Cost-cutting drive sees 5.4% drop in spending

THE Treasury’s cost-containment drive has led to an average annual 5.4% fall‚ in nominal terms‚ in spending on a raft of items.

Taking inflation into account‚ the decline was almost double‚ Finance Minister Malusi Gigaba said yesterday.

Since the programme was introduced in the 2013-14 financial year‚ the drop in expenditure has been in consultants‚ travel and subsistence‚ catering‚ events and advertising by national departments.

Total expenditure by national departments on items that relate to the mandatory cost-containment measures decreased in nominal terms by R2.1-billion from 2013-14 to 2016-17.

But Gigaba says in a written reply to a parliamentary question by DA finance spokesman David Maynier that‚ after taking into account inflation and measuring the decline in last year’s rands‚ there was a real decline of R4.5-billion in spending on these items – or an average annual percentage decrease of 10.5%.

Items identified for cuts in the cost-containment drive also included newspapers and publications‚ conferences‚ and other expenditure such as communication.

On the other hand‚ total expenditure by the provinces on these items increased in nominal terms by R182.2-million from 2013-14 to 2016-17‚ an average annual increase of 0.6%.

However‚ this implies a real decline of R1.7-billion (in last year’s rands) or a real average annual percentage decrease‚ after taking the effect of inflation of 4.8% into account.

From April 1 to August 31‚ national departments spent R4.2-billion on these items and provinces R4.7-billion.

In 2016-17, national departments spent R3.2-billion on consultants and R5.4-billion on travel and subsistence‚ while provinces spent R1.6-billion and R1.7-billion respectively.

Big achievers in cost containment among national departments were transport (with a R934-million reduction on the specified items between 2013-14 and 2016-17); rural development and land reform (R573-million); social development (R530-million); cooperative governance and traditional affairs (R445-million); and public works (R233-million).

But at Treasury‚ expenditure rose R256-million.