Facts are there for all to see
Economists weigh in on how national treasury can improve SA’s already worldclass budget documents
Over the years, SA has entrenched its reputation as a global leader in budget transparency. This is clear from the expansive budget information that is published for public scrutiny each year, as well as from SA’s performance in international budget surveys.
“There was a time, back in the 1980s, when all you wanted to know from the budget was government’s assumption on the gold price, because tax revenue from the gold mines accounted for 25% of government tax revenue,” recalls Sanlam economic adviser Jac Laubscher.
In those days the public had access only to the budget speech and tables of numbers.
Budget transparency has evolved steadily over time. In 1993, the Budget Review document was introduced. It has become an extensive resource of around 235 pages, presenting an enormous amount of information on fiscal policy across eight chapters.
The next big evolution came in October 1999, when treasury held its first-ever medium-term budget. In these budgets it sets out its spending, revenue, debt and deficit projections as well as economic forecasts for the next three years.
“What is now necessary is much more than budget transparency,” says Laubscher. “The budget tells you how the money is spent in terms of expenditure [line] items but it doesn’t tell you who gets the contracts.”
Laubscher feels it would be useful in the current climate for treasury to disclose the identities of the recipients of all government contracts over R10m.
He would also like to be told more about the assumptions that underlie treasury’s macroeconomic models and information about how sensitive the results are to the assumptions made, whether on the rand, the oil price or matters such as SA’s tax buoyancy ratios.
Stanlib chief economist Kevin Lings identifies a few pieces of information he would like to see incorporated in the budget. These include:
A detailed time-series on infrastructure spending. This should provide budgeted versus actual infrastructural spend, explain why key projects had been delayed or shelved, and give information about which projects had started in the past fiscal year;
An indication of the success of tax incentive measures such as the youth wage subsidy and tax-free savings plans; and
A more detailed breakdown of government employment, including wage costs per department, details about municipal salaries and the amount spent annually on consultants.
In 2010, SA came first in the Open Budget Index survey, but in 2015 — a year when the rules placed a greater emphasis on formal public participation and budget oversight — SA dropped to third place out of 102 countries in a closely fought race with New Zealand and Sweden. Even so, SA was one of only five countries that performed solidly across all three main areas of public accountability and scored above 80 out of 100.
In 2015, SA and New Zealand got equal scores on public participation, better than Sweden. On the other hand, SA and Sweden got equal scores on budget oversight, which were better than those of New Zealand.
SA scored lower on a subcategory of public participation because the office of the auditorgeneral lacks a formal mechanism to secure public input. In SA this is done at the discretion of the auditor-general.
Past survey results have been used to identify gaps in budget transparency, according to national treasury. The improvements implemented between 2010 and 2015 included the initiation of procurement reforms by the chief procurement officer to enhance transparency in the bidding for government contracts.
National treasury is also continuing to engage civil society and academia in the quest to expand budget participation. A budget outreach programme is rolled out every year after the national budget has been tabled in which treasury takes the budget discussion to forums around the country, hosted by universities.
Civil society workshops are also held annually to present the budget as well as to solicit civil society organisations’ inputs.
Furthermore, an online budget data portal project with civil society representatives on its steering committee is in the initial stages of implementation.