Maverick Citizen: Oped

Budget: Political choices are undermining promises of the Bill of Rights

By Zukiswa Kota 10 November 2019
Caption
South African Finance Minister Tito Mboweni (C) arrives to deliver the mid-term budget statement at parliament, Cape Town, South Africa, 30 October 2019. (PHOTO: EPA-EFE/NIC BOTHMA)

With dust beginning to settle after Finance Minister Tito Mboweni’s Medium-Term Budget Policy Statement, there is clear disillusionment with his three-year spending plan. The minister’s debut address of the 6th parliament barely lived up to the promises of biblical bounty that his Corinthians 9 reference heralded.

The work of the New Dawn is clear, starting with high levels of unemployment, poverty, weak municipal performance and severely compromised state-owned entities.

Statistics South Africa’s Poverty Trends reveal the devastating facts that poverty and unemployment are on the rise. Those hardest hit are black women, children, the disabled and people with little formal education. The One Campaign puts it aptly in a 2015 report, stating that “poverty is sexist”.

The inextricable link between public budgets and human rights has been emphasised by international rights mechanisms, budget advocacy movements and human rights activists. For this reason, training a lens on how public funds are configured, deliberated and ultimately spent is worth the time and energy.

The Budget Justice Coalition (BJC) is not convinced the South African government is using all available and appropriate means to ensure that public expenditure effectively promotes people’s equal enjoyment of their rights.

The BJC seeks not only to expose injustice in public budgeting, but to promote a culture of inclusive, participatory budget processes in which decision-making is broadly evidence-based. Besides offering a glimpse into the state of the country’s fiscal affairs priorities, Finance Minister Tito Mboweni’s Medium-Term Budget Policy Statement (MTBPS) provided a valuable opportunity to assess the Cabinet’s efforts towards the realisation of human rights.

On 6 November, members of the BJC made a submission to parliament’s select and standing committees on finance, making key calls to action by elected representatives. Some encouraging elements of Mboweni’s plan currently being debated in the National Assembly were also highlighted.

Interventions to improve the quality of infrastructure planning, including the Budget Facility for Infrastructure, have a positive bearing on the management of public resources. The reduction in spending on ministerial benefits to optimise public spending is laudable, as is the allocation of R1.1 billion towards an emergency plan to tackle gender-based violence and femicide. (Notwithstanding that the adjustments are not immediately evident to support the latter).

The BJC has, in past submissions, raised the alarm about South Africa’s economically harmful trajectory of austerity.  Austerity measures are usually implemented to allow the state to prioritise debt repayments in order to reduce government borrowing and debt exposure. Austerity is defined as fiscal policy implemented to address debt and economic growth problems. Common austerity policies tend to include spending cuts, regressive tax increases, or a combination of both. Austerity might be also be implemented to demonstrate commitment to “fiscal discipline” in an effort to appease creditors and credit rating agencies.

In its submission to parliament this week, the BJC emphasised that:

“The choice of austerity is not merely a technical one, but reflects political choices. The debate over austerity is far from purely academic as austerity has many devastating implications for people’s lives, in particular low-income households.”

The adverse effects of austerity on human rights were also raised by the UN Committee on Economic, Social and Cultural Rights (UNCESCR) in October 2018 when government and civil society representatives reported on South Africa’s progress in the implementation of the International Covenant. The UN committee observed that the austerity measures being introduced risked exacerbating inequality and potentially undoing progress achieved, particularly in sectors such as health and education.

The BJC is in agreement and believes there are alternatives to austerity and that several of these revolve around the development of a more capable, inclusive and accountable state.

The current mid-term proposals are set to deepen austerity. Tellingly, in 2016, former Finance Minister Pravin Gordhan acknowledged that “South Africa cannot rely on austerity measures to reduce public debt and boost economic growth, as previously thought”.

Treasury’s 2020 Medium-Term Expenditure Framework (MTEF) technical guidelines to provinces was a startling signal of what was to come in the MTBPS. These guidelines, issued annually, instruct provincial departments and entities on the preparation of their budgets for the upcoming financial years. The 2020 MTEF notably states: “There are no additional resources, with budget reductions likely to be implemented. Any additional allocations proposed to a programme must be funded by reductions in funding by another programme.”

The implications of this on the country’s ability to meet its obligations to respect, promote and fulfil the rights of all its people are deeply concerning.

Impacts on health and education

The Department of Basic Education in October tabled a report in parliament indicating reductions to infrastructure budgets across several provinces. Combined with the stagnation of the overall basic education budget and increasing costs of providing education services, provincial education departments will be expected to make further cuts to key basic education programmes over the next three years. Provinces with the worst infrastructure backlogs, such as KwaZulu-Natal and Eastern Cape have not been spared deepening unequal resourcing.

