Business Day

Government tensions spill over in court

Disagreeme­nt over legality of deal

- Claudi Mailovich mailovichc@businessli­ve.co.za

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.

 ?? GCIS ?? In the hot seat: Finance minister Tito Mboweni s announceme­nt of public service pay cuts has led to
’ disagreeme­nt with state department­s and unions over the legality of the cuts. /
GCIS In the hot seat: Finance minister Tito Mboweni s announceme­nt of public service pay cuts has led to ’ disagreeme­nt with state department­s and unions over the legality of the cuts. /

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