South Africa

Treasury document: South Africa’s future matters

By Stephen Grootes 13 January 2016

The reactions to the sacking of Nhlanhla Nene as Finance Minister in December (exaggerated or otherwise) show the critical importance attached in the public mind to the Treasury. It is not often in this country that one sacking leads to ANC elders calling for Number One to be defenestrated. Some people have claimed that the Treasury is not that important, that it is just one Ministry. On Wednesday, a small document emerged and which showed just how important the Treasury is, and why so many people were prepared to fight for it. It is a simple circular to municipalities, and it tells them not to over-spend during this year, because of local government elections.

We have The Sowetan to thank for a little piece of digging which should be normal life for journalists working in well-resourced newsrooms. On its front page, The Sowetan splashed about the existence of this Treasury document. A quick look at the Ministry’s website may have been the first stop for those hunting down the original of the document. They would have been disappointed, and uttered shortish words about hidden documents. But it is not hidden at all. The document in fact, is the first result on the internet search for “National Treasury Municipality Circular”. It is a great demonstration of the value of going through publicly available documents.

In the document about local government elections it says this: “The outgoing council may be tempted to prepare an ‘election friendly budget; – with unrealistically low tariff increases and an over-ambitious expenditure programme. The outcome of this approach will undoubtedly be unfunded municipal budgets that threaten their respective municipalities’ financial sustainability and service delivery”.

It goes on to say that because this year’s polls may come during the budget process, there is a risk that “these consultations may be neglected or used to serve the narrow interests of political parties”. It’s exactly the kind of exciting breathless language one would expect from the National Treasury…. But it does actually suggest a multitude of issues. Firstly, and most importantly, isn’t it reassuring to know that someone in government has thought through all of these issues, looked at what happened during the last local elections, and then thought ahead about how to stop it? So often in this country we seem to think in the short-term. Here is someone, with real power, thinking over the longer-term.

Perhaps more important than that, is the reassurance that there is at least one group in government that understands the distinction between party and state. You would think that if someone wanted to maintain the status quo in our municipalities, they would not send out this kind of document. Instead, they would remain mute. Of course, there is the very real possibility that someone in the ANC is going to be furious at this. They will claim it will make it harder for the party to retain the councils it already has. However, there is of course, a pretty quick response to that. That it was sent out to all councils, and not all of them are ANC. Suddenly the value to the nation of having more than one party in government, in different spheres, becomes important.

The circular goes on to warn councils to “critically consider the financial implications before entering into new long-term contracts that are not of priority to the municipality”, before suggesting that councils should “refrain from purchasing cars” at this point. While this advice obviously flows from the earlier advice, in that not over-spending during election season leads to this suggestion, there is, probably not deliberately, a slight hint to one of the major issues that could crop up this year. That is, whether the ANC will give up power in councils it loses in elections without a fight.

So far, the evidence is that it will not. From Cape Town to Outshoorn, the ANC has actually had to be thrown out kicking and screaming. The Treasury of course, while important, is far from omnipotent. It doesn’t have the power over local councils that it has, say, over SAA.

No doubt different councils will react in different ways. Those that are sitting on pretty large majorities probably will not change course much because they don’t need to. It’s the councils that are finely balanced that will be interesting. Which this year means Nelson Mandela Bay, Tshwane, and possibly Johannesburg. As they are all big metros, they will receive plenty of non-SABC media attention this year, and now that this circular is public knowledge, their budgets are going to be watched very closely indeed. That said, the temptation is still going to be huge. Imagine the situation in Tshwane. It is almost impossible to predict at the moment what will happen; the ANC does not have the security of Soweto that it does in Joburg. And there is drought upon us. Imagine, should the moment come to implement water restrictions, how some will argue that to do so will literally be to lose the city for the ANC. You couldn’t blame them, they would literally see the ANC losing an election through an act of God. The temptation to just brazen it out until after voting day would be very strong. And of course, some of the smaller councils, in rural areas, will simply ignore the Treasury, and do what they were always going to do, load the budget with pre-election goodies. As politicians do everywhere.

It’s not known at this point whether the new new Finance Minister, Pravin Gordhan, himself had a hand in this document; it is entirely possible that he has not. But it does show you the confidence of the Treasury that it would put something like this out. If the person who wrote it thought she would not be backed up by her Minister, she wouldn’t have put it out, or she would have moderated the language. In a way, this could help to weaken Number One’s claim that the person who runs a Ministry doesn’t actually matter. It really does matter. And, for the moment, so does the National Treasury. DM

Photo: A shopkeeper counts out change above her cash box at her shop in Hillcrest, west of Durban, South Africa, January 11, 2016. REUTERS/Rogan Ward



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