‘There is no awareness of how to design policy programmes that allow for savings. It is like people are designing for Switzerland when we are living in South Africa.’
The Standing Committee on Appropriations heard on Wednesday how government can save R36 billion in three years from the Government Technical Advisory Centre (GTAC).
GTAC, which forms part of the National Treasury, has conducted 240 spending reviews for the national and provincial governments since 2013.
This comes as government spending is put under the spotlight, with opposition parties arguing if it could be cut, there wouldn’t be a need for a VAT increase.
News24 reported that R36 billion could be saved by cutting red tape in public procurement and trimming expenses from overlapping state agencies.
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How is government spending too much
Ronette Engela, Head of GTAC, highlighted the pressing need to improve the government’s complex procurement process, stating that it is overly ambitious and fails to provide good value for money to government departments.
“Procurement is not delivering the least-cost solution for government, with costs being unduly high because of middlemen and corruption-related activities.
“There is a skill deficit and poor procurement process management because it is extremely complex. Managers are flying blind when it comes to cost-effectiveness.”
She added that the commitments made by department spending programmes exceed what the government can afford to spend. She attributed this to the establishment of more public entities, from 100 to 279 between 1999 and 2019, with 4,900 spending programmes.
What can government cut
GTAC recommended to the committee that there should be a price benchmark for what should be paid for goods and services and procuring at scale, including for rental properties, where the government is paying far above market rates.
“There is no awareness of how to design policy programmes that allow for savings. It is like people are designing for Switzerland when we are living in South Africa.
“These policies generate waste and are too ambitious. We also have an overburden on departments to report. But none of these reports probes for the value of money.”
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Salary increases
Engela also touched on public servants’ salary increases. She stated that above-inflation pay increases between 2006 and 2020 also meant that money spent on paying higher salaries was four times more than on increasing personnel.
Meanwhile, policies for automated progression meant that government employees would often drift into higher positions with higher salaries.
GTAC’s review included savings from the justice and security cluster, urban development and infrastructure spending, health, social development, economic services, and generalised public services.
Findings in the review
GTAC’s findings identified potential cost savings of R2.4 billion over the medium term for the Justice, Crime Prevention, and Security Cluster by optimizing expenses related to leases, fleet management, and IT services for the South African Police Service.
Additionally, the Department of Health could save an estimated R4.1 billion on its HIV/AIDS community outreach grant through improved operational efficiency, along with R1.8 billion in procurement savings by minimizing waste.
The review further projected that reducing urban development and infrastructure spending across government departments could yield savings of R18 billion over the medium term, nearly a quarter of the initial R75 billion budget.
Savings identified
GTAC can only make recommendations and not enforce them.
Deputy Director-General of Public Finance at Treasury, Rendani Randela, stated that savings have been identified over the years through budget reviews and reprioritization.
“In 2023, we identified savings of R188.2 million in military health within the Department of Defence,” he noted, adding that these funds could be redirected towards purchasing ambulances, X-ray machines, and field medical equipment.
He also highlighted a significant cost reduction in the Integrated National Electrification Programme, with R7.8 billion in savings identified during the 2024 budget process.
Additionally, the Department of Social Development identified R1 billion in savings by removing ineligible recipients from the child support grant through enhanced screening measures.
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