The Southern African Institute of Government Auditors (SAIGA) says the Medium-Term Budget Policy Statement tabled by the Finance Minister, Enoch Godongwana, this week, has dismally failed to address the issue of basic services needed by the people.
In fact, Phillip Rakgwale, President of SAIGA says the MTBP was economically driven and did not address the leakages and structural capacity issues. However, he says it was also encouraging to see a budget spending or consolidated budget spending alongside looking at the revenue increase.
The Finance Minister said that there will not be additional expenditure without revenue increase. He stated that some of the funding that is allocated to infrastructure, will contribute towards job creation. The Minister also said that the funding will be available to employment programmes, different schemes of employment.
Rakgwale says: “This is commendable and I am encouraged by the consolidation of debt to reduce our debt to GDP ratio, a commitment that the government has put forward. Our debt is still very high, and that is a concerning issue.”
Rakgwale says the reforms that will be instituted by the Treasury can help make sure there is growth in the economy by reducing the number of barriers for small and medium businesses to entry to the economy and lastly to change the ownership patterns of the economy.
He says the government’s decision to offer R1 000 once-off gratuities to civil servants for them to accept a 1.5% wage increase will cost R20.5bn in the current financial year. This he says is money that was not catered for when former finance Minister Tito Mboweni tabled the 2020/2021 budget in February.
Rakgwale says: “There are key issues I expected the Finance Minister to address, which I think require immediate attention. The first issue is how do we resolve the issue of irregular expenditure across all spheres rather than leaving it to the department of justice where justice processes are required?
“We did not hear clearly what was the stance of Treasury with regards to the irregular expenditure is. Just recently, the public enterprise reported in parliament about R24.5 billion of irregular expenditure within the cluster of Eskom and Transnet, which are the major contributors. Eskom alone contributed about R11 billion in irregular expenditure. The stance around irregular expenditure, fruitless and wasteful expenditure and unauthorised expenditure that have been reported by the Auditor General, we have seen very little being spoken around that in the budget speech.”
This Rakgwale say is concerning because these are stances that contribute to the leakages that are seen in government. The question, therefore, is what are the mitigation plans, controls, policy adjustments, consequence management? What is the accountability that is being driven at the Treasury level?
“As much as we have a tight budget and don’t have much room to move or play around, we have really seen less and less interaction on these stances, which is hard for us as professionals and citizens of this country to overlook. We are on the lookout for more on what the Treasury will be doing to local government, provinces and national departments that are wasting lots of funds that could have been spent better in the public sector, “ says Rakgwale.
The second concerning issue for Rakgwale is the plans around state-owned enterprises (SOE) in reforming them. For example, he asks what is the plan to ensure that Eskom finances are properly managed moving forward?
He says: “The Eskom debt of over R400 billion must be reduced. All in all, we would like to see some reforms in the governance of SOEs. It is interesting to hear the Minister assure us that SOEs will be treated with tough love, meaning that there will not be bailouts without conditions to the SOEs. However, it is unclear how the issue of mismanagement of funds will be addressed to ensure that funds are handled much better in the future and very little has been said about the issue of loadshedding that we are currently experiencing in the country.”
Rakgwale says he also thought the Minister would address the local government reforms since there are now newly elected councillors. “We are aware that there have been reports of irregular expenditure in municipalities. It would be helpful to address the mechanisms, policies, principles and reforms to be placed in municipalities. Also, it would help to know what are the skills and capacity building programmes that the Treasury would deploy to make sure that the councillors are well equipped to handle the finances and appointment of senior management is of adequate nature. People are desperate for basic serviced to be delivered to them. For instance, people need water, electricity, healthcare and houses and the COVID-19 pandemic has really affected them as many people lost their jobs,” he added.