The new accountability revolution in government

-------------------------- Marc Robinson Technical Advisor Badan Pengawasan Keuangan dan Pembangunan (BPKP) Jakarta --------------------------

The first rule of business is to keep your customers happy. If you produce products which are poor quality or too expensive, you'll go out of business. If you produce products the customer doesn't want, you'll go bust even faster. But for government, it's been different. If a government agency produces a poor or inappropriate service, so what? The funding comes from the taxpayer, and taxpayers have to pay irrespective of the quality of the service they receive.

But things are changing. There is a new accountability revolution under way in the public sector. It is about results. Government agencies are being required to measure and report publicly on the results they are delivering to the community. Their access to budget funding is increasingly being made dependent upon the results they deliver, and upon how efficiently they deliver those results.

The manifestations of this revolution are everywhere, including Indonesia. In the U.S., President George Bush has recently demanded that all government agencies prove that they are delivering results for the public. He has committed himself to cutting the budgets of agencies that don't or can't demonstrate that they are giving the public value for the tax funding they use. His actions build on the provisions of the Government Performance and Results Act passed by Congress in 1993.

In Australia, for example, budget funding for many government services takes the form of a "price" paid by the government per service delivered by the government agency to the community. Centrelink, the government organization that administers income support and similar payments, is paid a certain amount of money for every benefit application it processes. If it doesn't deliver the product, it doesn't earn the revenue.

Performance measurement and reporting is fundamental to this accountability revolution. Across the world, government agencies are being required to measure and report publicly on the outcomes and outputs they deliver. "Outputs" are services provided and "outcomes" are the social benefits produced by those services. For example, the outcome of the government education is well- educated children, and it is clearly both possible and desirable to measure the educational achievements of school students. There is no reason why the performance of government agencies should be shrouded in darkness.

The emphasis upon reporting and managing for outcomes fits naturally with a new respect for the people the Governments serve. Traditionally, the attitude of some government agencies to the people the Governments serve was that they should be grateful for whatever service they receive, and should wait patiently until it was provided. Now, the view is that clients are entitled to prompt and courteous service. The results have, in many countries, been impressive.

Two of the key challenges behind this accountability revolution are fiscal pressures and demanding democratic electorates. From the mid-1970s, fiscal pressures upon western government became intense. If you're facing serious fiscal pressures, it becomes absolutely crucial to know where tax funds are being spent effectively and efficiently, and where they are not. It is essential to get budgetary expenditure priorities right.

Electorates, on the other hand, have become more informed and less tolerant of waste and incompetence. They have sent governments a clear and loud message: Use our taxes well, or you'll pay the price by losing office at the next election.

Both of these factors are highly relevant to Indonesia. Indonesia's difficult budgetary situation leaves absolutely no scope for ineffective and wasteful expenditure. Every rupiah of tax revenue must be used in the way that will yield maximum benefit to citizens. Indonesia's citizens are, moreover, increasingly aware of the power that they hold in a democratic system, and can be expected to use that power to demand real performance from their leaders and from the civil service.

The accountability revolution is the second great accountability revolution in the public sector. The first took place mainly in the nineteenth century, and was concerned with financial propriety and accountability. It led to institutional structures which were designed to ensure that public monies were used only for public purposes which had been authorized according to law. It was, in short, an anti-corruption revolution. Essential parts of this revolution included requirements for full public reporting on the use of public funds, with auditing by fiercely independent public officials (such as the Australian Auditor-General and the U.S. Government Accounting Office). These types of structures are also now being put in place in Indonesia.

Indonesia now has an opportunity that was not available to countries like Australia and the U.S. It can combine the two accountability revolutions and realize their synergies. Eliminating blatant corruption would, of course, be an impressive achievement. However, ensuring that public money is only spent for public purposes does not prevent it from being spent wastefully. To ensure that public money is spent well requires the reforms designed to create results-oriented government agencies.

One organization working to achieve these objectives in Indonesia is the BPKP. In 1999, a new Presidential Instruction was promulgated requiring performance accountability of Indonesian government organizations. To implement this requirement, the BPKP has been developing a system called AKIP, applying to all regional and central government organizations. Under this system, there are three things all government organizations are required to do. They must undertake strategic planning. They must measure their performance. And they must report on their planning and performance to the government, through the BPKP.

The broad principles of the AKIP system are firmly in accord with the new accountability revolution. Of course, the system is new, and will take time to implement fully and to fine-tune for maximum effectiveness. As elsewhere in the world, it will take time for government organizations to develop the skills and experience needed to meet the new accountability requirements. This is an important start and it is essential now that the momentum is carried forward with the support of the broader community.