Yesterday Minister Gordhan told the people of South Africa that there is about R20bn more to spend than was projected in the October Medium Term Budget Policy Statement. Of this amount, he proposes to spend more than half on increases to civil servant salaries. The effects of last year’s public sector strike also drove the budget deficit significantly higher. Minister Gordhan told us that public sector wage commitments will have the same effect on the 2012/13 budget. The result is that South Africans can expect very little help in dealing with rising food and petrol prices: social grants barely keep up with inflation and there is almost no real income tax relief.
The extra money committed to government salaries is also about five times what we will spend on the new employment programs promised in the State of the Nation address. It seems that Treasury is not yet ready to put money behind President Zuma’s announcement of tax cuts for youth employment – all Minister Gordhan had to offer in this regard was the promise of a discussion paper.
So what can South Africans do if they don’t like what the finance minister has proposed? Despite the much announced ‘social compact’, the answer is ‘not much’.
In 2010, the International Budget Partnership rated South African budget documents as the most transparent in the world. This is a remarkable achievement. Sadly the situation is very different when it comes to participation in the budget decisions that government reports on so diligently. Government is happy to tell us about what they do with the budget in world class detail. But the general public cannot use this information to influence what government chooses to do with public funding in the first place. When it comes to the budget, the South African electorate is all dressed up in information, but has nowhere to go.
In a democracy, Parliament should be the voice of the people in the formulation and oversight of the budget. Despite the hope held out by the 2009 passage of the Money Bills Amendment Act, Parliament still plays a subservient role in the budget process. Granted, it did make a number of recommendations to Minister Gordhan after last year’s budget. In response to most of their recommendations, Minister Gordhan effectively told Parliament “we’ll think about it”. When Parliament asked to have more time to consider tax and spending priorities in the Medium Term Budget Policy Statement the response was that it doesn’t suit Cabinet’s timetable.
While budget recommendations by Parliament and a written response by the Finance Minister are already progress over what we had in the past, they can hardly qualify as examples of budget democracy. Will Parliament force the issue and make the amendments that Cabinet can only promise to think about? Not likely. Not if the process for the implementation of the Money Bills Amendment Act is anything to go by. This Act was meant to give Parliament, and by extension the people of South Africa, a substantial role in the budget process. Yet more than a year after its enactment, MPs are still going on study trips to help them think about how to implement it.
Why does this matter? Some will argue that most South Africans don’t really care about the deficit or the cost of public sector wages. But many people care about grants, employment, education etc. The estimated 300 service delivery protests recorded in South Africa last year confirm that many South Africans want to have a say in how public money is spent. If Parliament cannot or will not be the voice of the people in the budget process, then we urgently need a national debate about how to fix this broken link in the democratic process. It is only when the majority of people can actively buy into budget decisions that we will be able to form a true social compact.
It is safe to say that a significant part of South Africans would have chosen more job creation initiatives and larger social grant increases and tax cuts over government salary increases in this year’s budget. They should be given the opportunity to make that choice.