PLANNING AND BUDGETING
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Transcript of PLANNING AND BUDGETING
THE THEORY OF PUBLIC THE THEORY OF PUBLIC ADMINISTRATION
Linkage Master Programmesg gDouble Degree FIA-UNIBRAW and Japanese Universities
Universitas Brawijaya
Lecturer : Prof. Dr. Ir. Ginandjar [email protected] j
Assistant Professor : Dr.Ir. Deddy S. Bratakusumah, BE, MURP, [email protected]
PLANNING AND BUDGETINGPLANNING AND BUDGETING
DEVELOPMENT THEORIES
1. THE LINEAR-STAGES THEORY2 STRUCTURAL CHANE MODELS2. STRUCTURAL-CHANE MODELS3. THE INTERNATIONAL-DEPENDENCE
REVOLUTIONREVOLUTION4. THE NEOCLASSICAL
COUNTERREVOLUTIONCOUNTERREVOLUTION5. THE NEW GROWTH THEORY
(TODARO 2000)(TODARO, 2000)
3
THE LINEAR-STAGES THEORYTHE LINEAR STAGES THEORY
1. ROSTOW’S STAGES OF GROWTH1 THE TRADITIONAL SOCIETY1. THE TRADITIONAL SOCIETY2. THE PRE-CONDITION FOR TAKE OFF INTO SELF-
SUSTAINING GROWTHSUS G G O3. THE TAKE OFF4. THE DRIVE TO MATURITY5. THE AGE OF HIGH MASS CONSUMPTION
2. THE HARROD-DOMAR GROWTH MODEL
Y/Y = s/k
4
STRUCTURAL-CHANGE MODELS
1. THE LEWIS THEORY OF DEVELOPMENTDEVELOPMENTLEWIS TWO SECTOR MODEL (TRADITIONAL AND MODERN)
2. STRUCTURAL CHANGE AND S O OPATTERNS OF DEVELOPMENT
AGRICULTURE – INDUSTRY – CONSTRUCTION & SERVICES
5
THE INTERNATIONAL-DEPENDENCE REVOLUTIONDEPENDENCE REVOLUTION
1. THE NEOCOLONIAL DEPENDENCE MODELUNDERDEVELOPMENT IS SEEN AS AN EXTERNALLY INDUCED PHENOMENON
2 THE FALSE-PARADIGM MODEL2. THE FALSE PARADIGM MODELUNDERDEVELOPMENT IS CAUSED BY FAULTY AND INAPPROPRIATE ADVICE FROM INTERNATIONAL “EXPERT”
3. THE DUALISTIC-DEVELOPMENT THESISTHE EXISTENCE AND PERSISTENCE OF INCREASING DIVERGENCES BETWEEN RICH AND POOR NATIONS AND RICH AND POOR PEOPLES ON VARIOUS LEVEL
6
THE NEOCLASSICAL COUNTERREVOLUTION
1. FREE MARKETS, PUBLIC CHOICE, & MARKET FRIENDLY APPROACHESMARKET FRIENDLY APPROACHESPRIVATIZATIONS, GOVERNMENTS CAN DO NOTHING RIGHT, “NONSELECTIVE” INTERVENTIONS,
2. TRADITIONAL NEOCLASSICAL GROWTH THEORYOUTPUT GROWTH RESULTS FROM ONE OR MORE OF THREE FACTORS: INCREASES IN LABOR QUANTITY AND QUALITY INCREASES IN CAPITAL AND AND QUALITY, INCREASES IN CAPITAL, AND IMPROVEMENTS IN TECHNOLOGY
Y = AeµtKαL1-α
7
Y Ae K L
THE NEW GROWTH THEORY
ENDOGENOUS GROWTHSEEK TO EXPLAIN THE FACTORS THAT SEEK TO EXPLAIN THE FACTORS THAT DETERMINE THE SIZE OF µ (THE RATE OF GROWTH OF GDP) THAT IS LEFT GROWTH OF GDP), THAT IS LEFT UNEXPLAINED AND EXOGENOUSLY DETERMINED IN THE SOLOW NEOCLASSICAL GROWTH EQUATION
Y = AeµtKαL1-α Y = AeµtK
8
DEVELOPMENT AS DEVELOPMENT AS TRANSFORMATION OF SOCIETY
A MOVEMENMT FROM TRADITIONAL A MOVEMENMT FROM TRADITIONAL RELATIONS, TRADITIONAL WAYS OF THINKING, TRADITIONAL WAYS OF ,DEALING WITH HEALTH AND EDUCATION, TRADITIONAL METHODS OF PRODUCTION TO MORE METHODS OF PRODUCTION TO MORE “MODERN” WAYS
(STIGLITZ,1998)
9
THE SUCCESSFUL TRANSFORMATION OF SOCIETY
1. RAISE THE GDP PER CAPITA1. RAISE THE GDP PER CAPITA2. RAISE STANDARD OF HEALTH AND
LITERACYLITERACY3. REDUCE POVERTY4 SUSTAINING THE ENVIRONMENT4. SUSTAINING THE ENVIRONMENT
(STIGLITZ,1998)
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THE STRATEGY INCLUDING
1. PRIVATE SECTOR DEVELOPMENT1. PRIVATE SECTOR DEVELOPMENT2. PUBLIC SECTOR DEVELOPMENT3 COMMUNITY DEVELOPMENT3. COMMUNITY DEVELOPMENT4. FAMILY DEVELOPMENT5. INDIVIDUAL DEVELOPMENT
(STIGLITZ,1998)
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THE PRIORITY
1. EDUCATION1. EDUCATION2. INFRASTRUCTURE3 HEALTH3. HEALTH4. KNOWLEDGE5. CAPACITY BUILDING
(STIGLITZ,1998)
12
THE UN MILLENNIUM DEVELOPMENT GOALS
