Finance Minister Tito Mboweni has announced several drastic measures to rein in government spending on salaries and perks.
These include a salary freeze for Cabinet Ministers, Premiers and MECs and an injunction that all domestic flights for government officials will be at economy class.
Mboweni announced the measures while delivering the 2019 Medium Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.
‘We spend more than we earn’
The Minister said government currently spends more than it collects in revenue and taxes.
To fix this, he said government will seek spending reductions of R21 billion in 2020/21 and R29 billion in 2021/22 as a first step.
However, it needs to cut spending by R50 billion a year over the next three years, with a focus on the public sector wage, to achieve its overall targets.
Mboweni said, “29,000 public servants, plus members of the national executive, members of Parliament, members of provincial executives, and so forth, each earned more than R1 million last year.”
This is double the number of public servants earning the same amount in 2006/07, he said. Taking into account inflation, the average government wage has increased by 66% in just 10 years.
Measures to kick in on 1 December
Mboweni said the cost-cutting measures will apply to members of the Cabinet and provincial executives as from 1 December.
He said Cabinet, Premiers and MECs’ salaries will be frozen at current levels and the cost of official cars will be capped at R800,000.
Furthermore, a new cell phone dispensation will put a limit to the amount claimable from the state and all domestic travel will be on economy class tickets.
Mboweni encouraged the leadership of Parliament to also consider implementing similar measures to reduce their expenditure.
The Minister reiterated that these and other interventions are necessary to rescue South Africa from higher budget deficits and debt levels.
He said, “The consequence of not acting now would be grave for South Africa. Over time, the country would likely face mounting debt service costs and higher interest rates and may enter a debt trap.
“The unemployment crisis would worsen, and government debt could balloon. This is an outcome we are determined to avoid.”