Former National Treasury deputy director-general Andrew Donaldson says spending reviews are no substitute for hard political decisions about scrapping programmes and state entities that are dysfunctional, ineffective and draining the fiscus.
“Bureaucratic sluggishness, vested interests and a lack of political will are getting in the way of what needs to be done,” says Donaldson, who initiated the Government Technical Advisory Centre, which has carried out nearly 240 spending reviews since 2013.
These reviews have led to much analysis, negotiation, discussion and policy planning, but no actual decisions.
“On the expenditure front ... it’s the decision-making we’re not seeing,” he says.
As a result billions are being wasted on programmes and agencies that are not fit for purpose.
A prime example is the sector education & training authority (Seta) programme, which spending reviews have shown to be exorbitantly expensive and unproductive, Donaldson says.
In the technical & vocational education & training field, a review might show that supporting private training institutions that provided higher quality programmes would be a better option than the “half-baked reimbursement systems” the Setas operate.
And there are “lots of other areas” where spending reviews should have led to tougher decisions being taken, he says.
“Many of the blowouts in spending are happening in extra budgetary institutions and agencies, and Treasury is inclined to say, ‘We don’t make those decisions.’ Well, it’s no good saying that anymore if the wrong things are being spent on.”
Many of these expenses are off-budget and not supervised by parliament or subject to parliamentary oversight.
“It’s been a case of benign neglect on the assumption that there’s responsible decision-making by the boards of these agencies.”
When it comes to unregulated, unmandated spending, one of the worst offenders is the Unemployment Insurance Fund, whose budget is set to rise to R44bn in financial 2026 from R24bn two years ago because of spending on things that are not part of its statutory mandate.
“There’s a really important distinction between the statutory responsibilities of paying unemployment benefits governed by law, and what is now happening, which is a blowout of spending on discretionary activities such as assisting businesses to keep going and employing people and bailing out the post office and things like that. Control over that kind of discretionary spending needs to be stepped up.”
This is a clear example of where the Treasury needs to step in with the backing of parliamentary committees, says Donaldson.
“I hope we’ll see out of this third budget process parliamentary committees saying to the Treasury, ‘We want you to investigate these things, we want you to be more proactive in containing the consolidated spending commitments and not just the main budget.’ That would be very welcome.”
Parliamentary oversight committees need to step up, as do the provinces, where irregular expenditure and corruption is rife.
“It’s not helpful to assume that Treasury can do everything. There has been a tendency to say, ‘Well, procurement is going wrong, we’re seeing irregular spending and corruption in the provinces and municipalities, the Treasury needs to oversee it.’
“But the Treasury can’t be everywhere. You’ve also got to have more direct accountability to provincial legislatures and municipal councillors. Essentially, you have to have a decentralised ethos of financial management.”
But strong political leadership, which is key to this, is absent. And state agencies with fiscal and financial advisory responsibilities are not doing their job, he says.
“We have a presidential economic advisory council. We need to hear from them.”
So far this year there hasn’t been a single published report from the council, on which, as he points out, 19 members sit.
It needs to be chaired by somebody who has a voice and publishes reports that are accountable not just to the president but to parliament and the public
“I think there’s a fundamental flaw in the idea that the president himself can chair the economic advisory council. It needs to be chaired by somebody who has a voice and publishes reports that are accountable not just to the president but to parliament and the public. This is another variety of a South African problem of putting too many people on committees and diluting their responsibilities.”
The country cannot afford presidential and other state-funded committees that do not seem to do anything, he adds. “We’re in a crisis and we need action.”
Nor can the country afford budget battles between political parties, which he blames on the Treasury.
“I think the Treasury was remiss in not recognising that the government of national unity is a different environment, which required adaptations to its processes.”
He hopes that after the third attempt to table a budget on Wednesday, interparty debates will give way to “a focus on the big questions, which are growth, unemployment and a sound fiscal framework”.
He hopes May 21 will settle the budget issue and signal an intent to address the issues that need to be addressed.
“There’s an adjustment budget and a medium term budget coming up in October, and then next year’s budget framework. We need to see a much stronger focus on growth.
“It’s not that this isn’t being said. The presidential advisory committee when it met said exactly that. But now we need to see action, we need to get beyond words.”
It comes down to political will, he says, recognising the central challenges and focusing on them. The central challenge is to cut spending, which is not rocket science but demands making tough choices.
Vested interests and overreaching government policy objectives — he cites National Health Insurance as an obvious example — stand in the way.
“We’re still in a politics of overreach and not enough willingness to make the tough choices.”
If those choices are not made, debt will never be reduced, Donaldson says.
“If debt continues to rise that translates into rising interest costs and rising interest rates, which is a cost for the economy as a whole, slow growth, deteriorating public services and the social pressures associated with that. A path that will become socially very difficult.
“Economic growth will continue being outstripped by population growth. Unemployment is one of the big challenges associated with that.”
The need for an employment-focused growth strategy cannot be emphasised enough, he says. “It’s critical, and we need to be willing to make tough choices to get us there.”
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