Supplementary Budget 2020

DA calls on Gigaba to guarantee independence of state institutions

Finance Minister Malusi Gigaba. (Pic: Gallo Images)
Finance Minister Malusi Gigaba. (Pic: Gallo Images)

Cape Town – The compensation of state employees is projected to cost government R1.7trn over the next three financial years, the DA said on Monday in its preview of the upcoming mini budget. 

The party’s finance spokespersons David Maynier and Alf Lees presented their preview of the Medium-term Budget Policy Statement (MTBPS) on Monday.

Finance Minister Malusi Gigaba will table his first mini budget on Wednesday.

“If government is serious about cutting spending it needs to confront the ballooning costs of compensating state employees,” said Maynier, adding that these costs were expected to grow at 7.2% between 2018/19 and 2020/21

Wage talks between government and state employees are currently underway, ahead of the expiry of the current wage agreement in March 2018.

Public sector unions have taken an unyielding stance, demanding at least 10% in wage increases, despite a weak economy and a budget deficit.

In 2015, unions and government settled for a 7% wage increase after protracted negotiations.

Wage freeze 

On Monday the DA proposed that government freeze the salaries of senior management who earn more than R918 000 per year, and those employed at state salary levels 13 to 16.

“[This] would save an estimated R1.2bn in 2018/19, a further R2bn in 2019/20 and R2.8bn in 2020/21 – or a total of R6bn in three years,” Maynier said.

The party also suggested granting inflation-related increases to employees earning between R227 000 and R918 000 per year, together with a 1% above inflation increase to employees earning between R84 000 and R216 000 per year.

Targeting the ‘big five’

The DA said that Gigaba's maiden mini budget speech would be a "defining moment", saying it was made all the more difficult by "little political space in which to manoeuvre".

The party said the finance minister would have to confront what it termed the “big five” challenges.

These are boosting weak economic growth, stabilising the national debt below 50% of GDP, supporting the independence of government institutions, reforming failing parastatals, and stopping the nuclear build programme. 

Maynier alluded to the emergence of a new “mysterious” decision-making authority on the budget, headed by Minister in the Presidency Jeff Radebe. “This new budget committee appears to circumvent the Minister’s committee on the budget,” he said. 

At the start of September, Radebe outlined the details of the so-called mandate paper, setting out the priority areas for the upcoming budgets. The mandate paper was approved by Cabinet in August this year, and will serve as a framework for spending in next year’s main budget.

There are concerns that this new committee boils down to a parallel structure that will circumvent National Treasury, and through which President Jacob Zuma may try to centralise budget priorities – rumours that Cabinet have denied vehemently.

Radebe said earlier that the Mandate Paper would not “usurp” South Africa’s well-established and highly-respected budgeting processes, or the National Treasury’s overall authority in determining how funds should be allocated.

Maynier, however, was of the view that this “centralisation” was an attempt to “defang” National Treasury.

Institutions are vulnerable

Lees added on Monday that South Africa’s state institutions have come under considerable threat, which risks compromising monetary and fiscal policy, pension savings and South Africa’s sovereign credit rating,

This rating was downgraded to junk status by two rating agencies in April.

“We have SARB (SA Reserve Bank) governor Lesetja Kganyago in court defending the constitutional mandate of the institution and Dan Matjila, CEO of the Public Investment Corporation Dan Matjila defending himself against baseless charges,” Lees said.

A report released by Public Protector Busiswe Mkhwebane in June ordered that the Reserve Bank’s constitutional mandate be changed. The report was based on the investigation into the Bankorp bailout during the apartheid era.

The SARB filed an urgent court application, arguing that the remedial action in the Public Protector report was unlawful and beyond Mkhwebane’s powers. The SARB subsequently won its application to have the Public Protector's remedial action to change its constitutional mandate set aside.

Matjila, meanwhile, was subjected to public a smear campaign, which alleged  he had made irregular payments to his girlfriend. The PIC later said the allegations were baseless. 

There have aslo been reports of efforts to centralise decision-making in National Treasury at the expense of experienced senior officials, while there seems to be restructuring of the Office of the Chief Procurement Officer responsible for approving tender deviations.

Fin24 earlier reported that acting chief procurement officer Willie Mathebula had denied reports alleging that he had met with the finance ministry to discuss the restructuring of his office and the revision of his powers.

This came after media reports alleging that Mathebula had met with Gigaba and Deputy Finance Minister Sfiso Buthelezi to discuss the restructuring of his office and its functions. If the finance ministry’s proposed intervention goes ahead, it could see the chief procurement officer's powers significantly diminished.

"We believe the minister should make a strong and unequivocal statement to the 'state capturers', Lees said, that "supports the independence of our institutions." 

* Visit our Mini Budget Special Issuefor all the news, views and analysis.

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