1. ERADICATE EXTREME POVERTY AND HUNGER2. ACHIEVE UNIVERSAL PRIMARY EDUCATION3. PROMOTE GENDER EQUALITY AND EMPOWER
WOMAN4 REDUCE CHILD MORTALITY4. REDUCE CHILD MORTALITY5. IMPROVE MATERNAL HEALTH6. COMBAT HIV/AIDS, MALARIA AND OTHER 6. COMBAT HIV/AIDS, MALARIA AND OTHER
DISEASES7. ENSURE ENVIRONMENTAL SUSTAINABILITY8 DEVELOP A GLOBAL PARTNERSHIP FOR 8. DEVELOP A GLOBAL PARTNERSHIP FOR
DEVELOPMENT
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SOME DEFINITIONS OF PLANNING
PLANNING IS THE APPLICATION OF SCIENTIFIC METHODS TO POLICY MAKING
(FALUDI, 1983)
PLANNING IS A PROCESS FOR DETERMINING APPROPRIATE FUTURE ACTION THROUGH A SEQUENCE OF ACTION THROUGH A SEQUENCE OF CHOICES
(DAVIDOFF AND REINER, 1983)( O , 983)
14
PLANNING
A DELIBERATE AND CONCIOUS ATTEMPT TO FORMULATE DECISIONS FROM SOME ALTERNATIVES TO ACHIEVE THE GOALSALTERNATIVES TO ACHIEVE THE GOALS
THE ELEMENTS OF PLANNING:1. GOALS2. PRIORITY AND TARGETS3. TIME FRAME3. TIME FRAME4. CONSTRAINTS5. CAPITAL AND RESOURCES, AND ITS ALLOCATIONS6 IMPLEMENTATION POLICIES AND STRATEGIES 6. IMPLEMENTATION POLICIES AND STRATEGIES 7. IMPLEMENTING AGENCIES AND HUMAN RESOURCES8. MONITORING, EVALUATION AND CONTROL MECHANISM
15
,
PLANNING CRITERIA
1.COMPREHENSIVE AND INDICATIVE2.CONTROL AND DIRECTING GOVERNMENT
SPENDING IN ORDER TO STIMULATE THE PRIVATE INVESTMENTPRIVATE INVESTMENT
3.STIMULATE MARKET MECHANISM4.PEOPLE PARTICIPATION PROCESS5.AFFIRMATIVE ACTION TO WHOM CAN’T
SUIT THE MARKET MECHANISM
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THE SHIFT OF DEVELOPMNET THE SHIFT OF DEVELOPMNET PLANNING
IN USA AND UK THE DEVELOPMENT PLANNING BEEN ABANDONEDPLANNING BEEN ABANDONED,
THE NEW FOCUS ON:1. DEREGULATION1. DEREGULATION2. PRIVATISATION3 URBAN ECONOMIC ZONE 3. URBAN ECONOMIC ZONE
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OTHER REASON
DEVELOPMENT PLANNING AND PUBLIC DEVELOPMENT PLANNING AND PUBLIC REGULATION, NO MORE APPROPRIATE, BECAUSE IT HINDERS CREATIVITY, ,PRIVATE INITIATIVE, BURDEN TO INOVATION, AND CREATE A HIGH COST ECONOMY
CLASSICAL LIBERAL
18
THE ROLE OF GOVERNMENT THE ROLE OF GOVERNMENT THROUGH PLANNING
IRVING SVERDLOW (1963):
OPERATION (PROVIDING PUBLIC GOODS)
DIRECT CONTROL (TARIFF)
INDIRECT CONTROL (STANDARDIZATION)INDIRECT CONTROL (STANDARDIZATION)
DIRECT INFLUENCE (INCENTIVE)
INDIRECT INFLUENCE INDIRECT INFLUENCE (EXPORT MARKET INFORMATION)
19
WHY WE DO PLANNING?
DECREASING UNCERTAINTYDECREASING UNCERTAINTYINTEGRATING SOME RATIONAL METHODS AND TECHNOLOGIES INTO METHODS AND TECHNOLOGIES INTO PROBLEM SOLVING PROCESS AND DECISION MAKING PROCESSDECISION MAKING PROCESS
20
WHY WE DO PLANNING ?
PROVIDING THE CHANCE ANG BLUE PROVIDING THE CHANCE ANG BLUE PRINT TO CONTROL AND MONITOR THE PUBLIC EFFORTS FROM TIME TO TIMEPUBLIC EFFORTS FROM TIME TO TIMEINCREASING PARTICIPATION FROM THE PEOPLE ON DECISION MAKING AT LEAST PEOPLE ON DECISION MAKING, AT LEAST WIDENING THE HORIZON OF THE PUBLIC EXPONENTEXPONENT
21
OTHER REASONSIF WE COULD FIRST KNOW WHERE WE ARE, AND WHITHER WE ARE TENDING, WE COULD BETTER JUDGE WHAT TO DO AND HOW TO BETTER JUDGE WHAT TO DO, AND HOW TO DO IT
(ABRAHAM LINCOLN)
THE ROLE OF THE STATE IN THE ECONOMIC LIFE OF DEVELOPING COUNTRIES NEEDS TO LIFE OF DEVELOPING COUNTRIES NEEDS TO BE REAPPRAISED…. NOT BY STRONG IDEOLOGICAL OVERTURES, BUT BY PRAGMATIC CONSIDERATIONS OF FEASIBLE PRAGMATIC CONSIDERATIONS OF FEASIBLE ALTERNATIVES
(M. SINGH)
22
OTHER REASONS
MARKET FAILURERESOURCE MOBILIZATION AND RESOURCE MOBILIZATION AND ALLOCATIONATTITUDINAL OR PSYCHOLOGICAL ATTITUDINAL OR PSYCHOLOGICAL IMPACTFOREIGN AID ?FOREIGN AID ?
