Finance Committees Briefed by National Treasury on Implications of 2020 Budget

“If unsustainable fiscal outlook is left unchecked, it could result in crisis,” the National Treasury Team warned the standing and select committees on Finance and Appropriation. It said this as a contextual response to issues raised by various stakeholders who took part in public hearings on the Minister of Finance, Mr Tito Mboweni’s, budget speech.

Responding to the ire raised by the minister’s pronouncement on the reduction of growth of public servants’ salaries. Contrary to widespread reports, the team was quick to point that “government is not proposing a reduction in nominal wages or reduction in head count. The proposal is to reduce wage bill growth to below the consumer price index.”

The team was at pains to point out that “over the past 12 years, public service wages have increased by 40%, and in recent years its growth has outpaced the rest of the economy.”

The team highlighted the positive effects of the slow growth on the public service wage bill. Among others, this “will open the door to increase the hiring of teachers and health workers.”

During public hearings, labour unions were unanimous that the minster’s budget speech was an austerity rather than a stimulus budget. The treasury team responded that “this budget is not in any way an austerity budget, for it is not cutting pay, grants or declare that it won’t further pay pensions. Such an argument is not correct because these are factors that characterise an austerity budget”.

To stem the tide on expenditure and to align it within our country’s collective revenue limits, the treasury team argued that “there is a need for reviews to identify cost savings and improve efficiency. The intent to squeeze inefficiency out of the system is one of the major priority of treasury”.

On expenditure, some members agreed that there is a need for Members of Parliament to also proclaim what measures they intend to take to cut expenditure. MPs said that the public has voted for them. In these trying economic conditions, therefore, they should be seen to be taking a lead in supporting the call to cut on public expenditure.

Some members wanted the treasury to reflect on the cost of corruption on the budget outlook. And what the treasury intends to do because the poor are now carry its burden. Treasury should come up with action plan to out root corruption, they said.

The treasury team replied that “the new Procurement Bill seeks to stem the tide of corruption in municipalities and provincial departments”. However, “we are not an oversight entity, we play that role department would claim that we overstepping our mandate,” they said.

The unfortunate fact is that “we know about acts of corruption and financial mismanagement through the Auditor-General when they have already occurred. As such, we are relying on the internal auditing processes of these entities. Most of the time they don’t seem to deal with this matter decisively.”

Asked about the effect of the coronavirus on an already-faltering economy. The treasury team replied that it “is matter that is very difficult to make a precise economic forecast on at the moment”.

There was also a view that the budget process should in future be more inclusive to involve all critical stakeholders to ensure that it takes on board their aspirations and concerns.

Concluding the engagements with the National Treasury, the Chairperson of the Standing Committee on Finance, Mr Joe Maswanganyi, emphasised that these meetings should not turn into high-flying economic debates. They must address the real issues on the ground that affect the people on a daily basis. “If we don’t do that, we would not be doing what we are here for. We are here to ensure that we come up with practical solution on how to address the concerns of rising unemployment and our faltering economy.”

Source: Parliament of the Republic of South Africa