Key topics:
- Godongwana agrees to review government spending to cut waste.
- ANC faces challenges in securing votes for proposed VAT hikes.
- Public infrastructure spending set to rise by over R1 trillion in 3 years.
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By John Matisonn*___STEADY_PAYWALL___
In this year’s ultimately inconclusive budget negotiations the DA inched the GNU a notch closer to the key reform that will unlock growth, with Finance Minister Enoch Godongwana’s undertaking to begin a review of government spending.
Despite the mutual public criticism between Godongwana and the DA, the Finance Minister agrees that wasteful spending programmes must be cut if government is to refocus on building infrastructure and other growth-oriented reforms.
“We must acknowledge that over time, budgets tend to grow incrementally, often carrying forward historical allocations, without necessarily reflecting the evolving needs of our country,” the Minister said in his budget speech. “This approach has led to inefficiencies, misalignments, duplication, and in some cases, the continued funding of programmes that do not yield the intended impact.”
It remains unclear whether the ANC can obtain the votes to pass the budget in its current form, which includes a 0.5% VAT increase this year followed by an equal rise next year.
It seems highly unlikely that the Mkhonto weSizwe Party or the Economic Freedom Fighters will be willing to appear more accommodating to a VAT tax increase than the DA.
The obvious targets may be the little parties, where offers of paying government jobs for party members have worked in corralling votes for marginal coalitions in shaky municipal governments in the past. If the votes cannot be found, further talks with the DA will be necessary.
It’s not that government does not know where to cut either. Hundreds of in-depth government spending reviews have been done, including on how to streamline the departments and ministries.
Dozens of new institutions were created in the past 30 years, and many of these have veered away from their original mandates or succumbed to corruption and cadre deployment. The DA specifically targeted scrapping Sector Education Training Authorities (SETAs), but the government refused to comply.
Godongwana rejected “zero-based budgeting,” although this was once ANC policy. Zero-based budgeting would require a fresh look at each programme to see if it still deserves funding.
The problem is not that government doesn’t know where it should cut. It’s the ANC has been unwilling to bear the political cost. Long-serving ANC members hold many government jobs. Scrapping these will be politically uncomfortable for the ANC.
It may be seen as ironic that one of the reforms the DA relies on is to centralize power away from ministries and into the presidency’s Operation Vulindlela, which has provide its ability to speed up government action in electricity and transport.
It’s an improvement made necessary by the weak quality of ministers and their indebtedness to political interests.
Godongwana said allocations towards public infrastructure are the fastest-growing area of spending, which will rise by more than R1trillion over the next three years.
Spending will focus on transport and logistics, energy, water and sanitation, roads and rail.
Godongwana said the South African National Roads Agency (Sanral) will spend R100 billion over the medium term to keep the national road network in good condition, while provincial roads departments will repair over 16 000 lane-kilometres of roads.
“This will enable commuters from areas like Mamelodi, Kwa-Mashu, Motherwell and Khayelitsha to catch a train every 10 minutes, to get to and from work and significantly reduce the money that low-income households spend on transport,” he said.
The allocation will also allow Prasa to maximise the potential of the 241 new trains delivered through the rolling stock renewal programme.
It’s expected that this year will finally see the long-approved concessioning of under-used rail lines to private companies to transport minerals and agricultural products.
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