The MTBPS provides an update on our economic and financial position and compares our actual performance with budgeted projections.
While everyone is wondering about what finance minister Enoch Godongwana will say when he presents the MTBPS tomorrow afternoon, one of the most important items on the country’s wish list should be that he will allocate more money to entities fighting corruption in South Africa.
As Outa CEO, Wayne Duvenage puts it, he should: “Cut the blue lights and beef up the anti-corruption fighters.”
The Medium-Term Budget Policy Statement (MTBPS) is also where Godongwana communicates adjustments to government’s spending due to changes in our economic situation or the reprioritising of spending to achieve revised objectives and areas of focus.
The MTBPS will give us an indication of cabinet’s fiscal policy stance for the medium term (three years), along with decisions on tax policies and how the government plans to manage its debt, Duvenage says.
“What the MTBPS also does is provide a barometer for civil society that shows of government’s grip on managing its financial affairs and more importantly, if and where there is an acknowledgement of and shift of attention to pressing needs addressing social justice and the stimulation of economic levers for employment growth.”
He says as this MTBPS will be the first section of the budget under the government of national unity (GNU), it will be interesting to see if the new cabinet influenced a change in budget priorities.
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Minister must send strong message of no bailouts for SEOs in MTBPS
“Outa hopes that the minister will send a strong message that bailouts to non-core state-owned companies, such as SAA, Denel, state mining companies and PetroSA will not be tolerated. More importantly, we want to see budget reductions in unnecessary spending areas, such as VIP protection for ministers and blue-light brigades.
“Instead, we want to see more funds assigned to the various sectors within the criminal justice system, such as the National Prosecuting Authority (NPA), the South African Police Service (SAPS), the Special Investigating Unit (SIU), Sars and institutions like the Public Protector and the Auditor-General.”
Duvenage points out that the issue of corruption and organised crime is commonly regarded as a crisis and a hindrance to economic growth across all fronts and levels of responsible leadership in South Africa.
“Yet we do not get a sense that government is prioritising the spending of our limited resources wisely enough to address this crisis.”
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NPA budget not enough and should be increased in MTBPS
He says over the past five years, the NPA’s budget did not grow enough to address its needs, moving from R4.009 billion in 2019/20 to R5.889 billion in 2024/25. “While this is an increase of 47% over five years, it started from an extremely low base and the NPA faces a massive and complex workload with the entrenchment of corruption and the growth in organised crime.”
This is an entity which still needs rebuilding and strengthening with experts, Duvenage says. “The NPA underfunding becomes even more apparent when noting that its budget includes funding the Asset Forfeiture Unit (R824 million) and the Investigating Directorate (R939 million), key institutions in the battle against state capture and grand corruption.
“The NPA needs significant resources. We note that the VIP Protection Services receives R2.177 billion, which we believe is massively over-resourced at the expense of essentials such as the NPA.”
He also points out that the SIU limps along with just R450 million a year but must provide professional forensic investigating and litigation services to all state institutions. “These institutions pay for the SIU’s service in theory, but the reality is different.
“The Presidency spends more on administration (R533 million) and the department of mineral and petroleum resources spends massively more on mining, minerals and energy policy (R1.2 billion), despite the apparent ongoing failure of this policy.”
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Police does not only need money, but a strategy to rebuild
Duvenage adds that the SAPS needs help, not necessarily more money, although extra police on the streets are always welcome, but a strategy for addressing the dysfunction that left South Africa with a police service utterly unable to respond to the July 2021 violence and only slowly now starting to regard extortion, an aspect of organised crime, as a crime.
“This overhaul needs building into the medium-term strategy and should include a strategy addressing the very expensive and failed Crime Intelligence unit with 6 074 officers and the well-padded Protection and Security Services with 8 801 officers.
“Compare these staffing numbers to the Maritime Defence of the National Defence Force with 5 870 staff and Defence Intelligence with 1 055 staff, or the NPA with 6 618 staff.”
The limited resources for the Public Protector sends a clear message of disrespect for the protection of the public from the abuse of authority, Duvenage says. “The Public Protector receives a miniscule R352 million, which means it is unable to increase its staff complement as it would like to do.”
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Returns on good spending in MTBPS will be returned ten times
Outa believes that for every R1 billion invested in effective rebuilding of structures that drive a concerted effort in the fight against corruption, we could see ten times that amount as a return in higher tax collections, in more excise duties by challenging illicit trading and in improved business confidence which will result in the growth of tax revenue and employment, Duvenage says.
“It makes so much sense for the minister to beef up all areas that tackle improved transparency and accountability to begin restoring social justice and grow the economy. We hope to see more measured steps to control the use of the equitable share grant funding to municipalities, with stricter consequences for failed service delivery, ensuring that the funds do not merely flow into the hands of corrupt syndicates.”
Duvenage says Outa will be watching to see government’s progress on its promise in Budget 2024 to narrow the budget deficit, stabilise debt and for the first time since 2008/09, achieve a primary budget surplus (with revenue exceeding non-interest expenditure) for this year.
