The affordable education loan option
Babalo Ndenze, Louise Flanagan, Marianne Merten and Sapa
Cape Town - Cut up your credit cards and park that luxury car. That’s what the mid-year Budget assessment is telling public servants and politicians.
The long-promised belt-tightening is finally due to start on December 1. The government plans to slash perks for all officials from ministers to mayors and hopes to save more than R2 billion in the process, Finance Minister Pravin Gordhan announced in his medium-term budget policy review.
The measures signal an end to ministers splurging R1 million on luxury cars and prolonged stays in upmarket hotels.
No public funds will be used to buy alcohol, all official credit cards will be revoked immediately and ministers will be banned from travelling first class.
Cabinet ministers and their deputies will be put up in rented apartments instead of hotels while waiting for official homes and will have to downgrade to cheaper hired vehicles while out of town.
“The cost of cars will be standardised. It is hard for me to advertise a particular brand of car, but it will be the equivalent of a BMW 530 or something like that,” Gordhan told a media briefing.
The model in question is priced at about half a million rand.
Entertainment allowances will be limited to R2 000.
The decision to implement cost-cutting measures and manage abuse and wasteful expenditure in the government was taken by the cabinet on Wednesday. It became a last-minute addition to the review.
With seven months to go before the 2014 elections, the cabinet’s decision has effectively fast-tracked the austerity measures – their announcement was initially scheduled for the 2014 Budget in February.
Other cost-cutting measures would include no compensation for the use of personal cars from December 1. Assistants to ministers would be limited to two.
Guidelines to limit the amount of money spent on advertising would be introduced.
Departments would have to buy cars in bulk and not one car at a time to negotiate discounts.
The elimination of perks for cabinet ministers would save only a few million, but if applied across the board, it could bring savings of up to R2bn.
“To cut costs and waste within the government, as far as the executive is concerned, this will include members of the national executive which includes ministers and deputy ministers, provincial premiers and MECs and even municipalities mayors and so on.
“We will develop an appropriate legal way which will make sure these standards apply to everyone,” said Gordhan.
“Although most government spending is effectively managed, there are many opportunities to cut or minimise costs and stop abuse,” he told MPs.
The ministerial handbook has been in revision for more than three years.
However, Wednesday’s trimming of executive perks has come without the final revised guidelines being made public.
“As government, we acknowledge that we too must provide value for money.
“Although most government spending is effectively managed, there are many opportunities to cut or minimise costs and stop abuse,” Gordhan told MPs. “In these difficult times, the cabinet has decided to take a number of initiatives.”
Asked whether the new rules would apply to President Jacob Zuma, the minister said the Presidency was a government department and would have to implement the same savings as others.
He sidestepped a question about the controversial R206 million upgrade of Zuma’s private home at Nkandla, but said there was no reason to suspend reported plans to buy the president a new jet.
“If the president requires a plane he must get one,” he answered.
As expected, Gordhan focused parts of his speech on the National Development Plan (NDP).
He said the medium-term budget demonstrated the government’s resolve to implement the NDP through, among others, the expanding of electricity, transport and communications capacity and promoting industrial competitiveness and job creation.
“So we have a plan, and we now have to track progress, year by year, on its implementation,” he said.
Tax incentives for industrial development projects amounting to R10bn have been approved over the past three years, which would support investment amounting to R35bn.
On the economic outlook, Gordhan said in crafting the country’s fiscal strategy for the next three years, the cabinet had taken careful account of global and local economic circumstances.