Treasury’s belt-tightening drive cuts spending

Treasury’s cost-containment drive has led to an average annual 5.4% fall‚ in nominal terms‚ in spending on a raft of items.

When taking inflation into account‚ the decline was almost double‚ Finance Minister Malusi Gigaba said on Wednesday.

Since the programme was introduced in the 2013-14 financial year‚ the drop in expenditure has been in consultants‚ travel and subsistence‚ catering‚ events and advertising by national departments.

This means total expenditure by national departments on items that relate to the mandatory cost-containment measures decreased in nominal terms by R2.1bn from 2013-14 to 2016-17.

But Gigaba says in a written reply to a parliamentary question by DA finance spokesman David Maynier that‚ after taking into account inflation and measuring the decline in 2016 rands‚ there was a real decline of R4.5bn in spending on these items — or an average annual percentage decrease of 10.5%.

Items identified for cuts in the cost-containment drive also included newspapers and publications‚ conferences‚ and other expenditure such as communication.

On the other hand‚ total expenditure by the provinces on these items increased in nominal terms by R182.2m from 2013-14 to 2016-17‚ an average annual increase of 0.6%.

However‚ this implies a real decline of R1.7bn (in 2016 rands) or a real average annual percentage decrease‚ after taking the effect of inflation into account‚ of 4.8%.

From April 1 to August 31‚ national departments have spent R4.2bn on these items and provinces R4.7bn.

In 2016-17 national departments spent R3.2bn on consultants and R5.4bn on travel and subsistence‚ while provinces spent R1.6bn and R1.7bn respectively.

Big achievers in cost containment among national departments were transport (with a R934m reduction in expenditure on the specified items between 2013-14 and 2016-17); rural development and land reform (R573m); social development (R530m); co-operative governance and traditional affairs (R445m); and public works (R233m).

But at Treasury‚ which spearheaded the cost-cutting drive‚ expenditure on these items rose R256m — largely because of increased expenditure on consultants‚ which rose from R254m to R522m over the period. Other big increases were recorded by police (R703m); defence and military veterans (R273m); and energy (R151m).

- BusinessLIVE