Democracy Development Programme Comments on the 2013/4 Budget

Thursday, 28 February, 2013 - 12:20

The Democracy Development Programme firstly notes and applauds the efforts of the South African state in promoting budget transparency

Value for money?
The Democracy Development Programme firstly notes and applauds the efforts of the South African state in promoting budget transparency. In 2012, the Open Budget Survey scored South Africa 2nd in the world at 90% for budget transparency, down slightly in both score and ranking from 2012 (1st place at 92%). The alignment of the national budget with the National Development Plan further increases citizen access to the logic behind budget decisions and provides business and citizens with an idea of the intended development trajectory mapped out by the state.
As mentioned by Finance Minister Pravin Gordhan in his budget speech, “We find ourselves in a challenging period, with revenues lower than expected by R16.3 billion compared with estimates at the time of the 2012 budget. This is predominantly due to weak economic growth during the second half of 2012, mining sector disruptions and lower commodity prices”. Bearing this in mind, it is perhaps not the overall amounts allocated to various departments which is the measurement of a successful administration, but the value for money, or efficiency of this spending.
The Open Budget Survey, which uses 112 criteria to evaluate the level of transparency in regards national budgeting processes, scored South Africa particularly low in terms of reporting on expenditure backlogs – the percentage of funds allocated but unused during the fiscal year. This year, Minister Gordhan’s speech made mention of the issue of under-expenditure, which plagues delivery in South Africa. 
This was further elaborated in the forward to the departmental budgets: “Indeed, departments and spending agencies do have to learn to do more with less. In the period ahead, improvements in outcomes have to come from qualitative improvements in the use of available budgets and other inputs. All institutions need to increase their efficiency and effectiveness in terms of service delivery, particularly in relation to infrastructure development.”
This issue is perhaps best highlighted by the failure of the Basic Education department to deliver as per the plans of 2012. The NGO Equal Education reports that “In its 2011/2012 annual report the DBE stated that it had spent approximately R76 million of the R700 million it had available to eradicate mud schools and provide basic services. This was an under-expenditure of around R624 million. Basic Education Deputy Minister Enver Surty admitted to portfolio committee members that there will be under-expenditure from the R 2.3 billion allocated for the current financial year.  The DBE stated that expenditure at the end of the third quarter was R476 million. This is an under-expenditure of R1.8 billion.
The ability of departments to implement policy and to deliver according to plans and budgets is perhaps the most urgent issue facing governance in contemporary South Africa. Whilst DDP promotes the strengthening of local government as a means of deepening democracy, and therefore applauds the increase of the local government equitable share, this must be balanced with an honest evaluation of the capacity of local municipalities. The Minister’s comments on professionalizing the public service and strengthening accountability are welcome and we look forward to seeing the steps which the state takes to improve the capacity of crucial departments to deliver, efficiently and timeously.
The second prong of efficiency is the reform of procurement systems. This is being addressed by the creation of a Central Procurement office in Pretoria. We can only hope that this initiative serves to crack down on corruption, speed up payment to suppliers and does not entail expansion of the already excessive bureaucratic procedures which can prohibit small and local suppliers from being appointed as service providers.
DDP would also like to highlight the promise of increased funding for NGOs providing essential social services (up from up from R5 billion in 2012/2013 to R6.5 billion in 2015/2016) as well as the increase in the number of social workers employed by the state. 
As a final point on social spending, while the increase in grants has been widely endorsed, it must be noted that these increases are well below the level of inflation, estimated at 5.75% during 2012 – implying a drop in real income for the poorest sectors. 
The table below illustrates:

Grant type 2012/2013 2013/2014 Percentage increase
Old age 1200 1260 5
Old age over 75 1220 1280 4.9
War veterans 1220 1280 4.9
Disability 1200 1260 5
Foster care 770 800 3.9
Care dependency 1200 1260 5
Child support 280 290 3.6

In summary, whilst the budget appears to be balanced and the transparency of the process is acknowledged, civil society has important tasks in the years ahead: we must advocate for good governance in terms of improved efficiency and the identification and prosecution of corrupt officials, monitor on-going spending, and continue to offer support to the neediest sectors of the South African populace.
Sarah Watson 
Democracy Development Programme

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