The government should appoint an expert task team to review the structure and financing of local government, the Centre for the Development and Enterprise (CDE) urges in the latest of a series of its reports.
This was one of seven key recommendations made by the think-tank to deal with SA’s fiscal crisis and to make spending more efficient.
The report is part of a series called “Agenda 2024: Priorities for SA’s New Government, which sets out a number of catalytic actions to reverse SA’s decline.
The CDE is an independent policy research and advocacy organisation funded by various large companies, including Anglo American, Discovery, FirstRand, AllanGray and Investec.
Business activity depends on local government for service delivery but this has collapsed in many municipalities.
CDE executive director Ann Bernstein said in a media release on the report that “every year some 10% of the national budget is transferred to municipalities and metros and there is almost universal consensus that this money is not being spent effectively.
“The president should urgently appoint a high level expert task team to relook at the structure and financing of local government with recommendations for action to be discussed in parliament within six to eight months.”
Among the other recommendations made by the CDE to fix the fiscal crisis were for the government to refrain from making any new, unaffordable spending commitments, including unbudgeted increases to public sector remuneration.
The quality and productivity of spending should be improved by focusing on core business, eliminating low impact and low productivity activities, and enhancing accountability for service delivery. Productivity commissions could identify practical ways to increase service delivery within current budget limits. These processes could be led by Operation Vulindlela.
Decision-making at the centre of government should be improved by streamlining the presidency and ensuring that the right people were appointed in “mission critical” positions at the highest levels in the public sector.
Officials involved in theft and corruption must be swiftly identified and dismissed and greater value achieved for the hundreds of billions of rand spent on government procurement. The system of procurement must be revamped.
Revenue collection should be maximised by investing in the enforcement of tax obligations.
In its report the CDE recommended that the government of national unity (GNU) stick with the current fiscal strategy, and strengthen it further with these interventions. It supported President Cyril Ramaphosa’s undertaking to “manage public finances with a view to stabilising debt” and to “place inclusive economic growth at the top of the national agenda”.
“While CDE acknowledges that there are no magic bullets for resolving the fiscal crisis, the GNU must make meaningful progress along two dimensions that would help enormously: improving the quality of spending and pursuing faster economic growth.
“Ultimately, the most desirable way to improve the sustainability of public finances is through economic growth. The effect of growth on fiscal sustainability is instantaneous because a growing economy can sustain existing levels of debt more comfortably,” said Bernstein.
“Achieving faster growth is not actually all that hard. It requires a government that is committed to addressing the enormous governance deficiencies that exist — from cleaning up procurement, to sending corrupt officials to jail, to demanding higher standards from public servants. The confidence that would flow from actually doing this would electrify investment and growth.”
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