How can central governments decentralise and simultaneously ensure that national objectives of equitable coverage and acceptable service standards are achieved? This article assesses the feasibility of the Indonesian model, which uses obligatory functions and minimum service standards to govern relations between central and local governments. Affordability and capacity issues undermine the prospects of the model in the current Indonesian governance context, hence a cautious and phased approach is recommended.
The Government of Indonesia (GoI) is in the process of revamping its regional government framework as a part of wider financial management reforms. Central in the new regional government law are obligatory functions (OF) and minimum service standards (MSS), used as measures to define good performance and government accountability. The intent of OF is to place an obligation on local governments (LG) to perform a certain function, usually a public service. MSS define the expected performance or dimensions directly felt by the recipients of public services. OF/MSS are tools for increasing the accountability of LG, principally to the central government (CG) but also to local constituents.
The optimal design of OF/MSS depends on the relationship between CG and LG. A prescriptive approach with specific targets set by CG increases the need for vertical accountability. This requires reporting systems, information sharing between government levels, adequate technical capability of LG, sufficient finance, and rules for enforcement. In a governance context where local voluntary initiatives dominate rather than OF, the LG should have strong technical and financial capacity. High levels of education and political awareness, tight bonds between elected officials and their constituencies, and stable relations between central and local government contribute to the feasibility of voluntary initiatives. The governance context in Indonesia does in general not meet the recommendations for a model based on voluntary local initiatives.
The most frequently voiced concerns during piloting activity of OF/MSS in five provinces in Indonesia regarded the loss of autonomy on district level and insufficiency of finances. Other challenges common to any government performance management initiative include:
- Selecting indicators that are meaningful for cross-LG comparisons despite varying technology and financial accounting systems.
- Establishing a data system that supports the desired measurement.
- Dealing with cross-sectoral outputs and outcomes.
- Distinguishing technical standards versus quality/access standards.
- Estimating the financial impact of standards.
- Making the reports intelligible to politicians and the general public.
After the consultative exercises, some GoI officials are more aware of the complexity and pitfalls of the prescriptive model. As a result, the laws have been amended to clarify responsibilities and avert a clash of sectoral laws with regional government law. The GoI is intent on implementing the prescriptive model, but concerns of technical feasibility, affordability and disagreement within CG, LG and the donor community has serious implications for coherency of the model. Recommendations to policymakers and donors include:
- A prescriptive OF/MSS model is badly needed in Indonesia, but existing governance deficiencies will make it hard to introduce a coherent, affordable and enforceable prescriptive model.
- The OF/MSS should be realistic but ambitious, and it should not be binding during an initial preparation period. Functions with the largest welfare impact should be prioritised, particularly education and health.
- The prescriptive model requires strengthening of technical capacity and wider consultations/consensus-building.
- Results will depend on a number of complementary good governance initiatives, particularly adequate financing, proper vertical supervision and a constituent oversight system.
- Donors should provide coherent support for a workable prescriptive model before proposing the purely voluntary LG models.
- Donors should caution the GoI that confusion and conflict could result from a poorly designed prescriptive model, with its unfunded mandates and a legal framework that is unenforceable.
