Managing Public Expenditures to Promote Economic Development: Indonesian Experiences since 1945

Abstract
Since its independence day, Indonesia needs around twenty years to start living in stable and normal situation that enable it develop its domestic political system, national budget mechanism, and national economy. Disharmony within domestic political powers such as between leaders for Nationalist, Communist, Religious, and military groups has plunged Indonesia to domestic political conflicts, even between parliamentary and executive branches. Due to this chaotic situation, budget formulation process could not be properly done during the period of 1945 to 1965. Even, for the reason of budget formulation process dead-lock, Soekarno’s Administration froze the Parliament by issuing Presidential Decree of the Year 1960 Number 3. That is why Indonesian government could not manage its public expenditures properly until the presence of New Order era under Soeharto’s Administration. After learned for more than 55 years, Indonesia decided to promote transparency and accountability principles in budget formulation processes and mechanism by enacting law on State Finance.

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Mature Debates with Hearth and Soul. Nobody hurting.

Peoples and the Government Budget: who should preserve?

In a democratic country, governance rights derived from the peoples, executed by the peoples, and dedicated to the peoples themselves. Those are delivered to both government branches: the executive and the legislative, which are elected by the peoples in a general election. From the government budget sight, the governments are equipped with:
1. laws, regulations, and rules,
2. authority to collect taxes or other payments– due to the laws, and
3. natural resources that can be exploited due to the laws, regulations, and rules,
which must be managed correctly to achieve the main goal of the nation, “delivering prosperity and welfare to the peoples (or citizen)”.
As a democratic country, the Indonesian Government, governs the country to ensure that the nation’s goals as stated in the Preambule of the Constitution Year 1945, “…to promote public (peoples) prosperity, to sharpen peoples’ mind, to take part in developing the world order which is based on the independency, long-live peace, and social justice, …” might be definitely achieved gradually, through the State Budget, year by year. The state budget is enacted in laws, as the agreement between the government (the executive branch) and the parliament (as peoples’ representative).
As the agreement, the State Budget is financed by the peoples --through the taxes and other state income sources, either directly taken from the peoples as a cost-sharing to the services produced by the government, such as health, education, environment, security and order, and public facility, or taken from the natural resources which could be exploited, such as forestry, fishery, mining, and plantations—to enable the government delivering better services to them. The government should be responsible to serve peoples in many aspects of human life, such as economy, culture, ideology, and infrastructures. Therefore, the establishment of a legal framework and good governance are mostly considered to be success factors.
The equilibrium of demand between the peoples and the government would be achieved when the government's activities which are financed by the budget, might:
1) accommodate most of peoples’ interests to have a better life, and
2) be acceptable to and supported by the peoples.
From the Indonesian experiences, the government budget is enacted from years to years, since the Indonesian Independence in 1945. Due to the Constitution Year 1945, Article 23, the state budget proposal is submitted to the parliament to be discussed and scrutinized in the parliamentary debates until could be approved and enacted into the law on state budget. The debates are provided to ensure that:
1) the proposed programs in the state budget are proper to both the peoples’ and government’s interests, and
2) the peoples have no obligation to the taxes or payment should be payed to finance the state budget.
Since the Independence Day, many trillions rupiahs have been spent in the Indonesian State Budget. During five years later (year 2002-2006), peoples have been agreeing budget spending to the amount of Rp2,318.80 trillion. And, in the year 2007, again, peoples have agreed Rp763,57 trillion. But untill nowadays, Indonesian peoples almost give up to the government, while the government budget can’t be expected to rise their welfare.
People are waiting for; "what can be provided by the government during this year (2008) which will spend the budget for around Rp989 Trillion."