Indonesia’s political parties have lost control over the national budgeting process, as members of parliament prioritise their constituencies – and themselves.
At first glance, the second cabinet reshuffle by President Joko Widodo, or Jokowi, appears to continue Indonesia’s well-established rainbow cabinet strategy. Like the other three incumbents since 1999, Jokowi has formed an oversized parliamentary coalition. Jokowi began with a parliamentary minority. But, after winning over the Golkar Party, the National Mandate Party (PAN) and the United Development Party (PPP), he now has the support of seven of the 10 parties with a presence in the House of Representatives.
With 69 per cent of seats in the parliament, the coalition has the capacity to wield enormous power. But the annual budget process has proven that numbers aren’t always a recipe for success. Instead of paving the way for the adoption of the government's budget agenda, Jokowi’s newfound parliamentary majority has had little impact on the budgeting process.
The fragility of coalitions
Like Yudhoyono’s before him, Jokowi’s coalition cabinet relies on the assumption that political parties will provide legislative support in exchange for cabinet seats. Indeed, a coalition cabinet has been known as a powerful presidential ‘toolbox’, which could be used to build legislative support for executive policy positions.
Since the introduction of the open-list proportional system, though, the role of party leadership and party discipline has fallen away. The new system encourages parliamentarians to prioritise building a relationship with their constituents rather than being representative of their respective parties. As a consequence, party alliances no longer guarantee that the parliament will support government policy.
In the revisions of the 2012 budget and 2013 budgets, for example, the Prosperous Justice Party (PKS) joined with opposition parties to reject the government’s proposal for the removal of the fuel subsidy, even though it was a part of the government-majority coalition. Jokowi’s experience in the last two years has also demonstrated that the size of coalition no longer determines the relative success or failure of the government agenda in parliament. Parliament approved the revised 2015 budget bill even though Jokowi’s coalition held only a minority of seats. What’s more, the revised 2015 budget was also not business-as-usual fiscal policy. Besides removing fuel subsidies, Jokowi’s first budget also proposed a significant jump in the budget allocation to state-owned enterprises.
How, then, did Jokowi get his controversial budget bill passed? What accounts for parliament’s decision to approve it, if not a rainbow cabinet strategy?
Alliances of convenience
An open-list proportional system has encouraged members of parliament to bargain for measures that will benefit their electorates as a means of ensuring their re-election. In other words, incentives in the electoral arena pushed members of parliament toward behaviour that focuses on their constituency rather than their party. Important examples of this include the efforts of parliamentarians to maximise budget allocations to their constituencies.
Opportunities to access state resources independent of party affiliation has allowed members of parliament to form cross-party alliances in the budgetary process, which they can use to influence budget policy. One example of this is the optimisation fund, which was established in discussions by the budget committee. This adjusted macroeconomic assumptions in order to increase revenue and expenditure efficiency – freeing up funds for them to allocate as they pleased.
The optimisation fund is typically allocated to the electorates represented by the budget committee members, with some funds also flowing to various ministries and to support benefits for all MPs. In the 2015 revised budget, for instance, optimisation funds totalling Rp.3.5 trillion were allocated to the committee members through the Special Allocation Fund (DAK). Extra benefits were also provided to members of parliament including increased salaries, a new building and other perks.
Although the optimisation fund is sometimes mentioned in formal budget committee meetings, decisions about ‘who gets what and why’ are made behind closed doors in informal discussions between the chair of the budget committee, faction coordinators and the commission chairs.
The government tolerates the existence of this slush fund, which it sees as an ‘incentive’ required to get the budget committee to approve the budget.
Shenanigans in the sectoral commissions
While the budget committee is busy maximising returns from the optimisation fund, the parliament’s sectoral commissions have created their own mechanism for rent-seeking called the ‘aspiration fund’.
The aspiration fund was produced by sectoral commissions as a way of obtaining compensation for approving the budgets proposed by their counterpart ministries. Like the optimisation fund, the aspiration fund is used to force ministries to reallocate government projects in ways that benefit members’ constituencies. In practice, however, these funds are prone to manipulation for the personal benefit of parliamentarians.
The corruption scandal that involved several Commission V members in connection with a project from the Ministry for Public Works and Public Housing demonstrates how easily the aspiration fund is exploited for corrupt activity. In this case, money from the fund was not only allocated to members’ electorates, but also was offered to other regions where business interests were prepared to pay to secure a project.
Even though the provision of aspiration funds has been criticised many times by the government and NGOs, the mechanism continues to be used by some sectoral commissions to maximise members’ reputation in their electorates, but also potentially to generate direct financial returns.
Pork barrel politics
Both the optimisation fund and aspiration fund are forms of pork barrelling, which signal the high political cost of parliamentary support. And because the Indonesian president has no authority to veto budget amendments by the parliament, there is little that can be done.
What is interesting, though, is that the benefits accruing from these mechanisms are being distributed to parliamentarians from parties in both the ruling and opposition coalitions. In other words, the budget process does not serve to benefit political parties’ agendas – as is the case when coalition partners are rewarded with cabinet seats – but rather individual parliamentarians in the form of pork.
Yuna Farhan (email@example.com) is completing a PhD in the Department of Indonesian Studies at the University of Sydney.
Twitter handle: @yunafarhan