Weekend Argus (Saturday Edition)
State wastage unaffordable
It is time for MPs to examine all streams of expenditure, writes Craig Dodds.
THE morning after the tumult that blazed through Parliament on Wednesday, workers had cleaned up the mess. They scrubbed off graffiti spraypainted on the wall, where, the evening before, a throng of students had drowned out Higher Education Minister Blade Nzimande’s efforts to placate them.
“0%,” it read, a riposte to the 6 percent deal the minister had struck with university bosses on fee increases. The cleaners made short work of it.
But the students have left invisible marks on Parliament and the scenes that swept through the precinct will not be so easily forgotten.
Neither by anyone who witnessed it, nor by the students who discovered the might of the state in the carapaced forms of riot police and stun grenades.
And not by the MPs who, having listened to Finance Minister Nhlanhla Nene present the government’s spending plans for the next three years, drifted out of the National Assembly and came face to face with the fury sweeping the land.
“We are your future,” students yelled, and it was clear the future was in a hostile mood.
Shortly before, the EFF had asked that the tabling of the medium-term budget policy statement be postponed, pending an urgent debate on the university crisis.
This was denied because, MPs from many parties argued, the process of putting together a budget involves a careful weighing of competing interests and can’t be decided on the basis of who is shouting loudest at the time.
Also, House chairwoman Thoko Didiza, presiding, said the various finance-related oversight committees of Parliament would be debating the MTBPS and the door was still open for changes to be made.
It begs the question: whose democracy is this anyway?
Or, more to the point, whose voices are reflected in the tedious detail of how much will be allocated to which line item in the budget? Nene offered a few clues. “Government’s central fiscal objective over the medium term is to stabilise the growth of debt as a share of GDP,” Treasury documents said, explaining why spending growth would remain within ceilings set by Nene last year and, by implication, why there was no extra money for new policy proposals – free tertiary education, for example.
There are a few important reasons this is a priority, most significantly because the cost of repaying debt and interest has for a number of years been the fastest-growing item in the budget and will continue to grow at 10.9 percent up to 2019, when it will reach R174.6bn.
By comparison, spending on postschool education and training is to grow – unless a new deal is struck – at an annual average 6.3 percent, reaching R76.6bn in the same year, or less than half the debt costs.
That illustrates neatly one of the risks of running up more debt: it eventually eats up resources that could have been spent elsewhere.
Another risk is that the country’s perceived ability to repay that debt deteriorates the higher it goes, resulting in creditors charging higher interest on loans.
So one voice that speaks louder than most in the finance minister’s ear, is that of ratings agencies as a proxy for creditors and investors.
Their only stake in the future of the country is the extent to which their calls on its creditworthiness ring true with their clients.
Hardly democratic – it’s not as if they’ve never got it wrong – but hard to escape, given this country’s reliance on foreign capital to fund its economic growth. Another voice that had a big impact on this budget was that of public sector workers, who won an effective 10.1 percent increase in wages and benefits in negotiations with the state this year and taking growth in compensation costs up to 2019 to an annual average 8.2 percent, or an extra R64bn over three years.
That is fractionally more than the R63.7bn the state will spend on post schooling education and training in this financial year.
It shows sometimes the budget is influenced by who is shouting loudest and renders somewhat artificial the distinction between students making demands in Parliament and immediate needs against future obligations to make sure generations to come aren’t saddled with debt or forced into austerity.
Nene said a new “fiscal rule of thumb” would be applied to explicitly link the expenditure ceiling in the outer year of the rolling fiscal framework to the long-term growth trend. This would result in spending remaining relatively steady in the face of short-term fluctuations in GDP growth.
In good times, spending would stick to the long-term trendline – growing less than GDP – as it would in bad times – growing more than GDP, helping to balance the economic cycle.
Another new tool would be a socio-economic impact assessment for all new policy initiatives.
Both are intended to ensure spending patterns don’t wobble with the times, to the tune of expediency – dousing the flames of popular anger, for example – but also, in highly theoretical form, to include the interests of the youth in budget considerations.
Which brings us back to the juxtaposition of students hammering on the doors of Parliament while the lawmakers sit inside deliberating how much to spend on what, and the question of whether the students’ cries should inform the process.
Out of the spotlight, the communications portfolio committee was busy with another element of the budgeting process – receiving and discussing the annual reports of entities it oversees – before writing a report in which, ostensibly, MPs can recommend adjustments to budgets.
No committee has yet exercised this power but the visit of the students may have been a cue for them to start.
One annual report the communications committee received was that of the SABC, in which it disclosed increases in staff costs of R400m, despite having made a loss of the same amount. How consistent is that with the principle of intergenerational fairness?
It may be true that budgeting is a complex process that requires nerveless deliberation rather than the hot breath of despair. But that shouldn’t mean the students must keep their distance from the process.
If anything, the cleaners should have left that enigmatic symbol on the wall to keep Parliament focused on its true constituencies and as a reminder that the time for indulging waste is over.
“0%” – that’s how much wasting of public resources this country can afford, and MPs have the power to help make it happen.
‘No committee has