EDITORIAL: Take the whip to other bodies
Jacob Zuma and his ministers should target what departments can do to boost the economy’s growth instead of hammering Treasury and Finance Minister Pravin Gordhan
When President Jacob Zuma reportedly attacked the Treasury and Finance Minister Pravin Gordhan last week for depriving government departments of the money they need to pursue their mandates, it was part of the new and poisonous politics of state capture — but also part of an old refrain.
The Treasury has long been a whipping boy for departments or ministers who can’t get the funding they want for their favourite projects. It is too often easy to blame underperformance in achieving the departmental mandate on a lack of money rather than on a lack of political will, sheer incompetence or corruption.
It is true, though, that times are hard in the government, compared with a few years ago. Austerity is the wrong word entirely to describe the situation, because government spending is still growing at above-inflation rates each year, rather than being cut. But, since 2012, there has been a spending ceiling in place that had to be reduced in the face of revenue shortfalls.
In October’s medium-term budget Gordhan proposed to reduce the operating budgets of all national departments 1.1% over the next three years to free up money "to fund critical requirements".
That’s the crucial point: the Treasury’s budget allocations are the product of political decisions made by the president and his Cabinet, not by Gordhan. With the economy hardly growing and limits to how much tax revenue can be squeezed out of it without further weakening growth, the public purse is highly constrained and trade-offs have to be made.
The Cabinet chose to allow a generous public sector pay increase in 2015, which added R60bn to the government’s compensation budget over three years and that money has had to be found somewhere. The steep increase in spending on post-school education and training was also a political decision. That is now one of the fastest-growing items on the government’s spending list, with university subsidies projected to increase at almost 11% a year over the next three years and allocations to the National Student Financial Aid Scheme at 18.5%.
There may be valid political concerns driving these choices and if Cabinet ministers feel legitimately hard done by, they might do better to take up their woes with the higher education minister, the public service administration minister and the president rather than with Gordhan.
That’s the crucial point: the Treasury’s budget allocations are the product of political decisions made by the president and his Cabinet, not by Gordhan
They might look first at whether their departments and provincial departments, which deliver services such as health and education, are spending their allocations as effectively and efficiently as they could and in a way that improves the lives of citizens. All the evidence shows that although SA spends billions of rand on education, for example, the value for money it gets in terms of outcomes is way below par.
Zuma’s reported comments seem to tie in with a growing chorus of voices dismissing the need for fiscal prudence as some kind of plot by the ratings agencies (or "white monopoly capital"?). But the increasingly constrained budgets of recent years have been a response less to ratings agencies than to ever-rising public debt levels — and Zuma and company might want to think about that. Do they really want to be paying bankers and investors more than R160bn a year out of the public purse? That is the amount the government will be spending in the current year to pay the interest on the public debt, which continues to be the fastest-rising item of its expenditure — R13 out of every R100 raised in tax revenue.
If Zuma and his ministers want to do something about that, and make more money available for their pet projects, they might want to focus on what their departments can do to boost the economy’s growth prospects rather than on beating the old Treasury drum.