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Chartered accountant Jan Conradie, who also holds an M Com in Public Finance, has listed ten tips in a long letter to Finance Minister Pravin Gordhan ahead of his budget address on February 26:
Dear Pravin
The devil's in the detail, especially in government budgets and fiscal affairs. I do not think it is good to scrap programmes willy-nilly or changing them and creating new ones every year. My proposals aim to clean them up and investing in increased effectiveness and efficiency inside the various budget votes:
Invest in stronger competition
Empower the Competition Commission to also look at monopolistic structures in semi-state organisations such as Telkom, Eskom, Vodacom (significant state investment), SAA, Sasol (significant state investment), Sanral and even large municipal water service "companies".
Yes, the private sector needs watchdogs, but watch these “state” entities which control a huge portion of the economy. Are their massive salary bills productive or are they lethargic from having too much monopolistic advantages? Does anyone know how much government will have to pay to keep SAA afloat permanently? Can we manage something like that if it is not quantified and some kind of limit set on funding and subsidies?
Invest in students
Invest more in student funding, but on a merit basis. Students from disadvantaged groups should have the security that their studies will be funded, provided that they contribute to the economy by passing, and by progressing to becoming productive contributors to the economy.
And how much are their qualifications worth? I see too many job ads that contain text like "candidates with qualifications from institutions X need not apply". Is the SAQA process really working after all these years?
Invest in private savings
Look at how economies like that of Japan got their economic engines going originally - from getting people to save money, putting more money into the market and thereby making money cheaper. The relationship between our real inflation rate and our after-tax returns on savings is terminal - ordinary people (as opposed to speculators with development capital) will not save money.
Spending money on luxuries instead of saving is not a recipe for success in a country which is not yet wealthy. But there is no alternative to spending - if you don't spend your money today it is worth less tomorrow. Therefore the money goes for unnecessary imported luxury goods.
Give the auditor general a budget vote
Either the auditor general must become a vote again or another audit commission with voted funds has to be created, to give direct investigative power and teeth to the austerity drive in all tiers of government. It will take a lot of effort to rein in the culture of irresponsible spending in government departments.
The intention to rein in wasteful expenditure is not effective without investigative power and penalties. The endless quantity of little (and large) waste inside government programmes overrules the good intentions of policies which are supposed to make a better life for all. Too much money never gets to the people who need it.
Accessibility and ease of use
We have significant funds available for welfare (social development), health and education. But poor, elderly or disabled people struggle to access those systems. In fact, they are always at a disadvantage compared to well-resourced opportunists who specialise in channeling these funds away from the poor. An investment is needed in accessibility and ease of end-user administration to make the objectives of those huge budget votes achievable.
Government schooling
Basic state schools should be free and gratis. Those who can pay for something better should be a separate issue. And not on a racial basis: Government should be better than that. Real poverty data should be used to prioritise spending on schools for the poor.
A bridge should be built to improve the access of rural and poor communities to schooling, especially in their home language. Primary school teachers, currently, have to obtain onerous qualifications designed to enable all teachers to teach all subjects - from mathematics to English.
A "bridge" enabling teachers to qualify for teaching indigenous languages without needing to be qualified for teaching mathematics and science too, should make more relevantly qualified teachers available in rural areas.
Start and grow the market for school books in indigenous languages. Maybe a new salary tier below Level 1 could be used for teachers who are properly qualified to teach one language, but not all subjects. Eventually, matriculants should have the benefit of being able to get a good mark in their own language like English and Afrikaans pupils have. This has a huge effect on their matric average.
Black Economic Empowerment
Local manufacturers should get a local produce benefit in their BBBEE rating to stimulate local industry as opposed to multinational conglomerates that quickly do "window dressing" to get BBBEE points without really benefitting the economy.
Set better targets
Another look should be had to the exactness and tangibility of the objectives of Votes, and how merit systems link up to those objectives and to nothing else, to increase the effectiveness of government spending. An investment in this should pay better dividends than just throwing more money at underperforming government departments/municipalities. The money is there, it is just not being used efficiently for what it was intended for.
Limit administration
There should be an adequately funded drive to prevent unnecessary and costly changes and additional administration. Have you seen how much of a primary school teacher's time goes into filling in forms required by the growing myriad of district officials? District offices should not have the authority to created administrative burdens - decentralised management but centralised administration control.
Otherwise the effectiveness of voted funds get watered down as it passes through the tiers - surely the intention is not that teachers should be paid for more administration than for teaching? That is just one example of many. Too much money is going into over-complication, duplication, indirect and intangible activities. Objectives and activities must be crisp, tangible, measurable and stable for long enough to actually benefit the public.
Affirmative action policies
Another look should be had at the cost/benefit ratio of detailed fair discrimination and affirmative action regulations and policies. Is it really worth it if we consider the millions who need jobs compared to the irrelevant size of the minority groups? Shouldn't this be run purely on a rewards basis rather than a punitive basis?
Thank you for listening.
