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Treasury’s spending review — Government’s Gordian knot

Treasury’s spending review — Government’s Gordian knot
Stephen Grootes
By Stephen Grootes
17 Mar 2025
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The promise by Finance Minister Enoch Godongwana to conduct a thorough review of government spending has the potential to fundamentally change South Africa. The intensely political nature of government spending means that he will face important hurdles in trying to make changes.

Right at the end of Finance Minister Enoch Godongwana’s budget speech last week, he spent some time explaining how the government would now carry out a fundamental review of how it spent money. 

He said that his proposed interventions “allow us to systematically assess whether public expenditure is effectively aligned with the priorities of this government, and whether it delivers the best possible value for money and impact of the people of South Africa while keeping us on the path of fiscal sustainability”.

From his comments, the intention seems very clear: the government will make major changes to how it spends money.

At first blush, the need for real change in how the government spends money is obvious. Before one even factors in the amount of money lost to corruption, the wastage is vast.

Auditor-General reports are replete with evidence of misspending, a recent report on Currency News about how the City of Johannesburg misspent R8.98-billion out of a budget of R80.9-billion makes for breathtaking reading. 

Perhaps more fundamental than that is that if one party has been the only party in government for a long time, when that party has to give up some of that power, it should be expected that the budget process will be reviewed.

This means it is entirely rational that this review happens, and that it happens now. Of course, the real question is whether any changes can be made.

Primed for conflict


For this reason, the process will be driven by the Presidency. In other words, instead of the National Treasury telling a department that it should be able to survive with less money, the Presidency would have the political power to instruct a ministry to accept a budget cut.

From the minister’s speech, it appears that the main driver here will be a committee to be established between the Presidency and the National Treasury.

On paper, it would be a brave department, or a brave minister, who could stand up to both the Presidency and the Treasury. However, anyone who has watched our politics over the past few years will be aware of the power of entrenched interests. 

Often the best way to understand our politics is to see it through the prism of insiders and outsiders.

Those who are in government, who receive government funding, are the ultimate insiders (it may be worth repeating that the fact government workers got a bigger percentage increase than people receiving social grants in this Budget is proof of this).

This means that any spending review will lead to huge fights.

For example, it may be that the Presidency and National Treasury conclude that the Small Business Development Ministry should have its budget cut dramatically. 

That would lead to a question about whether the ministry should continue to exist (even the person who advocated the loudest for it to be created, then Black Business Council president Sandile Zungu, says it has not lived up to expectations) 

But that would mean President Cyril Ramaphosa would have to remove an ANC minister whom he felt it important to appoint in the first place.

What would happen if a review found that a department controlled by a senior ANC leader had to be reduced? Would Ramaphosa really sign off on a budget reduction for ANC Chair Gwede Mantashe, for example?

And that might be an easy example.

What if a spending review found the departments that had to have the biggest spending cuts were all controlled by DA ministers? Or if all the ANC-controlled departments found themselves with bigger budgets while departments with ministers from other parties got no increases?

Read more: Budget battles — ANC, DA, and the fight over power, policy and politics

It should not be forgotten how every department can justify what it receives.

For example, the Small Business Development Ministry would say that to grow the economy, smaller firms are vital, and need a champion in government (the fact none of the ministers who have led that department have championed any major changes for small business is beside the point).

There could also be a risk that a spending review process could have other perverse outcomes.

For example, a party being asked to join a national coalition to bolster a bigger party’s majority might demand a ministry with a large budget, and then insist that its budget not be touched as the price of its continued support for the coalition.

Worse, a party in a coalition could demand a spending review to conclude that the ministry it controls should receive a larger budget. 

One could imagine how that would poison the entire process.

A culture of accountability


Of course, this reform process may lead to another change, which could benefit millions of people.

There is still a culture in government in which senior officials do not believe they are accountable for what they spend.

For example, in Joburg, officials believed they could spend other people’s money on VIP bodyguards for themselves.

In the SANDF, at a time when it is crucially underfunded, leaders followed up on their golf day achievement by planning to spend about R5-million on luxury cars for the navy (as every sailor knows, Audi Q5s have certain advantages over ships, which are not so obvious to landlubbers).

Read more: After the Bell — sorry, but Doge is not what South Africa needs

If used carefully, this review could be used as a warning to departments and the people who make their spending decisions that they will have to explain their financial deliberations.

This means that already, even though the review process has not yet begun, there could be a real shift in the culture of governance.

Of course, given the fact this process is going against 30 years of bad practices, this may be too much to hope for.

The process of changing the government's spending patterns will not be simple or easy. But it does have the potential to completely change our government. And thus it could become intensely political. DM

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