At this point, almost two years in, one would have expected the government of national unity (GNU) to have shown the courage to deliver a more progressive budget and to make bold decisions that depart from the templates of the past.
It is obvious that South Africa cannot continue to make only minor adjustments year after year. Without creating savings to invest in assets that generate real returns, the Treasury is left with nothing but the cards it’s been dealt.
The parties in the GNU have brought virtually nothing to the policy discussion. There is no meaningful input. The budget is, in essence, merely an exercise in adjusting for inflation, managing bad debt and increasing expenditure. That is the reality of this budget.
Lots has been made of finance minister Enoch Godongwana’s commitment to introducing a fiscal anchor in his budget speech before parliament last Wednesday — and rightly so. Such a tool is designed to set medium- to long-term targets to guide government spending, borrowing and revenue collection with the aim of fostering economic credibility.
One of the recently touted options is legislation to tackle rising national debt by setting binding limits on debt-to-GDP ratios and government guarantees. Budget deficit targets and expenditure ceilings are also popular fiscal anchors used worldwide to demonstrate disciplined financial behaviour by government.
This fiscal anchor, whatever its final form may be, is set to be introduced in the midterm budget in October. This gives the finance minister and government broadly eight months to address the political anchors that are anathema to structural reform and rapid economic growth.
These deeply rooted political anchors prevent the economy and country from moving. A political anchor holds a country still in calm waters, preventing it from catching the winds of opportunity, trade, innovation and investment. The engines may roar with plans and promises, but the hull strains against the dead weight below.
There are at least three “holy cows” — political anchors that impede structural reform and growth and can carry on no further. They drain public finances and threaten to come into a collision course with any fiscal anchor that is introduced.
A political anchor holds a country still in calm waters, preventing it from catching the winds of opportunity, trade, innovation and investment. The engines may roar with plans and promises, but the hull strains against the dead weight below.
The first is the public sector wage bill. The government’s relative inability to grow the economy and create private jobs has required an extensive social security net through grants and a bloating of the state to employ as many people as possible in the public sector.
The public sector wage bill for the 2025/26 fiscal year is projected at about R824.3bn. Against a total national budget of roughly R2.6-trillion, this means the wage bill represents about a third (32%) of total government expenditure.
According to Stats SA’s latest available figures, there are about 2.1-million citizens employed by the state, as per the broad interpretation of the public service. National and provincial public service employees number roughly 1.5-million, local government and municipal employees are another 345,000, and broader state bodies add 215,000.
It is worth noting that this is strictly formal, professional employment and excludes all elected public representatives. Councillors, mayors, MECs, MPLs, MPs, ministers and deputy ministers do not form part of this cohort.
Full audit option
It is patently evident that this level of public sector bloat is unsustainable. There are a few options. One is to perform a full audit of the entire public service to rationalise which positions are vital and which are redundant. The focus here must be on unnecessary middle management roles while protecting frontline public servants in education, healthcare and police. In addition to this, a freeze on hiring for non-essential middle and senior management positions will assist.
Another option is to link public servant salaries to performance and the value they produce, rather than relying solely on inflationary increases. Finally, identifying all ghost workers and enforcing a zero-tolerance policy against anyone who fraudulently creates or facilitates such positions.
The second holy cow is the 700 state entities and agencies that operate adjacent to government. In the UK these are loosely referred to as “quangos”, which stands for quasi-autonomous NGOs. This is an informal umbrella term for bodies that operate at arm’s length from central government but still perform public functions or are publicly funded. This includes regulators, advisory boards and cultural institutions.
A review of every so-called quango must be conducted to determine role duplication, necessity and effectiveness. Vital institutions must stay; the rest should go.
Executive ‘holy cow’
The third “holy cow” is the executive of the national government. It acts as the most visible symbol of a state that asks citizens to tighten their belts while refusing to slim its own waistline. South Africa’s national executive, now numbering about 75 members, is among the largest in the world. Salaries alone approach R200m a year, ministerial residences cost close to R1bn, and VIP protection drains roughly R4bn annually from public funds.
A serious commitment to spending discipline must therefore start at the top, with a leaner cabinet, fewer deputy ministers and an end to the practice of suspended officials remaining indefinitely on the state payroll.
Equally urgent is a reassessment of the culture of entitlement that surrounds executive office. The blue-light convoys, sprawling security details, million-rand luxury vehicles, business-class travel, lavish catering and state-funded housing have become normalised perks. Severely limiting, and where necessary outright scrapping, these benefits would save the public purse billions of rand a year.
Ultimately, a fiscal anchor will command credibility only if it is matched by the political will to confront the structural excesses that continue to weigh down the state. Binding rules on debt and deficits cannot succeed in isolation while entrenched inefficiencies remain untouched.
If the government is serious about restoring confidence, unlocking growth and demonstrating respect for taxpayers, it must prove that discipline begins within its own ranks. Only by lifting these political anchors can South Africa’s economy move in its intended direction.
• Dr Maimane, an MP and leader of Build One South Africa, chairs parliament’s appropriations committee.
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