(TODARO, 2000)
23
THE ROLE OF PLANNERS
WHAT IS OR SHOULD BE THE TOPIC OR FOCUS OF PLANNING?OF PLANNING?WHO DOES THE PLANNER WORK FOR?WHAT IS THE GOAL OF PLANNING?WHAT IS THE GOAL OF PLANNING?(IS EQUITABLE DISTRIBUTION OF RESOURCES POSSIBLE?)
HOW DO WE ACHIEVE OUR GOALS? HOW DO WE ACHIEVE OUR GOALS? (IS RATIONAL DECISION MAKING POSSIBLE?)
WHAT IS PRACTICAL EXPECTATIONS?(LEW, 1996)
24
PLANNING APPROACH
(1) POLITICAL(2) TECNOCRATIC(3) PARTICIPATIVE(4) TOP-DOWN(5) BOTTOM-UP
25
THE PLANNING APPROACH
1. RATIONAL PLANNINGSYNOPTIC PLANNING, COMPREHENSIVE PLANNINGBASIS FOR MOST PUBLIC PLANNINGBASIS FOR MOST PUBLIC PLANNING
2. INCREMENTAL PLANNING3. ADVOCACY PLANNING3. ADVOCACY PLANNING4. TRANSACTIVE PLANNING
26
RATIONAL PLANNING
THE STEPS:
1. IDENTIFY A PROBLEM2. IDENTIFY A GOAL3. COLLECT BACKGROUND DATA4. IDENTIFY A MEANS OF ASSESSING 4. IDENTIFY A MEANS OF ASSESSING
ALTERNATIVE PLAN SCENARIOS5. IDENTIFY ALTERNATIVE PLAN SCENARIOS
CONSISTING OF POLICIES AND GUIDELINES TO ACHIEVE THE GOAL
27
RATIONAL PLANNING
6. ASSESS ALTERNATIVE PLAN SCENARIOS7. SELECT THE PREFERRED ALTERNATIVE8. IMPLEMENT THE PLAN9. MONITOR, EVALUATE AND REVISE THE
IMPLEMENTATION10. IDENTIFY NEW PROBLEMS AND BEGIN
THE PROCESS AGAIN
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RATIONAL PLANNING PRACTICE
TYPICALLY MORE COMPLEX THAN THE STEPS
A. COMPLETE AGENCY PRE-PLANNING ACTIVITIESACTIVITIES
1 CLARIFY AGENCY MISSION ROLE 1. CLARIFY AGENCY MISSION, ROLE, RESPONSIBILITIES
2. DELINEATE INTENDED PURPOSE AND USE OF 2. DELINEATE INTENDED PURPOSE AND USE OF THE PLAN
3. DETERMINE PLAN FRAMEWORK AND FORMAT29
RATIONAL PLANNING PRACTICE
B. ESTABLISH GOALS, GUIDELINES, AND STANDARDS
4. DEVELOP A PLANNING PROCESS TO DO THIS:THIS:
- METHODOLOGIES DATA REQUIREMENTS- PARTICIPANTS ORIENTATION/EDUCATION- COORDINATION ORGANIZATIONAL STRUCTURECOORDINATION ORGANIZATIONAL STRUCTURE- EVALUATION PROCEDURE
5 DEVELOP A WORK PROGRAM TO DO THIS5. DEVELOP A WORK PROGRAM TO DO THIS6. ESTABLISH GOALS 7. ESTABLISH GUIDELINES AND STANDARDS
30
RATIONAL PLANNING PRACTICE
C. IDENTIFY NEEDS & PRIORITIES, ESTABLISH OBJECTIVES, AND DEVELOP PLAN IMPLEMENTATION STRATEGY
8 DEVELOP THE PLANNING PROCESS8. DEVELOP THE PLANNING PROCESS9. DEVELOP THE WORK PROGRAM AND TIME
SCHEDULESCHEDULE10. IDENTIFY NEEDS11. DETERMINE PRIORITIES12. ESTABLISH OBJECTIVES13. DEVELOP THE PLAN IMPLEMENTATION
STRATEGY31
STRATEGY
RATIONAL PLANNING PRACTICE
D. PUBLISH AND IMPLEMENT THE PLAN
E. EVALUATE RESULTS & REVIEW, REVISE AND UPDATE THE PLAN
32
CRITICS ON RATIONAL CRITICS ON RATIONAL PLANNING
RATIONAL PLANNING IS OFTEN CRITICIZED BUT RATIONAL PLANNING IS OFTEN CRITICIZED BUT IT STILL REMAINS THE MOST COMMON APPROACH TO PLANNING APPROACH TO PLANNING
BECAUSE IT IS: RATIONAL AND THEREFORE EASIER TO JUSTIFY
(LEW, 1996)
33
ASSUMPTIONS
1. ASSUMES THAT PEOPLE BEHAVE RATIONALLY- THAT RATIONALITY IS A PART OF EVERYDAY LIFE- THAT PEOPLE AND EVENTS ARE PREDICTABILITY
2. ASSUMES UNLIMITED PROBLEM SOLVING CAPABILITIES AND PERFECT INFORMATION
COST OF INFORMATION COLLECTION IS - COST OF INFORMATION COLLECTION IS AFFORDABLE
- ABILITY TO IDENTIFY ALL ALTERNATIVES (‘SYNOPTIC’)
34
ASSUMPTIONS
3. ASSUMES THAT ONLY FACTS EXIST- NO VALUES (SUBJECTIVE BELIEF SYSTEMS)( )- ALL VARIABLES EXIST WITHIN AN
INTERCONNECTED AND CLOSED SYSTEM (NO UNFORESEEABLE VARIABLES)UNFORESEEABLE VARIABLES)
4. ASSUMES A RATIONAL-DEDUCTIVE SEQUENCE OF EVENTSOF EVENTS- IF ‘A’ HAPPENS, THE ‘B’ WILL FOLLOW- NO NEED FOR POLITICAL STRATEGIES- NOT SUITED FOR CRISIS OR UNFORESEEN EVENTS
