Challenge for govt: Spending enough for education, or else

Riyadi Suparno, The Jakarta Post, Jakarta

Believe it or not: Just nine regular citizens, mostly teachers from the small town of Banyuwangi, East Java, have set the wheels in motion that could lead to the possible impeachment of President Susilo Bambang Yudhoyono.

These nine people were apparently unhappy that the government was dragging its feet on its constitutional obligation of allocating 20 percent of its budget for education.

They were unhappy that the government was merely promising to gradually work up to that and fulfilling the obligation some time in 2009. So, they took their case to the Constitutional Court.

In its verdict issued last week, the court met their demands and obliged the government to allocate at least 20 percent of its budget for education, starting Jan. 1, 2006, to conform with the 1945 Constitution.

The verdict surprised both the government and the House of Representatives, which have been investing a lot of energy and resources to put together the 2006 budget.

With the education budget set at Rp 40 trillion (US$4 billion), or 11 percent of the total spending for 2006, the government and the House now has two unpleasant options: revising the budget to conform to the ruling, which would be a near impossible fiscal task indeed, or ignore the verdict, which could have wider legal and political ramifications.

Conforming to the ruling means that the government and the House have to redo the 2006 draft budget, the deliberation of which is nearing completion. Revising the budget itself is not a big deal, the main concern would be how to find the additional funding to increase the education allocation.

To conform with the ruling, assuming that the central government's expenditures remain the same at Rp 375 trillion next year, education spending must be jacked up to at least Rp 75 trillion.

In fact, the Ministry of Education will get the largest budget allocation of all the government ministries next year, nearly Rp 31.5 trillion, while the Ministry of Religious Affairs, which oversees and funds state Islamic schools from elementary to higher education levels, will have Rp 8.3 trillion at its disposal. Together, they have will spend approximately 40 trillion on education.

If the government wants to comply with the court's ruling, one alternative to meet the target is to shift funding from other ministries to the ministries of education and religious affairs.

Now, if we look at the ministries with relatively large budgets for next year, the one that would get the next largest allotment would be the Ministry of Defense at Rp 23.6 trillion. It is followed by the Ministry of Public Works and the National Police at Rp 13.2 trillion each and the Ministry of Health with Rp 11.5 trillion.

Looking at the budget of those ministries, it is still possible for the government to shift a portion of the money from the Ministry of Defense, and possibly from the police, but not from public works or health.

Reducing the budget of those two ministries is not recommended at all as it would result in a slowdown of infrastructure projects and weaker health services. Both are in a dire state at present: infrastructure for maintaining the momentum of economic recovery, while health services are needed to help the poor.

Reducing the budget of the Ministry of Defense would possibly hurt the military most, which plans to revive its territorial operations down to the village level. But we can cope with that, and would possibly be a lot happier without the soldiers and military agents in every neighborhood and village.

However, with the reduction of the military budget, we might have to cope with the military's foot dragging in freeing themselves from their many business interests -- a bad practice that has been going on for decades.

Similarly, by slightly reducing -- emphasis on slightly -- the budget for the police is still acceptable, but of course at a cost. With budget reductions, we might have to tolerate more petty crimes or extortion from our underpaid police officers, which might irritate many of us. Reducing the budget of the police could also undermine their work, especially the anti- terror operation.

Considering these risks, the government would likely not be able to shift enough money from other sectors to education. Even if the government could take some portion from the Ministry of Defense and the police, it would still be far from enough to meet its constitutional obligation.

Despite such difficulties, the government actually has a very good option to boost education funding to 20 percent of the budget next year... by cutting the subsidies completely, especially fuel subsidies which will remain high next year despite this year's drastic cuts. The government has allocated Rp 80 trillion for such subsidies next year, of which Rp 68 trillion is for subsidizing gasoline, diesel and kerosene.

By only reducing by half the fuel subsidies next year, the government would be able to raise its education budget to 20 percent, as required by the Constitution and the Constitutional Court's verdict.

Cutting half the fuel subsidies next year requires political courage on the part of the government as it would likely draw widespread protests from many people. But learning from the two fuel price increases this year alone, the government is seen as quite capable in managing the impacts of those.

If the government has no political courage to cut subsidies, it still has another option to meet the constitutional responsibility, i.e. by creating a larger budget deficit.

The government has projected a Rp 20 trillion deficit next year, equal to 0.7 percent of the gross domestic product. Boosting the deficit to Rp 55 trillion, or even 60 trillion, would not pose any serious problem for the country's economy as it would amount to only about 2 percent of GDP, which is considered by many to still be relatively healthy; compare it to the 3 percent deficit ceiling for countries of the European Union.

Also, financing the deficit should not be a problem for the government as it has quite successfully done so in the past years by issuing bonds, both for the domestic and international markets.

So, the options are wide open for the government to choose. And yet, if the government remains defiant and does not abide by the court's ruling, it exposes itself to a greater danger ahead.

By not abiding by the court's ruling, the government sets a bad precedent for the whole country by literally snubbing its nose at the legal system. And this would only worsen the already bad law-abiding culture in the country.

Worst of all, by not upholding the court's ruling, the government could be legally classified as violating the Constitution, which is strong grounds for anyone not happy with the current government to mount an impeachment process of President Susilo.

Now, the choices are there, and it is up to the government to decide its own fate.