Cosatu says it cannot understand budget’s failure to deal with corruption and waste
Cosatu and the Budget Justice Coalition say the proposals risk further harm to the economy by slashing funding for socioeconomic development
It was inexplicable that the budget tabled in parliament last week by finance minister Tito Mboweni failed to deal with corruption and wasteful expenditure, a Cosatu representative said in parliament on Wednesday.
Cosatu, along with the National Union of Metalworkers of SA (Numsa) decried the plan to reduce the public sector wage bill by R160bn over the next three years, while PwC and the SA Institute of Chartered Accountants (Saica) stressed that the cut was necessary given the growing share of GDP and tax revenue that the wage bill represented.
They all made presentations during public hearings on the fiscal framework organised by parliament’s two finance committees. As is usual, strong written and verbal representations of pro- and anti-tobacco lobbyists pleaded their cause at the hearings with a new addition in 2020 being the views expressed on behalf of the vaping products industry. The Treasury gave notice in the Budget Review tabled in parliament last week that it would tax electronic cigarettes from 2021.
Cosatu regional secretary for the Western Cape Tony Ehrenreich pointed to an estimate by auditor-general Kimi Makwetu that as much as 10% of government budgets were lost to corruption and wasteful expenditure annually.
“Yet the budget does not indicate what is being done to stop the bleeding, arrest the looters, recover the stolen funds and plug the holes. What, then, is the point of attacking workers yet ignoring the looters?” he asked.
The budget did, however, allocate an additional R1.2bn over the next three years to the National Prosecuting Authority (NPA), whose investigative directorate is focused on high level corruption cases.
Ehrenreich said Cosatu had hoped to see a shifting of funds away from noncritical areas to ones that would support economic growth, industrialisation, job creation and service delivery.
Saica national tax committee chair David Warneke noted that the public sector wage bill has consistently grown from 10.29% of GDP in 2001 to 12.3%, but there had not been an improvement in productivity. Organisation Undoing Tax Abuse parliamentary engagement manager Matt Johnston also argued that the reduction in the wage bill was necessary.
PwC national head of tax technical Kyle Mandy reiterated the urgent need for the Southern African Customs Union revenue sharing agreement to be renegotiated as it was heavily weighted against SA. He said SA would have to fork out an estimated R63bn in payments in 2020/2021. This was unsustainable, he said.
The Budget Justice Coalition, which represents a number of nongovernmental organisations, argued that the 2020 “austerity” budget proposals risked further harm to the economy by slashing funding for socioeconomic development. This undermined SA’s pro-poor agenda. The government expenditure will be cut by R261bn over the next three years.
“It is stimulus, not austerity, that is needed to get the wheels of the SA economy turning,” the coalition said.
Like Cosatu, the coalition was concerned that the budget did not deal sufficiently with corruption and governance failures that resulted in high levels of unauthorised, irregular and fruitless and wasteful expenditure. Sanctions should be imposed on officials found to have acted illegally, the coalition argued.
The Fiscal Cliff Study Group told MPs that SA had moved closer to the fiscal cliff, which is when civil service remuneration, social grant payments and debt service costs absorb all of government revenue. Those expenditures now represent 75.5% of tax revenue, up from 75.1% in the February 2019 budget. The ratio was 55% in 2007/2008. According to the group on the basis of the 2020/2021 budget, SA had 21 years before it would reach the cliff.