South Africa: Turning Point - Reforms to Deal With Wastage

South African Finance Minister Tito Mboweni prepares to deliver his Budget speech on February 26, 2020.
26 February 2020

Tabling a very difficult budget, accompanied by a revenue shortfall amid low growth, Finance Minister Tito Mboweni said government needed to implement reforms and clean house to set the country on a path of recovery.

While the Budget Review document lists issues such as excessive medico-legal claims, and excessive salaries and bonuses for executives at State-owned entities, Mboweni said it is time to look at a review of government perks like subsistence and travel allowances, and perks for office bearers such as free cars.

National Treasury has revised economic growth projections down to 0.9% for 2020, amid a projected revenue shortfall of R63 billion.

"We will propose a new law to stop excessive salaries at public entities. We must deal decisively with the high cost of leasing government buildings. We are already acting on fruitless and wasteful expenditure," Mboweni said on Wednesday while tabling the Budget Speech.

To deal with escalating costs, government will abolish the current wasteful subsidence and travel system, will replace the cell phone policy and stick to economy class travel for all domestic flights, except for exceptional circumstances.

Briefing journalists ahead of the Budget Speech, Mboweni said it was time to clean house.

"There is too much wastage... We must make sure that all the areas of wastage identified by the Auditor-General are sorted out," he said.

In the Budget Review, National Treasury said reforms that are currently being put in place include:

- Procurement: The draft Public Procurement Bill has been gazetted for public comment to make State procurement more efficient.

- Provincial grants: Government has made progress in reducing unfunded municipal budgets and is piloting initiatives to improve municipal revenue collection. Following a review, government is introducing several changes to the provincial grant system.

- Medico-legal claims: Medical malpractice claims and litigation against the State have increased rapidly in recent years. Although in many cases the quality of care is insufficient, the increase in claims is inconsistent with certain indicators of health outcomes in the public sector. Work has begun to limit unreasonable claims against the State.

- Public office bearers: There will be no increase in the salaries of public office bearers in 2020/21. This follows a reduction in benefits stemming from changes to the Ministerial Handbook.

National Treasury said over the period ahead, interventions that will be undertaken include:

- Conducting a review of government incentives: Those that

are found to be redundant, inefficient or inequitable will be repealed or redesigned.

- National Treasury and the Department of Planning, Monitoring and Evaluation are undertaking a new round of expenditure reviews to identify cost savings and improve efficiency.

- Government's intention is to publish a new law this year to introduce a remuneration framework for public entities and State-owned companies. One goal of this legislation is to eliminate excessive salaries and bonuses being awarded to executives and managers.

National Treasury said in its review document that over the next year, National Treasury and the Department of Public Service and Administration will improve the wage setting mechanism; report on the causes of unauthorised and wasteful expenditure, and examine ways to reduce State litigation, accommodation and information technology costs.

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