Hotels drop prices in response to state belt-tightening – Pravin Gordhan

2014-02-26 14:11

Hotels and guesthouses have started playing along with cuts in travel and catering spend for civil servants and politicians – by lowering room prices.

Finance Minister Pravin Gordhan told reporters ahead of his budget speech in Parliament this morning the market responses to his cost-cutting orders were “fascinating”.

“When we said our spending on hotel rooms now is capped on R1 300, it is fascinating how hotels here [in Cape Town] made rooms available for R1 300, whereas before you were paying a lot more than that,” he said.

Gordhan also said guesthouses have sent government circulars inviting government officials to use their facilities at the prescribed price of R1 300. “I think we are creating a great dynamic, because if they can afford to give us those facilities for R1 300, why charge us R2 000?” he said.

Gordhan could not say how many government credit cards have been cut up in response to his order that these should be destroyed, but he promised to check.

He denied that there had been a rebellion among civil servants about the cost savings. “I’ve had nothing coming towards me.

That’s not a decision I made, it was a Cabinet decision. It was the right thing to do, it was the right thing to say let’s cut out the excesses in government,” he said.

According to the Budget Review he tabled in Parliament, travel and subsistence for the past financial year is estimated to be 6.3% of government’s spending, whereas it was 7.3% in 2010/11. It is projected to be 6% in 2016/17.

Spending on goods and services is projected to drop by 1.5% in the next three years, whereas in the past financial years it grew by 4%.

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