“This… is not an austerity budget. This is NOT an austerity budget. This IS NOT an austerity budget.” These were the words Finance Minister Tito Mboweni chanted to the South African public last week during his presentation of the 2021 Budget Review. However, despite his insistence that austerity was not being pursued, the Budget included severe cuts to social spending on programmes such as education and health. Budget 2021 is undeniably an austerity budget. 

Civil society organisations have raised concerns over the catastrophic impact this will have on the lives and futures of South Africans. On 5 March 2021, economist Michael Sachs, as acting chairperson of the Fiscal and Finance Commission, published a supplementary comment on the Budget that echoes these concerns – that the State has failed to properly consider the Budget’s impact on the realisation of constitutionally protected socioeconomic rights. 

The supplementary comment is a breath of fresh air amid institutional and state failures to confront or justify the potentially devastating effects of the Budget cuts on the realisation of these rights. 

SECTION27, therefore, welcomes the commission’s comment, in particular its call on the departments tasked with socioeconomic delivery such as basic education, social development and health to indicate whether the cuts imply a retrogression of rights guaranteed in the Constitution and, more significantly, the call on the finance minister to justify the cuts.

SECTION27 believes meaningful participation and mandatory human rights impact assessments will go some way towards facilitating rights-based budgeting in accordance with government’s obligations in respect of socioeconomic rights. It will also promote the transparency and democratisation of the budgetary process, and equip state officials with knowledge about the impact of their decision-making.  

The Fiscal and Finance Commission’s supplementary comment

The commission is an impartial, independent institution established by the Constitution and tasked with advising the government on financial and fiscal matters. It stated in its supplementary comment: “Budget 2021 is the first time since the adoption of the Constitution in which a budget tabled by the executive has unambiguously proposed a substantial reduction in the real value of allocations to public services.” Concerningly, allocations had been reduced for spending on socioeconomic rights and such reductions were set to continue for several years. For example, in SECTION27’s core work areas:

• In health, consolidated expenditure on emergency medical services and central hospitals is expected to be lower in 2021 than in 2019; 
• In education, consolidated expenditure is expected to grow “far below” the rate of inflation until 2023.

According to the commission, despite the Budget’s potential negative effect on constitutional rights, the government’s obligations in terms of these rights were not mentioned in the Budget speech or review: “It is hard to avoid the conclusion that [the] executive has not considered these matters seriously when preparing its Budget proposal to Parliament.”  

The state’s obligations when budgeting

The influential South African scholar, the late Etienne Mureinik, rightly said the enactment of the Constitution was supposed to symbolise a shift from a “culture of authority” to a “culture of justification”. It was no longer meant to be acceptable for power to be exercised by the government without justification in terms of the Constitution and Bill of Rights. However, as indicated in the commission’s supplementary comment, as well as comments by many civil society organisations, Treasury and Parliament seem to believe a culture of justification does not apply to budgetary decisions, which are among the most important tools for the realisation of rights.

Section 7 of the Constitution obliges the government to promote, respect, protect and fulfil the rights in the Bill of Rights. Section 8 states that the Bill of Rights binds all organs of state. Section 195 says public administration must be governed by the democratic values and principles enshrined in the Constitution, including the promotion of the efficient, economic and effective use of resources. 

The Committee on Economic, Social and Cultural Rights, which monitors the implementation of the International Covenant on Economic, Social and Cultural Rights (ratified by South Africa in January 2015), wrote concluding observations in response to South Africa’s initial State Party report in 2018. It noted with concern that the country had been introducing austerity measures, particularly in health and education, without setting time frames for such measures to be reviewed or lifted. Such measures may worsen inequality or lead to the retrogression of socioeconomic rights, the committee said. It was recommended that South Africa increase funding for social services (health, education and social security), ensure policies are directed towards the realisation of rights, and ensure rights are taken into account when budgetary decisions are made or reviewed. 

Further, in terms of the increase in VAT, the committee voiced concern that the government was not conducting human rights impact assessments, or sufficiently considering rights, when making budgetary choices. Yet, three years later the government continues on the path of austerity, still does not conduct rights impact assessments, and does not even mention human rights when making budgetary decisions. 

Public participation in budgetary decision making

An important point by the Fiscal and Finance Commission in its supplementary comment is that it is important for South Africans to discuss budgetary issues and their effect on constitutional rights. However, Treasury and Parliament have left little to no room for ordinary citizens to engage properly with the Budget. The participatory process in the formulations of budgets is wholly inadequate. While South Africa ranks high in terms of budget transparency, it scores low on public participation in the budget process. 

