/ 7 July 2024

Criticism all round of Ramaphosa’s ‘R670 million’ cabinet amid tax burden concerns

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The DA's entry into government has forced parliament to rethink its rules in terms of the definition of the official parliamentary opposition and determine who will now hold that title. (Photo by RODGER BOSCH/AFP via Getty Images)

President Cyril Ramaphosa’s new ministers and deputy ministers — a total of 75 — and support staff, will cost the fiscus about R670 million annually, excluding perks, according to modelling by Charles de Wet, an executive for tax practice at ENSafrica.

The R670  million is not inclusive of the president’s annual salary of R4.2 million and the deputy president’s salary of R3.6 million, according to the treasury’s 2024 budget review, and their support staff.

According to the gazetted official salary tables for government officials for 2022-23, ministers earn R2.6  million a year while deputy ministers earn R2.2  million.

Following a month of negotiations after the ANC lost its majority in the 29  May elections, Ramaphosa on Sunday announced his unity cabinet, which saw an increase of ministers from 28 to 32, while deputy ministers increased to 43 from 33 in 2019, as he tried to accommodate other parties.

“In the course of the sixth democratic administration, we indicated our intention to reduce the number of portfolios in the national executive. However, due to the need to ensure that the national executive is inclusive of all the parties to the government of national unity, this has not been possible,” Ramaphosa said.

In 2019, when he had been newly elected as president, he cut the cabinet from 36 to 28 ministers.

De Wet said of his modelling: “In my calculations I looked at the total number of ministers and their deputies’ annual salaries. I included their support staff as well and that gave me R670  023  192. I did not include their perks such as flights and cars because it is difficult to get that number for an annual basis.”

He said South Africa already has a significant tax burden. “We currently don’t have a lot of opportunities for economic growth. There are no other sources of funding for the new ministers in the cabinet. It will have to come from the tax base.”

But tax revenue is dwindling.

In the 2024 budget review, Finance Minister Enoch Godongwana said: “The weak performance of our economy has resulted in a sharp deterioration in tax revenue collection for 2023-24. At R1.73  trillion, tax revenue for 2023-24 is R56.1  billion lower than estimated in the 2023 budget.

“The shortfall is largely due to the decline in corporate profits and revenue from taxes on mining.”

ActionSA leader Herman Mashaba has said that Ramaphosa’s new cabinet, and deputies, will collectively cost more than R1  billion annually in benefits and perks, with more than R180  million allocated to salaries of ministers and deputy ministers alone.

But according to economist Sifiso Skenjana: “The R1 billion that Mashaba has alluded to is probably conservative, because some of the costs are direct and some are indirect. If we had to add all of those up, it would certainly be north of R1  billion.”

He said some of the costs associated with a bloated cabinet include the cost of administration, while others are not as direct, such as hampered policy-making.

“The cost of administration is related to getting people in the same place at the same time and housing them for meetings and the like. All of that inherently becomes more expensive the larger the number of the cabinet members there are,” Skenjana said.

Perks include transportation, VIP security, support staff, as well as free water and electricity, according to the latest ministerial handbook, a document that provides a guide for benefits, tools of trade and allowances to which ministers and their families are entitled, in the execution of their duties.

Dean Macpherson, the new Democratic Alliance (DA) minister of public works and infrastructure, said this week that his first act as minister would be to inform ministers and MPs that the state would not provide them with new official homes, offices or furniture.

“It is my prerogative,” he said.

According to the ministerial handbook, Macpherson is the minister responsible for the general interpretation and administration of the handbook, with the president providing oversight.

Last year Ramaphosa signed off on a 3% increase in the salaries of all public office bearers.

The decision was the result of recommendations of a 3.8% increase made by the Independent Commission for the Remuneration of Public Office Bearers on the annual salary increase of all public office bearers, including ministers, judges, magistrates and traditional leaders.

But Godongwana said the commission would increase earnings beyond tolerable scales when budget constraints did not permit for such increases. The minister criticised the government, saying the fiscus could only afford a 1.5% increase.

Skenjana said that in a context where the country already has limited financial resources, an emerging problem would be the further splitting of the budget to accommodate ministries. 

But there would be other costs to the taxpayer that would not only be monetary, he added.

“The cost is that we may have challenges in both policy design as well as policy implementation. This form of heterogeneity can slow down and inhibit the process of policy-making. What that translates to is that a lot of reforms that we need to see in our economy may come very slowly,” Skenjana said.

An example of this is National Health Insurance (NHI).

Before it was passed into law, the DA was vocal about its position against the NHI bill, calling the signing of it a “populist” stunt by the ANC to garner voters before the May elections.

What was needed, it said, was “a comprehensive overhaul of the entire healthcare system, using the significant portion of our GDP allocated to healthcare, which the ANC has failed to deliver over the past three decades. The NHI is merely a desperate attempt to deceive the public into thinking that the ANC can remedy a broken system it has perpetuated”.

Skenjana said another challenge involved the implementation of austerity measures.

Godongwana has pursued the austerity measures implemented by his predecessors to reduce debt and achieve fiscal consolidation.

“The treasury was on a journey of cutting spending and so with this bloated cabinet this is a diametrically opposed philosophy, in execution. As a result there will be friction when the minister has to tabulate the budget. What will be his pathway to austerity?” Skenjana asked.

Ann Bernstein, executive director of the Centre for Development and Enterprise, said there was no such thing as “the wisdom of crowds” and that cabinets needed to be small, agile and focused if they were to act cohesively, and if there was to be any prospect of collective responsibility for decisions and their implementation.

“A large cabinet filled with divergent viewpoints could be a place to which any serious proposal for reform will go to die slowly as it is [internally eroded] through endless consultation and procrastination,” Bernstein said.

In a 2022 article titled “Cabinet size and governance in Sub-Saharan Africa”, author Joachim Wehner said bloated cabinets were usually associated with corruption and practices that undermined sound policymaking.

The paper said cabinet size usually has a negative association, with one crucial implication being that a large increase in cabinet size should alert policymakers, donors, investors and citizens to the potential effect on governance.

“In Kenya, for example, presidents have used cabinet appointments as instruments of patronage, resulting in cabinets for more than 30 ministers as well as similar numbers of assistant ministers,” Wehner wrote.