Budget analysis of graft at election commission

Budget analysis of graft at election commission

Jhon Tafbu Ritonga, Medan

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 jtritonga@yahoo.com.