MTBPS: Our problem is that we spend more than we earn
CAPE TOWN – “Our problem is that we spend more than we earn. It is as simple as that,” were the words of Finance Minister Tito Mboweni when delivering the Medium-term Budget Policy Statement in Parliament on Wednesday.
How will we fix our problem?
“To stabilise debt, government will target a primary balance by 2022/23. The target measure excludes support to Eskom, because that is part of a separate process. As a firststep, we have identified spending reductions of R21 billion in 2020/21 and R29 billion in 2021/22 mostly in the area of goods and services, and transfers. In addition, non‐interest spending in the outer year of the framework is constrained in line with consumer price inflation,” said Mboweni.
The Finance Minister said if the government wanted to achieve its target, it would need to find additional measures in excess of R150 billion over the next three years, or about R50 billion a year.
How will we do this?
“We will need to deal with the challenges of the wage bill, state‐owned companies, executive remuneration and benefits and fiscal leakages.
“In the Review accompanying this statement, we set out a detailed analysis of spending on public‐sector wages. It shows that 29 000 public servants, plus members of the national executive, members of Parliament, members of the provincial executive, and so forth, each earned more than R1 million last year. After adjusting for inflation, thisis more than double the number of civil servants earning more than R1 million in 2006/07,” said Mboweni.
The Minister said the average wage increase across government was 6.8 percent in 2018/19, or 2.2 percent above inflation. After adjusting for inflation, the average government wage had risen by 66 percent in the last 10 years.