Twenty-five years ago Trevor Manuel started the Tips for Trevor initiative, which invited members of the public to give the then finance minister suggestions in advance of his budget speech.
Current finance minister Enoch Godongwana launched the latest call for Budget Tips on January 30, with a closing date of February 12, just in time for budget day on February 19.
The Treasury is seeking input regarding eight areas, though this is better described as seven areas with a catch-all “other”: government spending priorities, addressing the large budget deficit, stabilising state-owned entity finances, energy funding solutions, tax revenues, debt sustainability, municipal finances and any other economy-related topics.
Past suggestions have been sensible, evidenced, politically polarising or politically unacceptable, but the quality and tone certainly contributes to the way they are received and considered. The reality is that good tips are needed, and good tips can come from anywhere. Even those that are a poor ideological fit with that of the minister and his department should be heard.
Regarding government spending priorities, one could highlight the consequences of not meeting our debt obligations, which makes this a nonnegotiable. After interest, the target could be to spend money effectively on pro-poor policies, which may mean social grants that help the downtrodden, while drawing attention to the reality that we don’t have the characteristics or surplus needed to fund a sovereign wealth fund, or the track record to stop that becoming a slush fund.
Sensible changes to the grant system could be proposed, for example one could recommend extending the child grant so that it is paid to everyone while they are under 18 or in school and making progress: many turn 18 in their matric year, with the grants being terminated adding an unnecessary level of stress and destitution.
The large budget deficit can be dealt with in three ways — increasing taxes, decreasing expenditure or growing the economy so that the debt level falls (as measured relative to GDP).
Many will be tempted to make seemingly obvious and mundane suggestions, say recommending clamping down on corruption and wasteful expenditure. This has been suggested many times before and is certainly simpler said than done, but this shouldn’t preclude submissions that are accompanied by tangible suggestions, say proposing withholding future funds, preventing the issuance of new debt, automatically introducing a hiring freeze and the cancellation of bonuses to employees in organisations that have repeatedly had qualified audits due to wasteful or fruitless expenditure.
The purpose, necessity, viability and sustainability of many SOEs can be questioned. One could propose criteria before they can receive transfers from the fiscus or issue debt with a government guarantee, because taxpayers can’t be expected to fund Eskom’s bloated payroll indefinitely. You could even speak on behalf of the late former finance minister Tito Mboweni, who noted that funding SAA is not an imperative as part of a pro-poor policy.
Regarding energy funding solutions one could remind government that it lacks the funds to refurbish and replace the coal generation fleet that will come to the end of its life shortly. You could stress that the plans to liberalise the power generation market need to get over the line, and that failing to do so will mean the return of widespread load-shedding in a decade. With the lion’s share of our electricity generation capacity still coming from coal, ensuring that this generation fleet is either replaced or refurbished — and steps are taken to do so timeously — should be part of current plans.
Deregulation
You could draw attention to the Laffer Curve, and the lesson that increasing tax rates does not always lead to increases in the amount of tax collected. Antagonising our small, currently highly taxed (by international standards) and mobile tax base (reflected by the declining number of dollar millionaires residing in SA) may be counterproductive. The only sustainable way to grow tax revenues is to grow the economy, which means steps need to be taken to encourage growth, which could include deregulation.
Our credit rating is already junk, which means the sustainability of our debt level is already in question. One could suggest that government introduce a debt ceiling, which would require steps to rein in expenditure if economic growth and the resulting tax revenues don’t materialise. More pointedly, a ceiling on the share of GDP that can be spent on public sector wages and salaries could be proposed, which would limit the hiring and the annual salary increases to be awarded to public sector workers.
We are already spending an inordinate amount (hence the deficit and debt level), and we still need to find the money for Aids drugs, Eskom plants and fixing our port and rail infrastructure …
Most of our municipalities receive qualified audits, with what seems like limited consequences. You could propose that a satisfactory audit be regarded as a prerequisite for bonuses to be paid, and ensure that municipal management is held accountable for nonpayment of monies to Eskom, pension administrators or other suppliers.
In the other category, you could be tempted to speak of the cost-effectiveness of the National Prosecuting Authority’s budget and rate of successful convictions, ask whether we have a sensible ratio of admirals to ships in the navy, or ask for a Treasury suggestion box to be available all year round.
Individuals in a democracy can collectively exercise power through the ballot box, with the executive and legislature running the show in the interim. It is easy to dismiss this initiative as a publicity stunt, accompanied by a comment or tweet that “they didn’t implement the policies suggested last time”.
Only the naive would assume that all their suggestions will be implemented: hopefully there will be many submissions, some are likely to be hairbrained and should be dismissed, and many will be contradictory. Some may suggest public works programmes to grow the workforce, while others will propose steps to shrink the public sector workforce.
That we are invited to make reasoned, reasonable and considered suggestions is an invitation we should not refuse. There are just a few days left to do so — submissions must made before February 12. Click here to visit the Treasury tips site.
• Becker, a retired actuary and recently qualified maths teacher, is founder of MyTutor.chat.
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