Cape Town - On the eve of his maiden midterm budget speech, Minister of Finance Tito Mboweni warned hard discussions needed to be held on the exorbitant public sector salary bill in the wake of an unabated demand for service delivery.
Mboweni was speaking at the ANC Western Cape Gaby Shapiro branch’s second annual Kadar Asmal memorial lecture on Saturday.
Mboweni, expected to give his first mid-term budget speech on Wednesday, said in an economy with low growth rates it cannot be expected that higher taxes be collected from its citizens.
“We are aware of the massive challenges facing the ANC, but from a government point of view, government operates on a budget. Government operates on a basis of revenue it collects from tax and allocates to departments, provinces and municipalities.
“There is no other source of funding for the government; it does not own a printing press. So this idea to demand from government to produce money - from where?”
He said while the demand for service delivery increased, there was little thought given to where the money would come from.
“Let’s look at what we can demand from our government and also be cognisant of how the system works. In a low economic growth environment, tax collection always goes down. So that means, if we have a growth rate of 0.8%, you can’t expect tax collection to be higher.”
Mboweni called on South Africans to be aware “about what the government can do through its budget” to influence change and transformation.
“Strategically speaking, if we were better organised we should be making sure that we do not a have a situation where R8 out of every R10 goes to salaries in public sector. Then you are left with R2 for other services, to fix a clinic or hospital.”
He said talk of salaries and wages raised the ire of unions.
“We should be able to engage in robust debates on these matters.”
Mboweni said when looking at job creation, there was a need to shift the mindset from sectors that were already congested towards a society that has transformed.
“There is a question about employment creation and it is very difficult for the public sector - there is no room there.”
He said Eskom needed to shed about 30 000 jobs. “They are broken, their salary bill is so big.”
He said a strong focus was required on what action was needed to win the confidence of rating agencies and investors in different sectors to help create jobs.
“The government can create public works programmes, but at the end of the day it is the farmers, miners, transport and logistics - that is where jobs can be created.”
Mboweni also focused on Asmal’s values and what the activist had stood for.
“State capture shenanigans would not have been tolerated.
“There is one expression that he liked to use. He used to quote the former British prime minister, Disraeli, who said ‘There is nothing dishonourable about public service, but there is a thing like dishonourable people in the public service’ and that is what we went through over the past nine years. This great public sector heist that we experienced in the form of state capture, it is a heist, daylight robbery.”
Feeling pressure from the unions and in a bid to avoid mass actions and strike on the eve of the 2019 general elections, the government succumbed to public sector union demands by tabling a draft wage agreement with proposals favourable to unions. The proposals, if implemented, could lead to a soaring public wage bill.
It was reported in a daily publication that trade unionists say the coming election was not the only factor that pushed the government to return to negotiations with a renewed mandate. Cosatu, the biggest bloc at the public sector bargaining council, backed Cyril Ramaphosa during his 2017 campaign to lead the governing party, the report said.