Gordhan wants his money’s worth

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The financial squeeze in the government’s Budget means a renewed effort to get value for money - and pursue the miscreants.

If you are evading taxes or cheating on tenders, or just an inept government department incapable of spending your slice of the infrastructure budget, then watch out because Finance Minister Pravin Gordhan wants his money’s worth.

“Government is committed to remaining within the expenditure ceiling set out in the budget. New policy initiatives over the next three years will be financed from savings, efficiency gains and reprioritisation,” said Gordhan, announcing the country’s R1.15 trillion Budget in Parliament on Wednesday.

He warned that previously, the government had been able to top up spending during the year, “but this year is different”. Instead, funds will be moved from non-performing programmes to those that deliver.

In policing, R2.5 billion was “reprioritised” over three years to improve detective and forensic capability in the police.

Gordhan expressed impatience with corruption and announced a new chief procurement office being set up in the Treasury, and plans to set “fair value prices” for goods and services.

Government procurement is a long-standing problem, and a complex and messy arrangement.

“In the present system, procurement transactions take place at too many localities and the contracts are short term. Consequently, there are hundreds of thousands of transactions from a multitude of centres. There is very little visibility of all these transactions,” said Gordhan.

“While our ablest civil servants have had great difficulty in optimising procurement, it has yielded rich pickings for those who seek to exploit it. There are also too many people who have a stake in keeping the system the way it is.”

He said there was no quick single solution, but promised progress and said taxpayers were “understandably impatient”.

Gordhan expressed impatience with corruption, and said the Treasury was scrutinising contracts worth R8.4bn with 76 businesses for apparent infringement of procurement rules, and the SA Revenue Service was auditing more than 300 businesses and scrutinising another 700.

 

He supported the call to curb government officials from doing business with the government, and said he would align the financial law in line with that initiative.

 

The good news included tax cuts for individuals and more subsidies for free basic services. There was R7bn in personal income tax relief.

 

The bad news was that tax revenue for 2012/13 is R16.3bn below what was expected; spending cuts of R10.4bn over the next three years are under way; and the contingency reserve is being reduced by R23.5bn over the medium term.

For individuals, the bad news includes higher fuel levies and more expensive alcohol and cigarettes.

 

BUDGET AT A GLANCE

- R5.2 billion for local government equitable share to help smaller municipalities meet developmental commitments.

- R4.2 billion to provincial equitable share to phase in adjustments resulting from Census 2011.

- R3.2 billion to Passenger Rail Association of South Africa for rail signalling infrastructure.

- R2.6 billion for regional bulk water infrastructure.

- R1.9 billion for the municipal water infrastructure grant.

- R1.5 billion for De Hoop dam.

- R1.4 billion to South African National Roads Agency Limited for road construction and maintenance.

- R1.1 billion for Square Kilometre Array and R0.6 billion for science and technology infrastructure.

- R1 billion to provinces to increase number of teachers and R0.8 billion for grade R teachers.

- R1 billion to human settlements grant.

- R0.9 billion to integrated national electrification programme.

- Personal income tax relief of R7 billion.

- Employment incentives to support young work seekers and special economic zones.

- Tax relief for small businesses.

- Tax treatment of contributions to pension, retirement annuity and provident funds to be harmonised.

- Phased implementation of carbon tax proposed.

- Increase in general fuel levy of 15c/l.

- Malt beer increases by 7.5c to R1.08 per 340ml can.

- Unfortified wine increases by 15c per 750ml bottle.

- Ciders and alcoholic fruit beverages increase by 7.3c per 330ml bottle.

- Spirits increase by R3.60 to R39.60 per 750ml bottle.

- Cigarettes increase by 60c to R10.92 per packet of 20.

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