The DA has proposed targeted cuts to government expenditure, including a three-year wage freeze for public servants not covered by the occupation-specific dispensation, which covers professionals such as teachers and nurses.
An occupation-specific dispensation refers to salary structures that are unique to each identified occupation in the public service. It is meant to attract and retain scarce skills in the civil service.
The freeze, which the DA believes could yield savings of up to R66bn over three years, should cover the “millionaire manager class” of head office managers and supervisors. An additional R60bn can be saved over three years by reducing the number of managers, the party said when releasing its proposals for the medium-term budget policy statement (MTBPS), which finance minister Enoch Godongwana will table in parliament on Wednesday.
The unbudgeted public-sector wage increase of 7.5% earlier in 2023, which cost the government R37.4bn, contributed to the fiscal squeeze that it is currently experiencing. An inflation-linked increase has been agreed on for 2024.
“Government salaries specifically those of the ‘millionaire manager’ class have inflated to unsustainable and unjustifiable levels particularly given the absence of a corresponding increase in productivity,” DA deputy finance spokesperson Ashor Sarupen said at a media briefing on Monday addressed by him and the party's finance spokesperson, Dion George.
In terms of the DA’s MTBPS proposals, government total net cuts would amount to R97bn in 2023/24, R129bn in 2024/25 and R158bn in 2025/26. This would include cutting out all bailouts for state-owned enterprises (SOEs) this fiscal year including Eskom (R22bn), Sanral (R23.7bn), Denel (R3.6bn), Land Bank (R5.2bn) and Transnet (R5.8bn) among others.
“The DA does not support the principle of bailing out SOEs at the expense of crowding out other necessary expenses,” George said.
Significant savings could also be made, they said, by eliminating all funding for the national health insurance scheme (NHI) (saving R14.5bn over three years), shutting down the National Youth Development Agency, freezing expenditure on the presidency, reducing expenditure on VIP protection and security services and reducing debt service costs.
The DA’s alternative budget in terms of revenue is predicated on its forecast of 0.6% economic growth this year, 3% in 2024/25 and 4% in 2025/26, which it says is possible with the implementation of its market-orientated economic policies. This would deliver a budget balance of about 4.9% in each of the next three years.
Revenue would be reduced by cutting the fuel levy and expanding the zero-rated food basket to address the cost-of-living crisis while provision is also made in the DA’s proposals for the continuation of the social relief of distress grant, which will cost about R38bn-R40bn in the outer years of the framework.
The DA stresses, however, that it would only support a basic income grant if there were substantial and sustained economic growth and the government achieved a budget surplus.
The party believes that more funds are required for institutions fighting crime and corruption such as the National Prosecuting Authority and the Special Investigating Unit, which should each get an additional injection in the region of R2bn in each of the three years, including 2023/24.
The solar tax incentive for individuals announced in the budget, which is due to terminate at end-February, should be continued for a further two years and extended to include batteries, inverters, frames and installation costs, and not just solar panels.
The child support grant should be increased to the food poverty line of R624 at a cost of R12bn in 2023 and between R26bn and R28bn in the outer years. The allocation to a restructured National Student Financial Aid Scheme for student accommodation should also be increased by R7bn in 2024.
Sarupen said the DA did not support the transfer of any more of Eskom’s debt onto the government’s balance sheet.
Addressing SA's economic malaise, George said “decades of financial mismanagement and failed economic policy have now come to a head. The appropriate course of action for government to address our underperforming economy would have been to enable a more flexible and responsive environment. Regrettably, the governing party has positioned itself in the wrong place in our economy and is getting in the way of any recovery.
“To achieve lasting prosperity, SA must enact comprehensive economic reforms that capitalise on the extensive resources and expertise of the private sector. The starting point for such reform is the elimination of government-imposed obstacles to growth.”
George emphasised that it was only through economic growth that the fiscal crisis could be addressed and fiscal sustainability achieved.
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