35
INCREMENTAL PLANNING
AN ALTERNATIVE THEORY THAT ACCEPTS MOST OBVIOUS SHORTCOMINGS OF RATIONAL OBVIOUS SHORTCOMINGS OF RATIONAL PLANNING
DEVELOPED FROM THE PEACE CORPS IN THE 1960S
1.LIMITED TIME PERIODS/HORIZONS2.POLITICAL DECISION MAKING3.LIMITED AND IMPERFECT INFORMATION
36
INCREMENTAL PLANNING
4.LIMITED TIME AND MONEY FOR DATA 4.LIMITED TIME AND MONEY FOR DATA COLLECTION
5.SOCIETAL VALUES ARE AS IMPORTANT AS FACTS
6.OPEN, RAPIDLY CHANGING SYSTEM; UNFORESEEABLE EVENTSUNFORESEEABLE EVENTS
7.PLANNING IS DISJOINTED, INCREMENTAL AND SERIAL (SERIAL = ONE EVENT AND SERIAL (SERIAL ONE EVENT AFTER ANOTHER WITH NO GIANT STEPS)
37
ADVOCACY PLANNING
CAME OUT OF 1960S, CONSIDER AS AN ADVERSARIAL APPROACH IN THE LEGAL ADVERSARIAL APPROACH IN THE LEGAL PROFESSION
1. DEFENDING THE WEAK AGAINST THE STRONG
WEAK MEANS: THE POOR; DISENFRANCHISED; ENVIRONMENTAL CAUSES
2 SUCCESSFUL IN BLOCKING INSENSITIVE 2. SUCCESSFUL IN BLOCKING INSENSITIVE PLANNING
ESPECIALLY ‘URBAN RENEWAL’38
ESPECIALLY URBAN RENEWAL
ADVOCACY PLANNING
3. MAJOR TOOL: DEVELOPMENT OF ‘PLURAL PLANS’PLANS
DIFFERENT PLANS FOR DIFFERENT SECTORS OF THE COMMUNITY
4. CRITICIZED FOR BLOCKING EFFICIENT PLANNING
5. SOCIAL POLICY & ENVIRONMENTAL JUSTICE BECAME IMPORTANT PLANNING ISSUESISSUES
6. SUSTAINABLE DEVELOPMENT IS THE ‘MAINSTREAMING’ OF ADVOCACY ISSUES
39
IS THE MAINSTREAMING OF ADVOCACY ISSUES
TRANSACTIVE PLANNING
ALSO CALLED ‘POST RATIONAL PLANNING’
A RESPONSE TO THE FAILURES OF ADVOCACY PLANNINGADVOCACY PLANNING
BASED ON:BASED ON:1. SOCIAL LEARNING THEORY
HOW DO SOCIETIES LEARN (AND CHANGE)2. INTERPERSONAL INTERACTION
DIALOGUE AND MUTUAL LEARNING
40
TRANSACTIVE PLANNING
PLANNERS JOB:1 FACILITATE SHARED UNDERSTANDING 1. FACILITATE SHARED UNDERSTANDING
AMONG PEOPLE2 ENGAGE IN MUTUAL LEARNING WITH 2. ENGAGE IN MUTUAL LEARNING WITH
CLIENTS/PEOPLEBOTH REQUIRE ‘DIALOGUE’Q
MAJOR CRITICISMS:- VERY TIME CONSUMING AND DIFFICULT- VERY TIME CONSUMING AND DIFFICULT- VERY PERSONAL & SUBJECTIVE
41
MUTUAL LEARNING PROCESS
PLANNER CONTRIBUTES "PROCESS" KNOWLEDGE
1. THEORY AND SCIENTIFIC METHODOLOGY2. LARGER SOCIETAL PERSPECTIVE & CONCERNS
CLIENT CONTRIBUTES "PERSONAL" KNOWLEDGE
1. DIRECT PERSONAL EXPERIENCE2. KNOWLEDGE OF LOCAL CONDITIONS AND NEEDS
BOTH ARE OF EQUAL VALUE AND IMPORTANCE
42
KNOWLEDGE SHARED
PROCESS & PERSONAL KNOWLEDGE BECOME FUSED THRU:
1. PERSONAL AND VERBAL INTERACTION (DIALOGUE)(DIALOGUE)
PUBLIC GOOD IS ACHIEVED
2. EFFORTS TO CREATE INTELLIGENT INSTITUTIONS
INSTITUTIONS WHICH ARE SELF LEARNING / INSTITUTIONS WHICH ARE SELF-LEARNING / EDUCATING / ADAPTING
43
COMPARISON OF APPROACHES
Rational Planning Advocacy Planning Transactive Planning
Audiencedecision maker / power holder a community group society / "the people”
View held by clientgoal oriented / rational goal oriented / rational experiential
View of self (planner)View of self (planner)rational analyst & technician rational analyst catalyst / inventor & change
agent Methodologyscience science & politics dialogue & politics
Techniquesanalytical analytical process / synthesis
Dataobjective & processed objective & processed objective / processed &
subjective/personal Goalone best solution solution perceived best a working solution &
by client continuing process
44
by client continuing process
COMPARISON OF APPROACHES
View of change processcontrolled / stability controlled / stability guided / responsive to change
View of futurecomprehensive / time-driven partial / short term evolutionary / long-term
