Funding Education October 23, 2008
Posted by Ross McLeod in Essays and Comments.Tags: Add new tag, budget, constitution, education, Indonesia
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In a previous posting I reported on a finding by the Constitutional Court that the government’s budget for 2008 (as well as previous budgets) infringed a recent amendment of the Constitution by failing to allocate at least 20% of government spending to the education sector. I also suggested that current and future governments would continue to ignore the 20% minimum because of reluctance to cut back on other spending priorities.
Much to my surprise, within just a few days the SBY government brought down its budget for 2009, having revised it at the last minute following the court’s decision so as to increase education spending to about 20% of the total. What an astonishing policy shift! Education was already the largest functional expense in the budget (excluding subsidies), and now it was intended virtually to double its allocation. In rough terms, the annual rate of spending on education was to increase from about $6 billion to about $12 billion, starting in less than five months time.
It would appear that as yet neither the public nor the government has any idea how this extra money is to be spent. How should it be allocated among primary, secondary and tertiary education? How should it be divided between current and capital expenditure? To what extent should additional funding be spent on back office bureaucrats or front line teachers? Should the extra funding be used entirely in public sector education, or should some of it be used to support private sector schools and universities? Should the emphasis be on raising the quantity of educational output or on raising its quality?
Such questions are extremely important, but it is highly doubtful that the government has even considered them in any depth, let alone making decisions about them. It almost beggars belief, therefore, that a financial commitment of this nature and magnitude could be made within a matter of days. This is certainly not a good example of how the policy making process should work. It is a recipe for disaster.
The constitutional amendment on education, like most laws in Indonesia, leaves a great deal to be desired in terms of clarity and precision. It is distressingly vague on key points. For example, every citizen is afforded the right to obtain an education, but what does this mean? Primary education? Lower secondary? Upper secondary? Tertiary? Each ‘citizen’ is obliged to participate in primary education. But for how many years? And what are the consequences for each such citizen—i.e. child—who does not do so? The government is obliged to finance primary education. But what if a child’s parents choose to send it to a private school? Are the costs to be covered, in part or in whole, by the government? How would this work out if rich parents sent their children to very expensive private schools? Could they sue the government if it failed to cover their costs?
In the present context the 20% minimum budget spending rule is of key importance. This requirement is worded ambiguously, such that it can be interpreted to mean either that governments at all levels must individually devote at least 20% of their budgets to education, or that total education spending by all governments in aggregate should be at least 20% of aggregate government spending. The court has adopted the latter interpretation, and the central government has accepted this. And yet education is one of the functions that has been devolved to regional governments since the beginning of 2001, so it makes little sense to require the central government to devote such a large proportion of its budget to this field. This suggests that the former interpretation is more appropriate. The logical implication is that regional governments should spend considerably more than 20% of their budgets on this aspect of their fiscal responsibilities, and the central government considerably less.
This highlights another drafting deficiency in the constitutional amendment. If the financing stipulation is interpreted as suggested here, meeting the 20% minimum becomes the joint responsibility of the central government, more than 30 provincial governments, and hundreds of local governments. In turn, it then becomes impossible to say who is to blame if the 20% level is not achieved. In other words, the finding of the Constitutional Court appears incorrect on this interpretation. Its decision should have been based on total education spending by all governments, not on that by the central government alone. And if it had found on that basis that education spending was insufficient, the blame should not have been laid solely on the central government, but on all governments collectively. Obviously, such a decision would have been pointless, because there would have been no legal basis for any instruction as to how the infringement should be rectified. An alternative, more sensible, decision would have been to send the constitutional amendment back to the parliament, with an instruction to resolve the ambiguity.
The whole episode reflects poorly on all parties involved. The parliament has recklessly amended the Constitution. The Constitutional Court has failed to recognise the deficiencies of the amendment, failed to focus on the appropriate evidence, and wrongly blamed the central government alone (on the basis of this inappropriate evidence) for supposedly infringing the Constitution. And the central government has meekly accepted this outcome, and responded in the worst possible manner.
Indonesia’s education system is certainly greatly in need of improvement, but this is not the right way to go about it.
Hi Ross,
I’m not sure how i only stumbled upon this blog now, since i’ve to say that you’ve probably the best stuff i’ve seen on blogs these days for current event analysis - most others choose to stay on the periphery of current events and elect to stay on the academic bubbles instead.
i particularly like the monetary post below - i’m not a trained economist - but i’ve been exasperated trying to make sense of a few things, some i think you explained rather succinctly in there. (i wrote a little bit - more on the politics, less the economy, on treeatwork.blogspot.com, a post on bailout, me thinks). Very few of the blogging economists out there tackled the issue, sadly.
On the education amendment, i very much agree with your take on it. It’s a messy structure and badly managed, i need to go back on it a little bit more, but i think you’re pretty accurate in your analysis. I’d like to think that it is still very much a positive thing though, and it reflects at least on the good will of the current administration, if at least to take education seriously. It will take beyond the first two years i think - after the election - for the budget to ever be effectively used and managed. Sad and not effecient, maybe, but looking at the state of education in the country, just about anything is better than its current sad state.
anyhow, i just wanted to say hello and say how much i like this site. Undoubtedly, you’ll be seeing more of me around.