Mboweni hints at zero-based budgeting

Dropping a hint that the government is looking at zero-based budgeting ahead of next week’s special budget, Finance Minister Tito Mboweni says the country is no longer as rich as “we once were”.

All eyes will be on Mboweni who will deliver an “emergency” budget on 24 June in order to make provision for Covid-19 relief efforts.

“When we thought we were rich, we would do things in a way. We are no longer as rich as we used to think we are, and therefore we must adapt to the new situation. A new situation, in my view, requires that we think seriously about going to zero-based budgeting.

“In other words, we refocus our attention on the strategic issues we can do, refocus our attention on the growth-enhancing activities and no longer take for granted that the baseline that was there last year, will always be the case going forward,” said Mboweni.

He was speaking during a sitting of the National Assembly (NA) to debate and vote on the 2020 Appropriations Bill on Friday.

Going forward

The NA passed the 2020 Appropriations Bill with 230 MPs voting in favour and 120 against it and will now go to the National Council of Provinces for its approval.

“Going forward, this (zero-based budgeting) is what we must do. We must not always assume that the baseline of last year, will always be the way forward.

Mboweni told MPs: “We must start from scratch, prioritise infrastructure growth enhancing, try and reduce all expenditure that is not required. This zero-based budgeting goes well with the district development model.”

In April, President Cyril Ramaphosa announced that government would provide R500 billion in fiscal support to be directed to Covid-19 priorities.

Of this amount, R130 billion was to be reprioritised from the national budget tabled in February.

Mboweni said: “We have to adapt to changed circumstances.”

Tax

He said determination was needed to implement structural reforms.

“Tax collection and revenue have declined very sharply. We therefore need to refocus our attention to what is now feasible and how we can help our people during this Covid-19 pandemic and still be able to support our economy going forward.

“Most sectors of the South African economy are in dire straits. We are going to see a lot of continuities and discontinuities in the economy and we should stand ready to confront the new challenges that are before us,” he said.

ANC MP Dipuo Peters said the 2020 Appropriations Bill’s consolidated government expenditure is R1.95-trillion.

Peters said R1.15-trillion goes to social spending which will be divided as follows:

• Learning and culture – R396-billion;
• Health – R229.7-billion;
• Community Development – R212.3-billion; and
• Social Development – R309.5-billion.

“When the ANC says the poorest of the poor is prioritised, here it is. The reallocation is because departments has not spent their money, it’s not because government has not appropriated the money,” said Peters.

DA MP Geordin-Hill Lewis said: “Government’s promised R500 billion stimulus package is looking more and more like an empty promise. Stimulus requires spending money. Yet according to (national) Treasury’s figures, the government spent R23.1-billion less in April 2020 than it did in April 2019.”

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