Government tensions spill over in court
Disagreement over legality of deal
Tensions within the government over the contentious public service wage bill blew into the open on Wednesday, with the Treasury and the department of public service & administration failing to present a united front. The contradiction at the labour appeal court underscored the tension between the Treasury and other departments as the keeper of the national purse pushes back against implementing a deal it says was illegal from the start.
Tensions within the government over the contentious wage bill blew into the open on Wednesday with the National Treasury and the department of public service & administration failing to present a united front.
The contradiction at the labour appeal court underscored the tension between the Treasury and other departments as the keeper of the national purse pushed back against implementing a deal it says was illegal from the start. Over the years the Treasury has resisted implementing politically expedient but unaffordable plans.
The court has to determine whether the state should implement a wage agreement that would cost it an additional R37.8bn this financial year, an amount it has insisted it does not have, a matter that was reinforced by the Covid-19 outbreak and lockdown that imposed new priorities on an already dire fiscal position. Its entire budgeting plan over the medium term is premised on substantial cuts to the public service wage bill.
Finance minister Tito Mboweni announced cuts to the wage bill for the first time in February, when the government was forecasting a budget deficit of just below 7% for 2020, a forecast that has since ballooned to more than 15%.
Even before the Covid-19 outbreak, the state refused to implement wage increases for 2020 that were agreed in 2018. This refusal has now resulted in the court case.
While the Treasury and the department of public service & administration were set to argue different aspects of the case, they ended up on opposing ends about the legality of the multiyear deal.
The Treasury argued that it was unlawful from the start, whereas the department of public service & administration ’ s lawyer, Timothy Bruinders, said it was only unlawful the moment the department had to go over what was budgeted this financial year.
Jeremy Gauntlett for the finance minister, who had already made his submissions, stood up to clarify that they were not in agreement with the department of public service & administration.
The Treasury said the agreement was invalid as regulations 78 and 79 of the Public Service Regulations were not complied with, which require that the finance minister give his commitment to provide additional funds for the agreement or approve that it be moved from other departments.
The agreement went beyond the budget envelope of R110bn
which was approved by parliament over the three years — by R30.2bn. The department of public service & administration
negotiators had tabled an unmandated offer in January 2018, which the state eventually signed. The cost to implement the increases this year has now risen to almost R40bn.
Gauntlett said the agreement was illegal from the outset, and that illegality did not simply arise as you wander along if the money runs out. We do not embrace the argument we have listened to,” he said, adding that
maybe the department was able to defend a position that “has arisen by what can only be described as fecklessness”.
He also touched on one of the most sensitive issues of the saga, saying it cannot be said that the finance minister approved the deal just because there was a cabinet decision that was taken and the minister was part of it. The Treasury had made it clear it could not afford to go beyond the
compensation envelope, he said.
While the unions did not agree on Tuesday to postpone the court hearing to settle with the government, proposals were made which indicated that they were open to an order sending the parties to negotiate on how to implement the final leg of the agreement while accommodating the dire economic circumstances the country faces.