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ANC, alliance partners push back on Treasury’s cost cuts ahead of 2024 elections

ANC, alliance partners push back on Treasury’s cost cuts ahead of 2024 elections
Illustrative Image: President Cyril Ramaphosa. (Photo: Shelley Christians) | Finance Minister Enoch Godongwana. (Photo: Leila Dougan) | South African R100 notes. (Photo: Shiraaz Mohamed) | South African National Treasury Building. (Photo: Supplied)

Finance Minister Enoch Godongwana and his team have their work cut out for them ahead of the Medium-Term Budget Policy Statement, as their cost containment guidelines face pushback from the ANC and its alliance partners.

The ANC officials, the top brass of Cosatu and the SA Communist Party (SACP) are said to have held a meeting this week with Finance Minister Enoch Godongwana about National Treasury’s cost containment measures, which they believe could be detrimental to their 2024 election campaign. 

Daily Maverick understands that the meeting was held on Monday, 18 September, where all members of the ANC Top Seven were present, apart from President Cyril Ramaphosa and the party’s second deputy secretary-general, Maropene Ramokgopa, who are in New York for the United Nations General Assembly meeting.

The bone of contention revolved around Treasury’s lack of political nuance in relation to the cost containment measures it has outlined. This is despite the department being headed by Godongwana, an ANC National Executive Committee member.

Read more in Daily Maverick: South Africa’s Treasury Pressured to Water Down Spending Cuts

The ANC is looking to woo voters in next year’s provincial and national elections and they are trying to avoid losing popularity among supporters. It’s been predicted that the ruling party could fall below 50% of the vote – something that has placed considerable pressure on party leaders.

During the meeting, red flags were raised around the suggestion that retrenchments be considered in the public service. The ANC and its partners felt this should not be implemented, but they were in favour of giving civil servants the choice of taking a voluntary severance package or opting for early retirement. 

The tripartite alliance felt that the Social Relief of Distress (SRD) grant should continue, even if the amount is not increased in the upcoming Budget. A proposal around tax increases was shut down as it offered only a temporary solution to the country’s cashflow woes. 

There was also disapproval of the suggestion that certain government programmes be ended as a means to cut costs. Treasury has suggested this as a way to increase the SRD grant to R365 or R450 a month.

Cosatu wants the government to ensure that Transnet functions properly to ensure that the manufacturing and mining sectors can operate seamlessly. The union also believes that Eskom should improve its revenue collection from municipalities that owe billions.

One of the suggestions that received support involved the reconfiguration of the state, which would see larger departments absorb the functions of smaller ones. It would also eliminate duplication and overlap of functions across departments and entities. 

Because there was a clear disconnect between Treasury and the tripartite alliance regarding the cost-cutting measures, it was decided that smaller working groups would be formed to facilitate the process.

Treasury’s financial woes 

Daily Maverick’s Ray Mahlaka has written about how Treasury has found itself in trouble after a fall in commodity prices and a weakening of the economy due to power blackouts and logistics constraints (mainly problems at Transnet). These factors have bitten into the profits of companies that are consequently paying less corporate taxes to the government.

Early figures indicate that for the second quarter of 2023, corporate income tax collections were down by 22.5% compared with a year ago. Because of this, it is broadly expected that the government will face a revenue shortfall of between R30-billion and R60-billion this year.

At the end of August, Treasury sent a letter to the provinces, informing them that it faces “unprecedented” challenges for the current fiscal year. It has instructed departments and provinces to freeze hiring and advertising for new procurement contracts for all infrastructure projects (unless approved by Treasury). 

It recommended drastic cuts in spending on travel, catering, conferences and workshops. 

The finance minister will table the Medium-Term Budget Policy Statement in Parliament on 1 November. DM

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  • Iam Fedup says:

    We are completely broke, bankrupt, and these fools are still trying to buy votes with your and my money.

  • Hester Dobat says:

    Aiming for soft targets not to rattle the voters. Less spent on conferences, catering, travel, etc. Cutting back on ‘non essentials’. It would be really interesting to see how much money that adds to alleviating the suffering of the poor, and how much goes to voting campaigns.

    • Ukraak17 says:

      Cutting back on “self spending” would alleviate things, a lot. I used to work for a provincial Premier’s Office, where every meeting turned into an eeting, where people were submitting fuel claims (for meeting and workshop attendance – which often didn’t even happen) that would DOUBLE their salaries.

