A member of both APEC and the G20, Indonesia has the largest economy in South East Asia which, since the Global Financial Crisis, has experienced strong sustained economic growth around five per cent. With a population over 260 million, more than ten times Australia’s, Indonesia is the world’s third largest democracy.

In 2017-18 Australia will provide close to $300 million in bilateral foreign aid managed by the Department of Foreign Affairs and Trade, a key objective of which is to improve economic institutions and infrastructure critical to Indonesia’s development.

Under Griffith Asia Institute’s APEC Study Centre banner, a group of 25 Indonesian government officials from the key national agencies responsible for devising and implementing fiscal policy in Indonesia — the National Development Planning Agency (Bappenas) and the Ministry of Finance – recently visited Canberra to hear presentations from senior Australian government officials on site at Commonwealth Treasury, Department of Finance, and the Parliamentary Budget Office in federal Parliament.

The Canberra site visits were a critical component of a course on Government Planning devised and delivered by Professor Tony Makin and Dr Debbie Delaney from the Department of Accounting, Finance and Economics, with assistance from Griffith International, and funded under DFAT’s Australia Awards Indonesia program.

The intensive three-week program also entailed a pre-course element in Bandung, Indonesia, in early November, as well as site visits to the Brisbane City Council, Queensland Treasury and Pricewaterhouse Coopers in Brisbane, allowing participants to learn of budget making at all levels of government in Australia.

The Brisbane and Canberra site visits provided an excellent opportunity for Indonesian fiscal policy makers to compare and contrast Australian and Indonesian budgetary goals and processes, as well as our respective systems of representative government. Participants learned of the Australian government’s focus on fiscal sustainability and of fiscal risks over the medium term, as well as the importance of budget transparency.

Two major themes of the course were:

(a) the economic significance of well-managed government budgets, at both the macroeconomic and microeconomic levels, and

(b) the importance of adopting best-practice principles and processes in budget making.

Participants learned of the rationales for government spending, macroeconomic risks associated with excessive budget deficits, fiscal federalism in Australia, budget forecasting, transparency and accountability, principles of taxation and program provision, cost benefit analysis, and public debt sustainability. The course also included presentations by expert guest lecturers on topics relevant to budgeting, including Dr Larry Crump from the Department of International Business and Asian Studies, on negotiations.

A post-course follow-up is scheduled for mid-February next year in Jakarta, where participants will present findings of their research projects covering a range of fiscal issues, as a basis for making recommendations for improvements to Indonesian budget policy and practices.

Tony Makin, Professor of Economics and Director, APEC Study Centre