Jan Conradie
M.Com (Public Finance) CA (SA)
You can add your voice by posting your pointers for Pravin here.
Dear Pravin
The devil's in the detail, especially in government budgets and fiscal affairs. I do not think it is good to scrap programmes willy-nilly or changing them and creating new ones every year. My proposals aim to clean them up and investing in increased effectiveness and efficiency inside the various budget votes:
Invest in stronger competition
Empower the Competition Commission to also look at monopolistic structures in semi-state organisations such as Telkom, Eskom, Vodacom (significant state investment), SAA, Sasol (significant state investment), Sanral and even large municipal water service "companies".
Yes, the private sector needs watchdogs, but watch these “state” entities which control a huge portion of the economy. Are their massive salary bills productive or are they lethargic from having too much monopolistic advantages? Does anyone know how much government will have to pay to keep SAA afloat permanently? Can we manage something like that if it is not quantified and some kind of limit set on funding and subsidies?
Invest in students
Invest more in student funding, but on a merit basis. Students from disadvantaged groups should have the security that their studies will be funded, provided that they contribute to the economy by passing, and by progressing to becoming productive contributors to the economy.
And how much are their qualifications worth? I see too many job ads that contain text like "candidates with qualifications from institutions X need not apply". Is the SAQA process really working after all these years?
Invest in private savings
Look at how economies like that of Japan got their economic engines going originally - from getting people to save money, putting more money into the market and thereby making money cheaper. The relationship between our real inflation rate and our after-tax returns on savings is terminal - ordinary people (as opposed to speculators with development capital) will not save money.
Spending money on luxuries instead of saving is not a recipe for success in a country which is not yet wealthy. But there is no alternative to spending - if you don't spend your money today it is worth less tomorrow. Therefore the money goes for unnecessary imported luxury goods.
Give the auditor general a budget vote
Either the auditor general must become a vote again or another audit commission with voted funds has to be created, to give direct investigative power and teeth to the austerity drive in all tiers of government. It will take a lot of effort to rein in the culture of irresponsible spending in government departments.
The intention to rein in wasteful expenditure is not effective without investigative power and penalties. The endless quantity of little (and large) waste inside government programmes overrules the good intentions of policies which are supposed to make a better life for all. Too much money never gets to the people who need it.
Accessibility and ease of use
We have significant funds available for welfare (social development), health and education. But poor, elderly or disabled people struggle to access those systems. In fact, they are always at a disadvantage compared to well-resourced opportunists who specialise in channeling these funds away from the poor. An investment is needed in accessibility and ease of end-user administration to make the objectives of those huge budget votes achievable.
Government schooling
Basic state schools should be free and gratis. Those who can pay for something better should be a separate issue. And not on a racial basis: Government should be better than that. Real poverty data should be used to prioritise spending on schools for the poor.
A bridge should be built to improve the access of rural and poor communities to schooling, especially in their home language. Primary school teachers, currently, have to obtain onerous qualifications designed to enable all teachers to teach all subjects - from mathematics to English.
A "bridge" enabling teachers to qualify for teaching indigenous languages without needing to be qualified for teaching mathematics and science too, should make more relevantly qualified teachers available in rural areas.
Start and grow the market for school books in indigenous languages. Maybe a new salary tier below Level 1 could be used for teachers who are properly qualified to teach one language, but not all subjects. Eventually, matriculants should have the benefit of being able to get a good mark in their own language like English and Afrikaans pupils have. This has a huge effect on their matric average.
Black Economic Empowerment
Local manufacturers should get a local produce benefit in their BBBEE rating to stimulate local industry as opposed to multinational conglomerates that quickly do "window dressing" to get BBBEE points without really benefitting the economy.
Set better targets
Another look should be had to the exactness and tangibility of the objectives of Votes, and how merit systems link up to those objectives and to nothing else, to increase the effectiveness of government spending. An investment in this should pay better dividends than just throwing more money at underperforming government departments/municipalities. The money is there, it is just not being used efficiently for what it was intended for.
Limit administration
There should be an adequately funded drive to prevent unnecessary and costly changes and additional administration. Have you seen how much of a primary school teacher's time goes into filling in forms required by the growing myriad of district officials? District offices should not have the authority to created administrative burdens - decentralised management but centralised administration control.
Otherwise the effectiveness of voted funds get watered down as it passes through the tiers - surely the intention is not that teachers should be paid for more administration than for teaching? That is just one example of many. Too much money is going into over-complication, duplication, indirect and intangible activities. Objectives and activities must be crisp, tangible, measurable and stable for long enough to actually benefit the public.
Affirmative action policies
Another look should be had at the cost/benefit ratio of detailed fair discrimination and affirmative action regulations and policies. Is it really worth it if we consider the millions who need jobs compared to the irrelevant size of the minority groups? Shouldn't this be run purely on a rewards basis rather than a punitive basis?
Thank you for listening.
Jan Conradie
M.Com (Public Finance) CA (SA)
You can add your voice by posting your pointers for Pravin here.