Worldview elitist / structural efficiency benevolent / functional participatory / structural &
efficiency functional efficiency Problem environmentisolated (closed system) isolated (closed system) open system
Implementationnot planner's problem not planner's problem part of solution process
Focusth bl th bl & t ti l t th bl & t ti l tthe problem the problem & potential actors the problem & potential actors
(LEW, 1996)
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ECONOMIC DEVELOPMENT PLAN
A SPECIFIC SET OF QUANTITATIVE ECONOMIC TARGETS TO BE ECONOMIC TARGETS TO BE REACHED IN A GIVEN PERIOD OF TIME WITH A STATED STRATEGY TIME, WITH A STATED STRATEGY FOR ACHIEVING THOSE TARGETS
46
ECONOMIC DEVELOPMENT PLAN
A COMPREHENSIVE PLAN SET ITS TARGETS INCLUDING ALL ASPECTS OF TARGETS INCLUDING ALL ASPECTS OF THE NATIONAL ECONOMYA SECTORAL AND PARTIAL PLAN ELABORATING ONLY A SPECIFIC SECTOR, FOR EXAMPLE, AGRICULTURE, INDUSTRIAL OR TRADE SECTOR
47
MODELS FOR PLANNING1. AGGREGATE GROWTH MODELS:
INVOLVING MACROECONOMIC ESTIMATES OF PLANNED OR REQUIRED CHANGES IN PRINCIPAL ECONOMIC OR REQUIRED CHANGES IN PRINCIPAL ECONOMIC VARIABLES
2. MULTISECTOR INPUT-OUTPUT MODELS:WHICH ASCERTAIN THE PRODUCTION RESOURCES WHICH ASCERTAIN THE PRODUCTION, RESOURCES, EMPLOYMENT, AND FOREIGN-EXCHANGE IMPLICATIONS OF A GIVEN SET OF FINAL DEMAND TARGETS WITHIN INTERINDUSTRY PRODUCT FLOWS
3. DETAILED SELECTION OF SPECIFIC INVESTMENT WITHIN SECTOR:THROUGH THE TECHNIQUE OF PROJECT APPRAISAL THROUGH THE TECHNIQUE OF PROJECT APPRAISAL AND SOCIAL COST-BENEFIT ANALYSIS
48(TODARO, 2000)
PLANNING STAGING
1. AGGREGATE2. SECTORAL3. PROJECT3. PROJECT
49
THE PLAN
1. WARTIME PLANNING2 TOWN AND COUNTRY PLANNING2. TOWN AND COUNTRY PLANNING3. ANTICYCLICAL PLANNING4. DEVELOPMENT PLANNING
- NATIONAL- REGIONAL
(WATERSTON, 1982)
50
DECISION MAKING PROCESS
PLANNINGFROM
PLANNINGFROM
TECNOCRATIC POINT OF VIEW
POLITICPOINT OF VIEW
ACCORDANCEDISTORTION
PLAN
51
GOOD PLANGOOD PLAN
* ECONOMICALLY EFFICIENT* ECONOMICALLY EFFICIENT* POLITICALLY ACCEPTED* ADMINISTRATIVELY WORKABLE* ADMINISTRATIVELY WORKABLE* IN ACCORDANCE WITH SOCIO
CULTURAL AND ETHICSCULTURAL AND ETHICS
52
THE FAILURETHE FAILURE
AN EXAMINATION OF POSTWAR PLANNING HISTORY REVEALS THAT THERE HAVE HISTORY REVEALS THAT THERE HAVE BEEN MANY MORE FAILURES THAN SUCCESSES IN THE IMPLEMENTATION OF SUCCESSES IN THE IMPLEMENTATION OF DEVELOPMENT PLANS
(WATERSTON, 1989)
53
THE CAUSESTHE CAUSES
GAP BETWEEN THEORY AND PRACTICEPLANNING PROCESS FAILUREPLANNING PROCESS FAILURE- INSUFFICIENT AND UNRELIABLE DATA
UNANTICIPATED ECONOMIC TURMOIL- UNANTICIPATED ECONOMIC TURMOIL- INSTITUTIONAL WEAKNESSES
POLITICAL ASPECT- POLITICAL ASPECT- NO IMPLEMENTATION MANUAL
54
PUBLIC SECTOR MANAGEMENT
Decision making Policies forNat. Planning
Planning for programs
Budgetsg for programs
(Seek to achieve) (Defines) (Finance)
Implementation Outcomes Outputs Inputs
( ff ti )
Control indicators Impacts Production Costs
(effectiveness) (efficiency)
indicators
Monitoringtools
Evaluation Value-for-moneyAudits
Cost accounting& financial audits
LINKING POLICY, PLANNING AND BUDGETINGIN THE ANNUAL PLANNING AND RESOURCE MANAGEMENT
(1)REVIEW POLICY
R i h i l i d
CYCLE
Review the previous planning and implementation period
(2)(2)SET POLICY AND UNDERTAKE
PLANNING ACTIVITYEstablish resource frame work, set out
objectives, policies, strategies andexpenditure priorities
(6)EVALUATE AND AUDIT
Policy activities, effectiveness andfeed the results into future plans
expenditure priorities
