Mid-term budget speech 2013: Gordhan cuts the fat
The minister dedicated a significant portion of his medium-term budget speech outlining plans to "cut waste and extravagance in government". Gordhan did not mince his words on the issue of wasteful expenditure on the part of state officials.
"Although most government spending is effectively managed, there are many opportunities to cut or minimise costs and stop abuse," he said.
Over the past few years, several government ministers have come under fire for extravagant spending at the public’s expense.
In 2009 it emerged that Higher Education Minister Blade Nzimande spent R1.1-million on a new BMW. The next year, former communications minister Siphiwe Nyanda racked up massive bills for extended stays at five star hotels and splurges on cognac and wine. In 2011, Minister of Women, Children and People with Disabilities Lulu Xingwana took a 49-member delegation, which flew business class and stayed at five-star hotels, to a gender summit in New York. It recently emerged that Northern Cape Premier Sylvia Lucas charged R50 000 in fast-food bills to a government credit card, a move that was defended by her office as "not excessive".
The new measures announced by Gordhan on Wednesday – set to take effect from December 1 this year – could put an end to such wasteful expenditure. According to Gordhan, the savings incurred "could be billions".
Gordhan credited Cabinet with the decision to take on the cuts, which will apply across government and include members of Cabinet and national, provincial and local government, as well as state entities and state-owned enterprises.
First on the chopping block was officials’ spending on expensive cars. As of next year, the cost limits on official cars will be standardised and bulk purchasing will be used to reduce costs. Officials will no longer be able to claim back from the state for using their personal vehicles for official work. In addition, officials will no longer be allowed to hire top-tier cars, except in special circumstances, such as needing to travel to rural areas.
When leading delegations overseas, only ministers will be able to fly business class. Ministers will be restricted to taking only two assistants with them when they travel, and the number of officials in any given delegation must be kept to a minimum. Officials will be required to fly only direct routes, cutting out the need for unnecessary stopovers and accommodation.
Director generals and their deputies will still be able to travel business class when going overseas, but only director generals will have the privilege of flying business class locally.
Ministers awaiting their housing allocations will no longer be housed in hotels. In the past, ministers staying in hotels have charged food, drink, telephone bills and and laundry services to the public purse. In future, they will be accommodated in rented apartments. New guidelines are to be developed in order to limit the cost of any refurbishments carried out on a minister’s home.
Government has also been asked to cut down on unnecessary consultant services and to exercise better control over consultants contracts and fees. In addition, each government entity has been asked to develop a plan for reducing its reliance on consultants
'No credit cards'
Gordhan was very clear on the question of government credit cards. "No credit cards," he said. Existing credit cards are to be cancelled and new ones will not be issued.
The number of officials travelling to government’s Cape Town offices will be also be limited and plans are underway to restrict the size of delegations appearing before parliamentary committees. The cost implications of having two centres of government, one in Pretoria and one in Cape Town, will be revisited.
Advertising costs are to be curbed through a new set of guidelines and officials are being urged to make better use of the services offered by Government Communication and Information System.
Food, drink and entertainment budgets will be severely curtailed going forwards. Gordhan announced that new guidelines are to be developed in order to reduce the cost of hosting state event and entertainment allowances will be restricted to R2 000. Public funds will no longer be used to buy alcohol, except in special circumstances, such as the hosting of visiting dignitaries.
In addition, steps are in place to reduce long-term office accommodation and government housing costs, and to slash electricity bills in state buildings.
The Democratic Alliance (DA) welcomed the spending freeze but argued that they should have been in place already. "Government departments have, on average, increased spending on these items by 6-10% this year," said the DA's spokesperson on finance, Tim Harris.
Cost-cutting within government has been a feature of Gordhan's budgets since he stepped into the job but this is the first time he's put forward such sweeping changes, leading some to question whether the move is part of an electioneering strategy on the part of government. Gordhan however denied that the timing of the changes has anything to do with the upcoming national election.