had told him to cancel the increases and make the needed adjustments through the mid-year budget revision mechanism.

Besides the budget increase issue, all of the House factions also urged the government to fulfill the Constitutional Court's recent ruling, mandating the education budget be increased to a minimum 20 percent of total expenditure.

A group of 45 House members, including deputy House speaker Zainal Maarif who chaired Friday's plenary session, had submitted an official letter, stating their strong disappointment in the House leaders and the government.

Next year's budget only allocates some Rp 40 trillion to the education sector, less than 10 percent of total spending, and even lower than the planned 12 percent that the government had previously presented to the House.

Jusuf said the government has consulted with both the court and the House on its efforts to meet the requirement. "The court understands the current budget's condition (of the government) only being able to afford a gradual education budget increase," he said.

Despite their acceptance of the budget draft, the factions also questioned whether next year's Rp 54.2 trillion fuel subsidy allocation would be enough, without the country having to go through another series of fuel price hike like this year.

They urged the government to be more prudent in next year's budget implementation, basing it on performance-based criteria by setting specific targets -- such as unemployment rate reductions and human development index rating improvements in a year.