(3)MOBILIZE AND ALLOCATE
(5)MOBILIZE AND ALLOCATE
RESOURCESPrepare Budget
(5)MONITOR activities and
ACCOUNT for expenditures
(4)IMPLEMENTATION PLANNED
ACTIVITIESCollect revenues, release funds,
deploy personnel undertakedeploy personnel, undertakeactivities
Source : World Bank, “Public Expenditure Management Handbook”, 1998
BUDGET AND BUDGETING
BUDGET IS AN ESTIMATION OF THE REVENUES AND EXPENSES OVER A SPECIFIED REVENUES AND EXPENSES OVER A SPECIFIED FUTURE PERIOD OF TIME
THE PURPOSE OF BUDGETING: TO CONTROL OVER PUBLIC MONEY AND ACCOUNTABILITY OVER PUBLIC MONEY AND ACCOUNTABILITY TO PUBLIC AUTHORITY
57
BUDGET’S ROLE
BUDGETS DIRECT EVERYTHING A GOVERNMENT DOES THEIR PROCESSES GOVERNMENT DOES. THEIR PROCESSES ARBITRATE OVER THE ALLOCATION OF SCARCE RESOURCES AMONG THE SCARCE RESOURCES AMONG THE COMPETING DEMANDS OF AGENCIES WHOSE BUSINESS IT IS TO SEE PUBLIC NEEDS FULFILLED
(XAVIER, 2001)
58
BUDGET
BUDGET IS A PLAN THAT SETS OUT:1 THE OBJECTIVES AND STRATEGIES OF THE 1. THE OBJECTIVES AND STRATEGIES OF THE
GOVERNMENT IN A BUDGET YEAR,2 THE PROGRAMMES AND ACTIVITIES THAT 2. THE PROGRAMMES AND ACTIVITIES THAT
WOULD BE CARRIED OUT TO EXECUTE THE STRATEGIES TO ACHIEVE THE OVERALL OBJECTIVES,
3. THE RESPECTIVE OBJECTIVES OF THESE PROGRAMMES AND ACTIVITIES THAT REFLECT THE DISAGGREGATION OF THE OVERALL OBJECTIVES OF GOVERNMENT
59
OVERALL OBJECTIVES OF GOVERNMENT
BUDGET
4. THE RESOURCES ALLOCATED ACROSS THESE PROGRAMMES AND ACTIVITIES,
5 THE REVENUES PROJECTED TO BE COLLECTED TO 5. THE REVENUES PROJECTED TO BE COLLECTED TO FINANCE THE EXPENDITURE IN CARRYING OUT THE PROGRAMMES AND ACTIVITIESTHE PROGRAMMES AND ACTIVITIES,
6. PERFORMANCE TARGETS – IN TERM OF THE DELIVERY OF SERVICES IN THE RIGHT QUANTITY, DELIVERY OF SERVICES IN THE RIGHT QUANTITY, QUALITY AND IN A TIMELY AND COST-EFFECTIVE FASHION – THAT WOULD NEED TO BE ACHIEVED TO MEETING THE SUB-OBJECTIVES AND, THEREBY, THE OVERALL OBJECTIVES OF THE GOVERNMENT
(XAVIER 2001)
60
(XAVIER, 2001)
BUDGETING PRINCIPLES
TRANSPARENCY AND ACCOUNTABILITYACCOUNTABILITYCOMPREHENSIVENESS OF BUDGETPREDICTABILITY OF RESOURCES & PREDICTABILITY OF RESOURCES & POLICIESFLEXIBILITYFLEXIBILITYCONTESTABILITYEXISTENCE AND SHARING OF INFORMATION
61
BUDGETING THEORIES
PPBSPLANNING PROGRAMMING AND PLANNING, PROGRAMMING, AND BUDGETING SYSTEMS
DEVELOPED IN 1960s BY US DEPT OF DEFENSEDEFENSEBUDGETING BASED ON LONG-TERM PLANNING NEEDSPLANNING NEEDS
62
BUDGETING THEORIES
MBOMANAGEMENT BY OBJECTIVEMANAGEMENT BY OBJECTIVE
DETERMINING OBJECTIVES BASED DETERMINING OBJECTIVES BASED ON OVERALL GOALS CLOSE COOPERATION BETWEEN A CLOSE COOPERATION BETWEEN A MANAGER AND HIS/HER SUBORDINATESSUBORDINATES
63
BUDGETING THEORIES
ZBBZERO BASED BUDGETINGZERO BASED BUDGETING
LARGER BUDGET BROKEN INTO LARGER BUDGET BROKEN INTO SMALLER “DECISION PACKAGES”MANAGERS OF EACH DECISION MANAGERS OF EACH DECISION PACKAGE JUSTIFIES ENTIRE BUDGET FROM SCRATCH EACH YEAR (ZERO-FROM SCRATCH EACH YEAR (ZEROBASE)
64
BUDGETING THEORIES
BUDGETING FOR PERFORMANCE
LINKING:
INPUTS,OUTPUTS, AND
OUTCOMES
65
BUDGETING THEORIES
BUDGETING FOR PERFORMANCE
INPUTCASH/ACCRUALCASH/ACCRUAL
OUTPUTPERFORMANCE DATA/INDICATORS/STANDARDSAUTHORITYACCOUNTABILITYACCOUNTABILITY
OUTCOMECLEAR OBJECTIVESINDICATORSEVALUATION
66
EVALUATION
BUDGETING THEORIES
BUDGETING FOR PERFORMANCE
CLASSIFICATIONFUNCTIONALPROGRAMPROGRAMORGANIZATIONAL
MULTI-YEAR
67
BUDGETING THEORIES
MTEF MEDIUM TERM EXPENDITURE FRAMEWORKMEDIUM TERM EXPENDITURE FRAMEWORK
