Government remains committed to infrastructure spending, Godongwana tells MPs

20 Sep 2023

The government’s commitment to infrastructure investment would emerge in the upcoming Medium-Term Budget Policy Statement, Finance Minister Enoch Godongwana told MPs, while also signalling the reprioritisation of funds to programmes with impact.

Finance Minister Enoch Godongwana, formerly the ANC economic policy chief, showed his political suss on Wednesday amid tart opposition questions, with hardly a sweetheart question from his own party.

“I will not necessarily respond to electioneering,” Godongwana replied to DA MPs quoting the ANC’s 2019 election manifesto pledges to the governing party to show governance flops.

Instead, Godongwana moved to emphasise the government’s commitment to infrastructure spending, describing as a “management process” National Treasury guidelines for a stay on capital projects if not yet implemented until the financial year-end on 31 March 2024.

“There is absolutely no rationale for the fear that the commitments of investment in infrastructure would be curtailed,” Godongwana told MPs, using the state power utility as an example.

“Eskom’s ability to be able to invest and maintain ... arises precisely because we have made a commitment to undertake some of their responsibility, including their debt. Now today, Eskom can be able to do massive maintenance programmes, which is to the advantage of the South African economy in general.”

It was about “prudent use of resources” and reprioritising funds to programmes that have an impact, presumably like social grants, which are widely held as a success of the ANC government. Traditionally, underspending happens in capital projects.

Troubled finances

That South Africa’s finances were troubled — due to a mix of persistent rotational power cuts, lower-than-expected tax collection, stalled rail logistics and higher government borrowing costs — was also Godongwana's message to the public finance management conference earlier on Wednesday.

The finance minister’s comments came against the backdrop of an outcry over National Treasury letters in late August requesting cost cutting as tax collections are well over R22-billion short at this stage.

Meetings and briefings were triggered by sharp criticism from, among others, the ANC’s alliance partner labour federation Cosatu — it will play a key organising role ahead of the 2024 elections, in which, pundits argue, the ANC could dip below 50%.

Read more in Daily Maverick: ANC, alliance partners push back on Treasury’s cost cuts ahead of 2024 elections

On 18 September, the National Treasury published “Guidelines on cost containment measures” to clarify cost cutting for the rest of the 2023/24 financial year. It would apply across national and provincial government departments and entities, though not state-owned enterprises like Eskom, Transnet, SABC and Denel.

Amid a job freeze, any capital build not yet under way should be postponed until after the financial year ends, as should acquisitions of new equipment, from phones to laptops and vehicles.

“Arranging meetings outside of government premises should be avoided. Where a meeting, conference or workshop is arranged by a department or government component, no catering should be provided, unless approved by the accounting officer,” according to the guidelines.

It’s much like the “haircuts”, the colloquial take on the more official jargon of reprioritisation, in 2012 when then finance minister Pravin Gordhan hammered home the need for cutting costs. By the October 2013 Medium-Term Budget Policy Statement (MTBPS), more haircutting was needed as Gordhan announced an end to domestic business-class flights for all but directors-general, standardising official car costs and banning booze at government functions and government credit cards.

Forward to 2023, just weeks before the 1 November MTBPS and Godongwana finds himself in a very similar situation. He’s talking about volatile, uncertain, complex, ambiguous or “vuca” times — seemingly a play on the isiXhosa vuka, loosely translated as “wake up!”

Perhaps it’s out of frustration with Cabinet colleagues and the public service generally, as money allocated doesn’t seem to achieve the hoped-for value or even basic service delivery.

If the SAPS report on its performance from April to June 2023 — the first quarter of the 2023/24 financial year — is anything to go by, it’s at best a mixed bag.

The money spending is on track, but the performance that’s meant to match it is dodgy. For SAPS HQ, it’s better than good, with, for example, 13 more CCTV circuits installed than the 10 initially planned, according to Wednesday’s briefing to MPs.

But it’s not so good on the policing front, where it matters — detectives, who have met less than 50% of targets for detection, the jargon for solving crimes ranging from contact offences to those against women and children. And while Crime Intelligence gets the nod for having performed well, again in the area where it matters — security clearances — it falls short. “The target ... did not meet expectations,” was how the presentation put it.

Financial mismanagement, or unauthorised expenditure carried by departments for as long as a decade was the subject at Parliament’s spending watchdog, the Standing Committee on Public Accounts (Scopa) on Wednesday.

The Department of Mineral Resources and Energy still carries R14.68-million of unauthorised expenditure from 2010 when a conditional grant payment bounced, twice, apparently because the name of the municipality, Mthonjaneni, was misspelt. Because the payment finally went through in May 2010, it fell foul of the rules as that was a new financial year.

The 2009 splitting of the department into separate mineral resources and energy departments meant this R14.68-million fell through the cracks — and now Mineral Resources and Energy has reiterated its 2014 request that it be written off against the national revenue fund, not its departmental allocations. It’s a significant request in the face of current cost cuts and containment.

The Government Communication and Information System (GCIS) sits with R3.7-million in unauthorised expenditure related to the December 2013 funeral of South Africa’s first democratically elected president, Nelson Mandela.

Although GCIS had a budget plan the next day, and an actual R13.7-million budget backed by invoices in January 2014, the matter remained unresolved. Internal reallocations meant some R10-million were absolved by GCIS, leaving the remainder as unauthorised.

Just over R710,000 in unauthorised expenditure arose from the reorganisation of the communications ministry and department that was not absorbed. While R45.5-million had been requested for this, National Treasury approved R12-million.

Both the Mineral Resources and Energy and GCIS presentations highlighted the costs and potential pitfalls of reorganising Cabinet — a lesson for the National Treasury and Presidency as they chart proposals for cutting the size of the executive.

For Godongwana, Wednesday’s economic ministerial Q&A in the House would have been a breeze. Prepping the MTBPS for 1 November won’t be. DM

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Troubled finances