      Just as a point of reference, the provincial Premier’s office had a budget of three-quarters of a BILLION RAND for just doing oversight. Not for building shit or doing stuff, it was about (m)eetings!

      So there is huge fat that can be trimmed from the Provinces which is just wasted on self expenditure.

  • George 007 says:

    A really big part of governing is being responsible/prudent with taxpayer dollars. The ANC has utterly failed that measure in that the country is for all intents and purposes either bankrupt now or really close to it.

    How can you buy votes when you have no money? Asking for a friend.

  • Peter Dexter says:

    For years everyone has been telling the ANC to adopt market friendly policies. They should follow the economic policies of countries that produce high living standards like Singapore and South Korea, not those producing poverty like Venezuela, North Korea, and Cuba. Reduce the size of government and the public sector, and allow the PEOPLE (private sector) to grow the economy. Their centrist ideology drives investment and associated tax revenue elsewhere. The resultant declining state revenue flows mean the ANC will be less popular with voters . But if they don’t make changes now the impact will be far more severe later. Populous policies only work in the short term and that term is starting to run out for the ANC.

  • Michael Clark says:

    So the SACP with no seats and the COSATU with even less seats are discussing finance with the gangsters, while tax paying private enterprise that ACTUALLY pays tax are ignored. Wonder why might be R60 billion short in income. Also asking for a friend.

  • Ian McGill says:

    Why would a group of folks who, for the last 30 years, have been proven to be incompetent, business hostile, and wedded to a failed socialist model have any clue, let alone new ideas?

  • Grant Turnbull says:

    It is very evident that the election process is more important to the ANC than keeping the country’s financial stability in line. Just another case of these bleeding-heart socialists destroying an economy to make themselves look good to the unproductive non-taxpaying ever-dependant voter.
    Rather look after business and it will protect the economy and thus keep the people in jobs, not on grants.

  • Alan Watkins says:

    In terms of government finances, the pawpaw has hit the fan. This should have happened years ago and would definitively have happened a year ago but for higher commodity prices resulting in a tax windfall. But now there is no way out. Minister of Finance knows that and has to present a medium term budget soon and then an annual budget early next year, both before the election. Expect some more creative accounting as in the budget’s assumption that there will be a low or no salary increase for government employees, followed by an actual large increase.

  • Willem Boshoff says:

    They’re about to learn that eventually you really do run out of other people’s money.

  • Philemon Solomon says:

    I got a suggestion that will do 1000x more than anything suggested. Stop stealing EVERYthing.

  • Colin Braude says:

    “Daily Maverick’s Ray Mahlaka has written about how Treasury has found itself in trouble…”
    Not strictly accurate. It is SA that’s in trouble and the ANC has run out of Other Peoples’ Money to fund its looting and patronage politics.

    After the Reserve Bank disgraced itself and lost credibility over the Phalaphala cover-up, Treasury is the one state institution we can bank on — until the ANC is voted out. Until then, we don’t have a “high road” or “low road” scenario [𝘱𝘢𝘤𝘦 Clem Sunter] we have potholed or exploding roads.

  • Richard Robinson says:

    “Nothing tells the story of priorities gone haywire so well as a comparison of the budget allocations for VIP protection versus the budget for the Hawks.

    You guessed it: to protect about 200 VIPs the budget is R3.76-billion. To protect 60 million South Africans against priority crimes undermining the state, citizen safety and the economy? R2.2-billion will do.

    That means that the Directorate for Priority Crime Investigations (also known as the Hawks), responsible for stopping rampant corruption, organised crime, drug and people trafficking and more gets 58.5% of what is spent to protect about 200 elite politicians.”

    Daily Maverick, 2023-09-14

  • John Kuhl says:

    they have never contributed a cent to the Country……just spending the opposition’s tax contribution. Now their policies and inapt management of the country’s affairs is already spending the next generation of tax payers money on loans and interest….NOT ACCEPTABLE – kept n power by the non-contributing.

  • Grenville Wilson says:

    Again a poor article.

  • Andre Swart says:

    I told you so!

    ” … the problem with all communists is that they eventually run out of (other people’s) money. (Margaret Thatcher, British Prime Minister)

    As the ANC ship start sinking, the rats, COSATU, SACP etc will abandon them!

    Many FATCATS will drown with the ship!

    Watch this space!

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