Further to this, economist Nic Spaull argues that spending per learner has gradually decreased since 2010, further compromising the right of access to education. Black learners in rural areas are disproportionately disadvantaged by these trends.

The BJC believes these cuts are likely to elevate barriers to girls’ education and education for learners with disabilities, in particular.

Austerity measures also deepen inequalities within the health system. Reductions to health budgets have unequal impacts on the delivery of health care to women, transgender and intersex people. Some of the reasons for this relate to disproportionate HIV infection rates; inadequate maternal and child health services; and reduced access to hormones, contraception and gender-affirming care.

The 2019 MTBPS proposes average annual nominal growth of only 7.0% spending which is inadequate given the current population growth rate, above-inflation wage settlements and high medical price inflation.  And, with an estimated 40,000 health vacancies, crumbling infrastructure and widespread shortages of medical equipment, it is evident that austerity budgeting is not the solution. The shortages of critical personnel will also undoubtedly hamper the country’s preparedness to roll out the National Health Insurance (NHI), a programme intended to address systemic inequality.

Austerity, the public wage bill and state-owned entities

Among the central tenets of austerity in South Africa has been the reduction of the public sector wage bill. In his address, Mboweni stated that the wage bill “took more than 35% of consolidated public spending, [and was] not sustainable”.

Subsequent to the 2018 public-service wage agreement, provinces were required to absorb the increases within their existing compensation ceilings, which means they had to internalise the unbudgeted compensation costs. As it stands, provincial departments spend approximately 65% of their expenditure on wages. Current ceilings for compensation budgets exacerbate existing staff shortages, particularly in health and education.

Further reductions to the public sector wage bill over the MTEF are planned, incentivising the departure of civil servants by offering them early retirement packages. In this way, ever-increasing pressure is placed on civil servants.

What, therefore, is the real impact of cutting the public sector wage on service delivery capacity for the realisation of human rights?

The appropriation of R26 billion towards Eskom to service its debt obligations constituted the largest adjustment. The struggles of this state-owned entity (SOE) are Herculean in nature and acute in their impact on business and households.

Bailouts to SOEs are affecting service delivery. The lack of clear plans to manage SOE debt is concerning; parliamentary committees must oblige the National Treasury and the Department of Public Enterprises to avail the relevant plans to stem the flow. This should include full disclosure of the pre-conditions and levels of compliance towards special appropriations and SOE bailouts.

Are there alternatives?

In the spirit of solution-oriented participation in the country’s budget process, the BJC presented a range of recommendations for consideration by relevant committees of parliament and the National Treasury.

Firstly, frontline services must be protected and advanced. It is expected that the wage bill will account for the largest share of government spending by economic classification, with marginal increase due to reduction in spending on capital and goods and services. Shortages of frontline service delivery workers, large numbers of unfilled posts, as well as ongoing measures to freeze or cut back on posts are not sustainable. The need to review wage structure with a view to reducing costs while making wages more equal and reducing unnecessary layers of bureaucracy is clear.

Departments must be capacitated towards more effective performance management processes to ensure that skilled personnel that contribute meaningfully within the public service are recognised and retained. In addition to this, early retirement plans needs to be reviewed for their potential harm to the health sector, which is already contending with hiring and retention difficulties where specialists are concerned.

Much room remains for the South African government to prioritise savings by tackling wasteful and inefficient expenditure. It is incumbent on the state to prioritise robust anti-corruption interventions, strengthen the management of public resources and take decisive punitive action against breaches of the Public Finance Management Act and Municipal Finance Management Act. This is especially the case at state-owned entities where corruption, mismanagement and weak accountability persist.

Perhaps most concerning is the impact on national morale. Trust in government as a whole has been severely eroded.

Polling people’s attitudes towards democracy in 2018, the Foundation for Human Rights revealed that 50% of South Africans no longer believe democracy is the appropriate system of government. The resulting crescendo of populist voices should fire-up “Thuma Mina” interventions to rebuild state capacity. There can be no more dithering. MC

Zukiswa Kota is the head of the monitoring and advocacy programme of the Public Service Accountability Monitor and steering committee chair of the Budget Justice Coalition.

The Budget Justice Coalition is a civil society organisation that includes: the Alternative Information and Development Centre (AIDC), the Children’s Institute at UCT (CI), the Dullah Omar Institute at UWC (DOI), Equal Education (EE), Equal Education Law Centre (EELC), the Institute for Economic Justice (IEJ), OxfamSA, Pietermaritzburg Economic Justice and Dignity (PMEJD), the Public Service Accountability Monitor (PSAM), the Rural Health Advocacy Project (RHAP), SECTION27, the Studies in Poverty and Inequality Institute (SPII) and the Treatment Action Campaign (TAC).

 

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