Picture: ISTOCK
Picture: ISTOCK

SA’s "business-as-usual" policies and interventions will fail to achieve the poverty and inequality reduction targets set for 2030, the Financial and Fiscal Commission (FFC) warned on Monday.

The FFC is a statutory body that advises Parliament and state organs on how revenues collected by national government should be allocated fairly and equitably among the three spheres of government.

In May, the FFC tabled its annual submission for the division of revenue in Parliament.

The commission’s chairman Prof Daniel Plaatjies told a news conference on the submission that there was an urgent need to understand the country’s economic challenges as well as how to address them.

"The commission tables this submission against the backdrop of an austere economic environment. South Africa is required to balance ongoing efforts of fiscal consolidation against the need to address the significant revenue shortfall without stifling the county’s fragile growth recovery, or constraining the delivery of critical government services to its most disadvantaged citizens," said Plaatjies.

He sought to highlight that the combined effects of muted economic growth and the budgetary pressures stemming from increased demand for the delivery of public services, such as fee-free tertiary education, have precipitated a need for adjustments. These include expenditure cuts, revisions of planned government spending and a substantial adjustment in taxes, notably the increase in VAT to 15%.

"From a fiscal policy standpoint, the persistently low and fragile economic growth South Africa has experienced since 2011 has adversely impacted government’s ability to protect crucial frontline service delivery and successfully implement the measures aimed at eliminating poverty and reducing inequality by 2030 as set by the National Development Plan. This submission is premised on the commission’s view that ‘business-as-usual’ policies and interventions will fail and will not achieve the poverty and inequality reduction targets set for 2030," said Plaatjies.

He said one of the biggest threats to fiscal sustainability, fiscal governance, public goods and service-delivery management was fraud and corruption.

"As such, the commission believes that all spheres of government and administrations, including within institutions, entities and agencies of state, must consciously fight and solidify systems to eradicate error, fraud and corruption within the supply management systems. This should be done irrespective of how small or large insourcing and outsourcing of public good and services are."

Furthermore, widespread inefficiencies in infrastructure delivery across the three main infrastructure sectors of health, education and road maintenance exist.

"While the 2018 budget cut infrastructure grants, owing to underspending and relative ease of rescheduling spending to outer years, the commission calls for strengthened oversight and consequential accountability over consultants and contractors, especially noting the Sassa Constitutional Court judgment that private companies and by extension not-for-profit organisations delivering public goods and services on behalf of the government and state institutions are not only agents of the state, but also an extension of the state."