THE EFFECT OF LOCAL ORIGINAL REVENUES SP

IGCESH2018
Universiti Teknologi Malaysia, Johor Bahru, Malaysia 13 -15 August 2018
THE EFFECT OF LOCAL ORIGINAL REVENUES, SPECIAL
ALLOCATION FUNDS, GENERAL ALLOCATION FUNDS ON THE
HUMAN DEVELOPMENT QUALITY AND THE MEDIATING ROLE
OF CAPITAL EXPENDITURE IN REGENCY AND CITIES IN SOUTH
KALIMANTAN PROVINCE – INDONESIA
Akhmad Yafiz Syam* 1, Fahmi Rizani 2, Lisandri 3 , Muhammad Maladi4
1,3,4
Accounting Department, Stie Indonesia Banjarmasin, Banjarmasin, INDONESIA
(E-mail: [email protected])
2
Economic and Business Faculty, Lambung Mangkurat University, Banjarmasin, INDONESIA
(E-mail: [email protected])
ABSTRACT
This study aims to examine and analyze how local original revenue, special allocation funds,
and general allocation funds affect the quality of human development through the role of
mediation of capital expenditures in Regency/ Cities in South Kalimantan Province Indonesia. The important contribution of this study is to provide a different perspective, to
see the government's financial performance for Sustainable Development Goals (SDG's) in
the context of the quality of human development in the region. Based on the results of the
structural equation model (SEM) test, it was found that role of capital expenditure
significantly mediating for the quality of human development, except between the general
allocation fund and the quality of human development. This indicates ineffective local
government performance in utilizing transfer funds for the development of human quality.
Key words: local original revenue, special allocation fund, general allocation fund, capital
expenditure, human development quality.
INTRODUCTION
The Paradigm of New Public Management (NPM) has influenced the process of changing
public sector organizations comprehensively in almost all part of the world. The emphasis of
NPM movement is on the implementation of decentralization, devolution, and modernization
of public service delivery [1]. The NPM is the concept of public awareness in the form of
autonomy, performance-based budgeting, productivity, efficiency and effectiveness of public
services [2], and oriented towards good governance and sustainable development [3-8].
The ability of a region to explore local original revenue depends on the ability of the region
to develop creativity and innovation which will affect the quality of governance and services
in the public sector, and the allocation together with special allocation fund and general
allocation fund in capital expenditures to meet the demands of development on facilities
and i n f r a s t r u c t u r e s [ 9 ] ; [ 1 0 ] . T h i s s t u d y a i m s t o e x a m i n e a n d a n a l y z e
h o w regional original income, special allocation funds, and general allocation funds affect on
the quality of human development through the role of mediation of capital expenditures in
the Regency/Cities in
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South Kalimantan Province, Indonesia. The contribution of this study primarily provides a
different perspective in viewing the financial performance of local governments in their role
towards sustainable development goals (SDG's) in the context of human development quality
in South Kalimantan.
MAIN RESULTS
Based on SEM-PLS test concluded that the three main indicators of quality and suitability of
the model have met the criteria. The value of Average path coefficient (APC) = 0.221, P =
0.004, means significant at 0.05 and Average R-squared (ARS) = 0.295, P <0.001, indicating
significant determinant coefficient at the 0.001 significance level. While the Average block
VIF (AVIF) = 1.537, it means acceptable because it meets the criteria are under 5. Similarly,
the value of GoF (goodness of fit) 0,544, including the category large> = 0.36. this suggests
that the proposed model is supported by relevant and reliable data.
Table 1. VAF Calculated
Indirect Effect
LORÆCEÆHDI
SAFÆCEÆHDI
GAFÆCEÆHDI
Calculation
Indirect Effect = 0,22X0,14
LORÆCE: 0,22
CE Æ HDI; 0,14
Direct Effect:0,17
Total Effect
Indirect Effect = 0,26X0,14
SAFÆHDI: 0,26
CE Æ HDI; 0,14
Direct Effect:0,33
Total Effect
Indirect Effect = 0,29X0,14
GAFÆCE: 0,29
CEÆ HDI; 0,14
Direct Effect:0,14
Total Effect
Total
Category
0,03
0,17 (+)
0,20 = 20 %
0,04
Partial Mediating
0,33 (+)
0,37 = 37 %
0,04
Partial Mediating
0,14 (+)
0,18 = 18 %
Almost no role of mediation.
Based on the analysis with the VAF method above, it was found that capital expenditure can
act as partial mediation between local original revenue (LOR) and human development
(HDI), special allocation funds (SAF) and human development (HDI) influence, but
mediating between general allocation funds (GAF) to HDI is stated almost no role of
mediation [11];[12].
CONCLUSION
One measure of the quality of good government spending is the proportion of larger capital
expenditure allocations for overall local spending. The allocation of capital expenditure is
aimed at building infrastructure that impacts on the improvement of public services, which in
the long run improves the welfare and quality of human development. Based on the results of
the SEM-PLS model test, it was found that capital expenditure significantly had a role as
partials mediation of effect local original revenue, special allocation fund on quality of
human development, but not significantly mediated between general allocation fund on
quality of human development. This shows that general allocation fund is greater allocated
for government financing or operational expenditure, non-capital expenditures. The high
allocation of operational expenditures and other expenditures also indicates ineffective local
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government performance in utilizing transfer funds for the development of human quality. In
this regard, it is recommended to pay more attention to the absorption of the general
allocation fund budget to the allocation of capital expenditures, especially spending for
education, health, environmental services and empowerment programs that encourage local
productivity, to ensure the achievement of sustainable development goals (SDG's).
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