Long before the arrival of Covid-19, South Africa’s economic trajectory was headed for junk status. The calls for austerity, to improve discipline in government spending and to curb rising salary costs was loud from civil society, including from some within government (the likes of Nhlanhla Nene, Pravin Gordhan and Tito Mboweni), but to no avail. The question we asked so often over the past decade was: “To what extent would the economy have to subside for government departments to halt their incessant CPI+ budget and spending-increase mentality?” It appeared that not even the journey to junk credit rating status could provide the reality check needed for critical spending discipline. It would have to take something much bigger and with greater force to shock government’s spending-as-usual system into a new perspective. [read more]
The pandemic-induced economic lockdown seems to have provided the much-needed jolt. The need for the rapid introduction of austerity measures has become a reality for those in the public service, as opposed to the previously lethargic revision of budgets with minor tweaks here, and the merging of a department or two there.
This need to redirect funds away from government’s “as usual” spending was emphasised in Finance Minister Tito Mboweni’s 2020 Supplementary Budget Speech on 24 June, in which he stressed two things that OUTA has been advocating for some time: government spending has to be cut drastically; and zero-based budgeting is the way to go. Over the years, departments and municipalities have simply increased their budgetary expenditure without giving much thought to challenging their spending habits or to revising headcounts, productivity and the costs of service provider contracts.
Each annual Budget speech and State of the Nation Address featured the same pronouncements of focused action for improved service delivery and promises of reduced spending on administration, yet little changed with each passing year. That reality is now being forced on government as the money has dried up, driving long overdue changes by having to work with a lot less.
Tito Mboweni’s zero-based budgeting approach will lead to more questions being asked and stronger motivations required for departmental spending. We believe the time for a “request before spending” approach – as opposed to “spend first and ask for forgiveness later” – will go some way to reducing wasteful expenditure, corruption and maladministration. Probably not all the way, but somewhat more than was the case to date.
Economic growth was negligible before Covid-19 as the incidents of mounting debt, corruption and weak political leadership of the Zuma era continued unabated. However, the pandemic may be the catalyst for the change we so desperately need in South Africa: it emphasises the fact that we have much less time to remove the noose tightening around our neck.
Minister Mboweni’s message to government and the country is a necessary call. However, for austerity to be effective, decisive and strong leadership is required to slash national and local government budgets. We trust the drive to address and remove inept bureaucrats will get underway, but systemic cadre deployment, implemented to retain control over money flows throughout all levels of government, will no doubt get in the way of these initiatives. Auspiciously, severe funding shortages have triggered heightened discussion and greater urgency on the topic of private-sector equity ownership within SOEs. Even the ardent proponents of growing the state’s business ownership have toned down their rhetoric and the new reality of relieving the state of these cash-sapping inefficient businesses is no longer an option.
Should our government fail to take the stringent austerity actions required, South Africa will be caught in a sovereign debt crisis, which will take generations to recover from – if we do at all.
OUTA OPPOSES DUDU MYENI’S APPEAL ATTEMPT
In other news former SAA chair Dudu Myeni has filed an application for leave to appeal against the Pretoria High Court’s judgment of 27 May declaring her to be a delinquent director for life. OUTA and the SAA Pilots’ Association have filed notice of intention to oppose her application.
Since the May judgment, OUTA has written to the Companies and Intellectual Property Commission, calling on it to remove her as a director in line with the judgment. At the time of the judgment, she was still a director of various entities including state-owned municipal electricity utility Centlec and the Jacob Zuma Foundation.
VICTORIES FOR CIVIL SOCIETY
Two recent pronouncements have given OUTA and our Supporters reason to remain upbeat and advance the fight for a just, corruption-free society. The first was the declaration of former SAA chairperson Dudu Myeni as a delinquent director for life. The second was the Constitutional Court’s judgment in the case of the New Nation Movement (which involved OUTA as an amicus curiae), declaring sections of the Electoral Act unconstitutional. (Read more about both these cases below).
Both of these high-profile cases have taken several years to reach their conclusion. As we have learned, it takes enormous tenacity and dogged determination – not to mention financial resources – to pursue matters through the legal process. It is, therefore, incredibly satisfying when civil society’s efforts are rewarded with successful rulings on high-impact matters.
As I have said on many occasions, OUTA’s ability to keep up its long, arduous and effective fight for justice and accountability is made possible by a combination of highly motivated and professional staff, along with the continuous income we get from our Supporters. With your monthly contributions, we employ the energy and resources of good people to fight the good fight. While at times it may be frustrating, on the whole it is extremely rewarding and motivating.