Policy implementation and the construction of success : performance based budgeting experience in Indonesia's central government

Abstract

The introduction of a new policy in budgeting, called Performance Based Budgeting (PBB) to the Indonesian budgeting system a decade ago is expected to mark a substantial shift from traditional input-based budgeting practice to a performance-based one for Indonesia’s government. These budgeting reforms are aimed at overcoming the weaknesses of the traditional budgeting system. The purpose of this study is to explore how PBB was implemented and how success in implementing PBB is constructed. Drawing on data collected from the introduction of PBB in three central government ministries in Indonesia, this thesis firstly addresses the lack of research and literature on policy implementation in Indonesia by examining critical factors in enacting new policy initiatives. Next, how thoroughly the new policy in budgeting has been implemented in Indonesia is observed. Finally, the policy’s success is assessed by using both a practitioner’s perspective focused on budget realization and an academic perspective by applying the framework adopted from the work conducted by Marsh and McConnell (2010), Bovens et al. (2001) and Bovens (2010). The empirical evidence presented in this study lends strong support to the existing implementation variables proposed in previous research. This study extends the literature on existing implementation variables by identifying the disposition of regulators, the nature of the policy and external factors as additional critical variables in policy implementation. The hybridised constructivist approach applied in this study is used to show that PBB implementation has been well executed as indicated by the increasing use of performance information in budget processes. More importantly and only to a limited extent, such performance information has been used in budget decision making. However, performance information used to measure the performance of is only based on budget disbursement. This narrow scope of PBB implementation is at odds with contemporary views focusing on experience among Organization for Economic Co-operation and Development (OECD) countries and expecting much greater scope in PBB budgeting reform efforts.

Date of Award	2015
Original language	English
Supervisor	Chris Sadleir (Supervisor) & John HALLIGAN (Supervisor)