South Africa 2.3.2017 06:37 pm

Treasury mulls measures to increase infrastructure spending

Minister of Finance Pravin Gordhan arrives with members of the National Treasury to present his 2016 Budget Vote Speech in the National Assembly on February 24, 2015 at Parliament in Cape Town, South Africa. Gordhan that he will be cutting government expenditure while still making R870-billion available for infrastructure development. (Photo by Gallo Images / The Times / Ruvan Boshoff)

Minister of Finance Pravin Gordhan arrives with members of the National Treasury to present his 2016 Budget Vote Speech in the National Assembly on February 24, 2015 at Parliament in Cape Town, South Africa. Gordhan that he will be cutting government expenditure while still making R870-billion available for infrastructure development. (Photo by Gallo Images / The Times / Ruvan Boshoff)

The department said it was looking for ways to curb persistent infrastructure under-spending, which currently stands at around R6 billion.

National Treasury is considering setting up an office dedicated to infrastructure to curb under-spending and ease delivery of building projects across all sectors of government, Parliament’s joint standing committee on finance heard on Thursday.

Ian Stuart, chief director for fiscal policy, said the department was envisioning “an infrastructure unit of sorts”, in part in response to persistent infrastructure under-spending, which currently stands at some R6 billion.

Stuart said though the sum was a fraction of the infrastructure budget, “the more pressing issue is why do we consistently under-spend on infrastructure?”

A new unit would also focus on adequate state spending on infrastructure maintenance, which not only extends the lifespan of the initial investment but provides long-term labour opportunities at a lower skill level than new build projects, he said.

“It is hugely important because it extends the lifespan of your asset and it provides fairly constant employment,” he said, stressing that this was an often neglected aspect of infrastructure policy.

Though Treasury already has a regulatory office, Stuart suggested there was scope for a framework along the lines of the treasury of the United Kingdom’s Green Book, a guide for the public sector on appraising projects before committing funding.

It would also apply to public-private partnerships, he said.

“The idea is to have a very transparent, clear set of rules and cost analysis [guidelines]… This is a government wide intervention that we think can answer a lot of problems we have seen.”

The government’s total infrastructure allocation over the three-year medium term period is more R800 billion but the department of economic development has found that infrastructure spending has slowed, particularly at local government level, and the Financial and Fiscal Commission has termed under-spending of municipal capital budgets “endemic”.

– African News Agency

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