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Govt has no choice but to cut its spending, MPs told

The warning came from the Fiscal Cliff Study Group, which on Wednesday briefed Parliament’s two finance committees.

The National Assembly of South Africa on 22 May 2019. Picture: @GovernmentZA/Twitter.

CAPE TOWN - South Africa was edging closer to a fiscal cliff – the point where civil service pay, social grant payments and debt-service costs will soak up all government revenue, Parliament has been told.

The warning came from the Fiscal Cliff Study Group, which on Wednesday briefed Parliament’s two finance committees.

The group’s members were the businessman and political analyst Moeletsi Mbeki, the head of Wits’ School of Economic and Business Sciences, Professor Jannie Rossouw and Unisa economist Fanie Joubert.

Professor Rossouw said that the government had no choice but to cut its spending.

"It’s because we spent very irresponsibly over the past decade that we are in the position where we are, we have no options left but to rein in expenditure."

The Fiscal Cliff Study Group called for a permanent halt to bonuses for those employed at state-owned enterprises.

"The risks the managers at state-owned enterprises take do not justify bonuses, period. These are not bonus payments, these are bogus payments."

Rossouw said that after adjusting for inflation, the average government wage had grown by 66% over the last decade, making the civil service "unaffordable". He said South Africans were being taxed to afford the wage bill and that future increases should be linked to the rate of inflation.