Civil society organisations have long argued that they need to be given an adequate opportunity to make submissions regarding the Budget before it is tabled before Parliament. This is because, although technically Parliament can vote against the Budget (which these organisations are advocating for), this never occurs. Therefore, making submissions after the Budget has been tabled is a seemingly fruitless exercise. This is also precisely why, as the commission implies, it is so imperative that Treasury considers the effects of the Budget on rights. It is difficult to determine how exactly Treasury is doing this without a comprehensive process of public participation or human rights impact assessments. In other words, it is unlikely that Treasury properly considers human rights at all when writing the Budget.

The relevance of rights impact assessments 

Together with meaningful and effective public participation, human rights impact assessments may provide a valuable means of determining the effects of budgetary decisions and, more importantly, cuts. Impact assessments are not unfamiliar in the South African legal context. The National Environmental Management Act 107 of 1998 states that “social, economic and environmental impacts of activities, including disadvantages and benefits, must be considered, assessed and evaluated, and decisions must be appropriate in the light of such consideration and assessment”. This is achieved through impact assessments, whereby the government can make better-informed decisions around environmental authorisation for specific activities.

Conducting these assessments could easily be located within the Socio-Economic Impact Assessment System. In May 2015, the Department of Planning, Monitoring and Evaluation introduced a system to assess the socioeconomic impact of new policy initiatives, laws and regulations. The Socio-Economic Impact Assessment System Guidelines’ require that “any Cabinet memoranda seeking approval for draft policies, bills or regulations must include an impact assessment that has been signed off by the [assessment system] unit.” These must be measured in terms of their impact on “social cohesion and security (safety, food, financial and energy, etc); economic inclusion; economic growth; and environmental sustainability.” Human rights are not included explicitly as measurement indicators for impact assessment. 

In addition, the assessment of the impact of a proposed rule must go beyond a mere cost-benefit analysis, but “help decision-makers to understand and balance the socioeconomic impacts of proposals on different constituencies”. While impact assessments are not legislatively mandated, it is evident they are being conducted and discussed by relevant parliamentary portfolio committees. Noteworthy too is that the use of the assessment system does not extend to budgetary decisions.  The use of the system should be expanded to explicitly mandate measuring the impact on human rights. It should also be expanded to include budgetary decisions.

Interestingly, the UK has enacted legislation requiring officials to take certain procedural steps when making decisions, to protect individuals and groups from any discriminating consequences. In particular, Section 149 of the Equality Act (2010) imposes a Public Sector Equality Duty on all public authorities, which places a duty of “due regard” on officials that requires them to undertake human rights impact assessments when making decisions such as proposed policy changes, including those with budgetary implications.

This duty has been well developed in English case law, most notably in the case of Stuart Bracking and Others v Secretary of State for Work and Pensions, which concerned a decision to close the “Independent Living Fund” by the end of March 2015. The fund provided money to people with disabilities so they were able to live more independently. The Court of Appeal held that the duty to have due regard includes the recording of steps taken by a decision-maker; that the duty rests upon the relevant minister or decision-maker personally; that a minister must assess the risk and extent of any adverse impact and the ways in which such risk may be eliminated before the adoption of a proposed policy; and that officials reporting to or advising a minister must not merely tell the minister/decision-maker what he/she may want to hear, but must be rigorous in enquiring and reporting to them.

The English approach underscores the need for accountability in assessing the risks and benefits of decision making, and promotes rigorous and open processes of enquiry and reporting that could inform a similar approach in South Africa. 

Conclusion

There is little evidence that the South African public has been given an adequate platform to voice its concerns over budgetary decisions before they are tabled in Parliament. The state has thus proved unwilling to listen to the people most affected by spending cuts in core social services before making such decisions. It is also becoming increasingly evident that the state does not have proper processes in place to ensure it is adequately informed about the effect of its decisions on human rights.  

In a submission on Tuesday to the Standing Committee on Appropriations on the 2021 Division of Revenue Bill, the Fiscal and Finance Commission warned that “as the government is negotiating for a sustainable fiscal path, it should not lose sight of the constitutional imperatives nor lead to the retrogression of citizens’ socioeconomic rights”. SECTION27 believes that greater, more meaningful public participation, at longer intervals before decisions are tabled at Parliament, together with the completion of human rights impact assessments, will not only better inform decision-making processes, but open up these spaces to ensure a culture of justification and human rights is promoted. It is, after all, what our Constitution mandates. DM/MC

Dr Demichelle Petherbridge is an attorney in the Education Rights Programme at SECTION27, Mila Harding is a Legal Researcher at  SECTION27 and Dr Faranaaz Veriava is Programme Head of the Education Rights Programme at SECTION27.