FISCAL TARGETS (WHAT IS AFFORDABLE)FISCAL TARGETS (WHAT IS AFFORDABLE)FORWARD ESTIMATES OF EXISTING POLICY INSTITUTIONAL MECHANISMS FOR MAKING THE INSTITUTIONAL MECHANISMS FOR MAKING THE TRADE-OFFSA FOCUS ON PERFORMANCEENHANCED PREDICTABILITY
68
STAGES OF A MTEFT D
Stage 1
Macroeconomicf k
Detaileddit
Approval f
Review of ti t i
Top-DownStage 4 Stage 5 Stage 7
frameworkavailability of
resourcesexpenditureframework &
sector/ministryceiling for 3 yrs
ofceilings by
Cabinet
estimates in MOF and
presentationto Cabinet
andParliament
Stage 2
St 1
Stage 3 Stage 6
Step 1
Sector reviewof ministryobjectives, outputs &
i i i
Costing (recurrent &capital) of programs/
Step 3
Hearings toagree on
objectives &priority
Preparation of 3-yearestimates by
ministries withinCabinet approved
ilip
activities
Agreement on
Step 2
programs/sub-programs
for 3 years
p yprograms
ppceilings
Agreement onsectoral/ministryprograms & sub-
programs
Bottom-up(ADAPTED FROM GERVAIS, 1999)
BUDGET CYCLE AND FISCAL POLICYPOLICY
BUDGET CYCLE
THE BUDGET CYCLE IS MADE UP OF THE MAJOR EVENTS OR STAGES IN MAKING DECISIONS ABOUT THE BUDGET AND DECISIONS ABOUT THE BUDGET, AND IMPLEMENTING AND ASSESSING THOSE DECISIONS DECISIONS.
THE SPECIFIC CHARACTERISTICS OF THE THE SPECIFIC CHARACTERISTICS OF THE BUDGET CYCLE DIFFER FROM COUNTRY TO COUNTRY. NONETHELESS, IN MOST ,COUNTRIES, THE BUDGET CYCLE IS LIKELY TO HAVE FOUR STAGES
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BUDGET CYCLE
STAGE 1
BUDGET FORMULATIONBUDGET FORMULATION
THE BUDGET PLAN IS PUT TOGETHER BY THE EXECUTIVE BRANCH OF GOVERNMENTTHE EXECUTIVE BRANCH OF GOVERNMENT
STAGE 2
BUDGET ENACTMENTTHE BUDGET PLAN MAY BE DEBATED THE BUDGET PLAN MAY BE DEBATED, ALTERED, AND APPROVED BY THE LEGISLATIVE BRANCH OF GOVERNMENT
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BUDGET CYCLE
STAGE 3
BUDGET EXECUTIONBUDGET EXECUTION
THE POLICIES OF THE BUDGET ARE CARRIED OUT BY THE GOVERNMENT
STAGE 4
CARRIED OUT BY THE GOVERNMENT
BUDGET AUDITING AND ASSESSMENTTHE ACTUAL EXPENDITURES OF THE THE ACTUAL EXPENDITURES OF THE BUDGET ARE ACCOUNTED FOR AND ASSESSED FOR EFFECTIVENESS
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PUBLIC FINANCE
GOVERNMENTAL FINANCES TODAY ARE “IN THE PUBLIC EYE” AS NEVER BEFORE
(ROSENBLOOM AND KRAVCHUCK, 2005)
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FISCAL FUNCTIONS
THE MAJOR FUNCTION OF FISCAL FUNCTIONS ARE:
1. ALLOCATION 2. DISTRIBUTION3. STABILIZATION3. STABILIZATION
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ALLOCATION FUNCTION
THE PROVISION FOR SOCIAL GOODS, OR THE PROCESS BY WHICH TOTAL THE PROCESS BY WHICH TOTAL RESOURCE USE IS DIVIDED BETWEEN PRIVATE AND SOCIAL GOODS AND BY WHICH THE MIX OF SOCIAL GOODS IS CHOSEN
THIS PROVISION MAY BE TERMED THE ALLOCATION OF BUDGET POLICY
(MUSGRAVE AND MUSGRAVE 1989)
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(MUSGRAVE AND MUSGRAVE, 1989)
DISTRIBUTION FUNCTION
ADJUSTMENT OF THE DISTRIBUTION OF INCOME AND WEALTH TO ENSURE CONFORMANCE WITH WHAT SOCIETY CONSIDERS A “FAIR” OR “JUST” STATE OF DISTRIBUTION, HERE REFERRED TO AS THE DISTRIBUTION FUNCTIONAS THE DISTRIBUTION FUNCTION
(MUSGRAVE AND MUSGRAVE, 1989)
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STABILIZATION FUNCTION
THE USE OF BUDGET POLICY AS A MEANS OF MAINTAINING HIGH MEANS OF MAINTAINING HIGH EMPLOYMENT, A REASONABLE DEGREE OF PRICE LEVEL STABILITY, AND AN APPROPRIATE RATE OF ECONOMIC APPROPRIATE RATE OF ECONOMIC GROWTH, WITH ALLOWANCES FOR EFFECTS ON TRADE AND ON THE EFFECTS ON TRADE AND ON THE BALANCE OF PAYMENTS. WE REFER TO ALL THESE OBJECTIVES AS THE STABILIZATION FUNCTION
