Budget 2017: Gordhan expected to stay on cost saving path

The finance minister is expected to focus on ensuring government is getting bang for its buck when he delivers the budget speech.

Finance Minister Pravin Gordhan. Picture: GCIS

CAPE TOWN - Finance Minister Pravin Gordhan is expected to focus on ensuring government is getting bang for its buck when he delivers the budget speech on Wednesday afternoon.

Some experts are anticipating that Gordhan will stay on a cost cutting trajectory after he announced a cut of R10 billion in expenditure in last year's budget.

But Treasury also wants to ensure that public spending adds social value.

Economist Mohammed Nalla says government's self-imposed expenditure ceiling will restrict its public spending abilities.

“The real focus will be on the reallocation of government resources towards greater efficiency in spend.”

Public spending reviews have revealed TVET colleges get 85% of their spending from government, yet for every 10 students only one will successfully obtain their certificate after six years.

Another finding was that some South African staff at foreign missions receive a R600,000 allowance over and above their salaries, free education and housing.

Moreover, the real cost of an RDP house, often located far from city centres where jobs are located, is close to R250,000.

These will be among the public spending projects Treasury will scrutinise.

SMALL BLACK BUSINESS DEVELOPMENT

The Black Management Forum (BMF) wants Gordhan to allocate more money to small black business development.

It adds government needs to give meaning to radical economic transformation.

The BMF says the Small Business Development Department is hugely underfunded, and it wants to see at least R1 billion allocated to this department in the 2017/18 budget.

BMF Deputy Chairman Dumisani Mpafa says without more investment in this sector, the country cannot drive beneficiation and localisation.

“Grants for black business development is always underfunded and the [department] always runs out of funds before the end of year.”

The BMF says a lack of funding also affects growing the economy beyond urban centres.

“There’s this talk about township economy, rural economy but there’s never been a substantive budget to ensure it is well-resourced. We need to create viable economies in the rural areas.”

The forum adds it’s not in favour of increasing personal income tax or VAT, but that government should rather tax the wealthy to drive transformation.

(Edited by Shimoney Regter)