Wednesday, February 8, 2017

Jakarta Residents Call - Show us the money (and other stuff)

Jakarta Residents Call - Show us the money (and other stuff)

The promise of ‘social transfers’ are featuring heavily in the Jakarta gubernatorial election. But, rather than being dismissed as a way to buy votes, there are benefits from this form of ‘distributive politics’ that shouldn’t be overlooked.  

Recent controversies and massive protests surrounding the Jakarta 2017 gubernatorial election have shifted attention away from substantive discussion of each candidate’s platform. Taking a closer look, however, reveals that all candidates seem to replicate existing programs and policies in their campaign promises. Chief among these are social transfers.

Social transfer refers to a benefit provided by a public body to an individual, household, or community who is in need of social assistance. Such transfers encompass a wide spectrum of programs, ranging from ad hoc, unpredictable and idiosyncratic instruments such as humanitarian relief to regular, institutionalised and predictable interventions such as cash transfers, subsidised rice for the poor, healthcare, non-contributory pensions, and other means of direct assistance.

In the race to be Jakarta’s next governor, social transfers are featuring heavily. For example, Agus Yudhoyono, the son of former President Susilo Bambang Yudhoyono (SBY), announced his plan to generously disburse cash to local families and communities. According to him, these cash transfers are meant to reduce the jarring gap between the poor and the rich, and consequently improve social solidarity. He has pledged to give 1 billion Rupiah to each rukun warga (RW or neighbourhood group) as a stimulation fund – payments that are meant to complement existing household transfers.

Anies Baswedan also outlined his plan to reintroduce cash transfers. He acknowledges the remarkable past success of Bantuan Langsung Tunai (BLT), a series of unconditional cash transfers to the poorest households during the 10 years of SBY’s administration. Under this proposed temporary program, eligible recipients will subsist while local government prepares more sustainable programs like jobs creation, training, and soft loans, claims Anies.

However, Mr Baswedan also acknowledged that there are gaps in the program, particularly when it comes to payments, with not everyone who is in need of money receiving it. He believes that universalising or increasing the coverage of social transfer, and improved coordination between central and local governments in running the program, might be a game-changer.

Meanwhile, incumbent governor Ahok promptly countered the success story of cash transfers, instead warning caution and highlighting the downside of creating long-term dependence. Instead, he proposes better design involving strict supervision on delivering benefits. Further, he plans to channel social transfers electronically (making them cashless), and to build a reliable mechanism to oversee such transactions.

While a consistent element of contemporary politics, social transfers commenced in Indonesia at a later period than other countries. Underpinned by rising world oil prices a decade ago, the government decided to replace a regressive fuel subsidy with a compensatory policy of targeted transfers to mitigate temporary financial shocks on households, through BLT. First launched in 2005 and repeated in 2008 and 2013 with significant improvement, BLT has come under constant debate.

Targeting and dependency almost invariably dominate the discourse. Today the public who don’t receive payments, predominantly the middle class, are sceptical about cash transfers, particularly when it comes to accountability and effectiveness. Meanwhile, the existing beneficiaries will inevitably ask for more than the meagre amount of cash on offer.

Nonetheless, cash transfers are not an uncommon policy practice, but are often referred to as dependence-creating. Most critics often build an image of the recipients as lazy, refusing to work for government handouts, and wasting valuable tax-payer funds (on, for example, vices like cigarettes) rather than feeding and clothing their children.

Yet, empirical evidence depicts the contrary. For instance, randomised evaluation from various local and international independent agencies shows that cash transfers aimed at the poor help reduce poverty and improve social outcomes, without providing disincentives to work. In fact, Latin American countries have pioneered the experiment and demonstrated its effectiveness in promoting public welfare as well as solidifying political support.

Like markets, politics also distributes goods. Government programs channel cash, jobs, credit, and other resources to citizens. In this regard, politics can manage to impose taxes and transfers to redistribute income within society. In general, political distribution of goods is considered more controversial than their distribution through markets.

In a decentralised setting like Indonesia, local governments have abundant resources and mandates to devise various entitlement programs – what can be referred to as ‘political distribution’. Enhanced with democratisation values, political distribution has become increasingly relevant, particularly in a location with rampant poverty.

Political authorities across different layers of government make choices about the distribution of goods to beneficiaries. When holding on to office depends on these authorities winning elections, their choices become bound up with political strategies. Therefore, the modes of strategic distribution vary widely.

There are two important distinctions in distributive politics — programmatic versus non-programmatic. While the former is perceived as a legitimate instrument, the latter encompasses unfavourable characteristics in politics such as partisan bias, clientelism, pork-barrelling, patronage, and vote-buying, among others.

For a distributive strategy to be programmatic, it requires two prerequisites. First, the criteria of distribution must be public. Ideally, a public discussion precedes the design of distributive policies. Second, the formal criteria must shape the distribution of the resources.

In places where laws against vote-trafficking are enforced, judges can draw lines between the legal deployment of resources by ambitious office-seekers and the illegal purchase of votes. All-in-all, to avoid casting cash transfers in the wrong light, one must objectively assess them in their proper context.

For those who like to wager, when it comes to Jakarta’s race for governor, the smart money is on a bet either way. At this stage, it is unclear whether proposals of social transfer from the candidates in Jakarta’s gubernatorial election are categorised as programmatic.

Dharendra Wardhana is a PhD candidate on Development Studies with reference to Emerging Economies in the Department of International Development, King’s College London, UK.


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