(MUSGRAVE AND MUSGRAVE, 1989)
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INSTRUMENTS OF INSTRUMENTS OF STABILIZATION FUNCTION
1. MONETARY INSTRUMENTSCONTROL OVER MONEY- CONTROL OVER MONEY
- INTEREST RATECREDIT CONDITIONS- CREDIT CONDITIONS
2. FISCAL INSTRUMENTS- GOVERNMENT SPENDING- THE AMOUNT AND TYPE OF TAXES
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FISCAL-MONETARY MIX POLICY
TO INFLUENCE MACROECONOMIC ACTIVITY
1. TIGHT-MONETARY AND LOOSE-FISCAL POLICY WILL TEND TO ENCOURAGE POLICY WILL TEND TO ENCOURAGE CONSUMPTION AND RETARD INVESTMENT
2. EASY-MONETARY AND TIGH-FISCAL POLICY WILL TEND TO DISCOURAGE CONSUMPTION WILL TEND TO DISCOURAGE CONSUMPTION AND ACCELERATE INVESTMENT
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PUBLIC SECTOR IN ECONOMY
HOUSEHOLDS
INCOME
CAPITAL MARKETFACTOR MARKET
TAXES
SAVING
SPEND
INCOME
INCOME
FIRMSPRODUCTMARKET
MARKET
TRANSFER
PUBLIC SERVICEAND GOODS
BORROWING
TRANSFER
PURCHASE
GOVERNMENT BUDGET
(ADAPTED FROM MUSGRAVE AND MUSGRAVE, 1989)
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BUDGET DECISION MAKINGBUDGET DECISION MAKING
PLAYING THE BUDGET GAME
SOMETIMES BUDGETING TAKES ON THE AURA OF A GAME WITH THE THE AURA OF A GAME, WITH THE VARIOUS AGENCY PLAYERS TRYING TO INCREASE THEIR SHARES AND ELECTED OFFICIALS TRYING, AT LEAST OSTENSIBLY, TO KEEP TAXES DOWN AND PROMOTE ADMINISTRATIVE ECONOMY
(ROSENBLOOM AND KRAVCHUCK, 2005)
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A RATIONAL COMPREHENSIVE A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING
1. VALUES OR OBJECTIVES ARE DETERMINED AND CLARIFIED SEPARATELY, USUALLY BEFORE CONSIDERING ALTERNATIVE POLICIESPOLICIES
2. POLICY FORMATION IS APPROACHED THROUGH ENDS-MEANS ANALYSIS WITH THROUGH ENDS-MEANS ANALYSIS, WITH AGREED-UPON ENDS GENERATING A SEARCH FOR WAYS OF ATTAINING THEM
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A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING
4. A “GOOD” POLICY IS, THEREFORE, ONE 4. A GOOD POLICY IS, THEREFORE, ONE THAT PROVIDES THE MOST APPROPRIATE MEANS TO SOME DESIRED END
5. EVERY IMPORTANT RELEVANT FACTOR IS TAKEN INTO ACCOUNT
6 THEORY OFTEN IS HEAVILY RELIED UPON6. THEORY OFTEN IS HEAVILY RELIED UPON
(MILLER 1991)(MILLER, 1991)
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OBSTACLE TO DECISIONS
1 LACK OF GOAL CLARITY1. LACK OF GOAL CLARITY2. CONFUSION OF THE PUBLIC INTEREST
WITH THAT OF A CUSTOMER CLIENTELE WITH THAT OF A CUSTOMER, CLIENTELE GROUP, OR CONSTITUENCY
3. RIGID CONSERVATISM (IN THE SENSE OF 3. RIGID CONSERVATISM (IN THE SENSE OF STRICT ADHERENCE TO RULES, PROCEDURES, AND PAST PRACTICES
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OBSTACLE TO DECISIONS
4. THE TENDENCY TO OVERSIMPLIFY REALITYREALITY
5. “OVERQUANTIFICATION” AND TENDENCY TO DEEMPHASIZE OR IGNORE QUALITATIVE FACTORS
6. RELUCTANCE TO ENGAGE IN POLICY AND PROGRAM EVALUATION
(ROSENBLOOM AND KRAVCHUCK, 2005)
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BUDGET DECISION MAKING BUDGET DECISION MAKING PROCESS
BUDGETFROM
BUDGETFROM
TECNOCRATIC POINT OF VIEW
POLITICPOINT OF VIEW
ACCORDANCEDISTORTION
BUDGET
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INDONESIA NATIONAL BUDGET INDONESIA NATIONAL BUDGET SCHEME (SINCE 2005)
20 YEARLY 5 YEARLY YEARLY
PRESIDENT’S VISION
LTDP MTDP GWP
STRA-PLAN OF DEPT DEPT AP
DEPT ABP
89STATE BUDGET
THANK YOU
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