Tito Mboweni freezes salaries of cabinet ministers, premiers and MECs
Finance minister Tito Mboweni has slapped cabinet ministers, premiers and MECs with a pay freeze as government revenue takes a pounding amid a gloomy economic outlook.
Mboweni, who was tabling his first medium-term budget policy statement (#MTBPS) under the administration of President Cyril Ramaphosa, said ministers, their deputies, premiers and MECs will not be getting a salary increase "for the foreseeable future".
Finance minister Tito Mboweni delivered the nation's mid-term budget speech on Wednesday October 30 2019. He discussed national debt and government expenditure, among other things.
LISTEN | 2019 Medium-term budget policy statement highlights
In fact, Mboweni said, the pay packages of the political office bearers are likely get an "adjustment downwards" in the next three years as part of his measures to reduce the burgeoning public-sector wage bill.
The finance minister has also clipped the wings of political high-flyers, banning them from flying business class on domestic trips, while capping their spending on official vehicles to no more than R800,000.
Currently, ministers are allowed to spend up to R1.6m to buy an official vehicle or 70% of their annual packages of R2.4m a year.
Mboweni said since 2006, the public sector salary bill has tripled from R154bn to R518bn in 2019 or 46% of total tax revenue, largely due to above-inflation wage hikes.
This while government was expecting to collect R1.3-trillion in taxes, 4% less (R53bn) than it had projected in February.
He said ministers, their deputies and all political office bearers would no longer be paid subsistence and travel allowances for both local and international trips.
Mboweni is also gunning for the cellphone allowances of his cabinet colleagues, telling parliament that a "new cellphone dispensation will cap the amount claimable from the state".
At a closed press briefing before addressing MPs, Mboweni said the government was spending more than R5bn on cellphone allowances, which he believed should be curtailed.
Mboweni also suggested that the pay freeze should be extended to the 400 members of parliament, who on average earn an annual salary of R1.1m on top of taxpayer-sponsored free flights, cellphone and car allowances, and subsidised food and accommodation in Cape Town.
But he said he was leaving it to parliament's presiding officers to take a final decision on the matter.
"I encourage the leadership of parliament to think about how they can further contain their compensation and benefits," said a hawkish Mboweni.
As for civil servants, Mboweni said in MTBPS documents that their salaries had increased by 40% in real terms in the past 10 years and he favoured a below-inflation increase in the next three years.
Options to be considered include pegging cost-of-living adjustments at below CPI inflation, halting automatic pay progression and reviewing occupation-specific dispensation for wages.
"Government has to discuss these matters with labour, and progress will be announced in the 2020 budget," read the MTBPS document.
During his press conference Mboweni blamed the former ministers of public service and administration, Richard Baloyi and Faith Muthambi, saying it was during their time that government entered into above-inflation wage agreements.
"It's Richard Baloyi and Faith Muthambi who got us into this mess and they must be held accountable for this, they signed agreements outside the mandate and one of them has been made ambassador… this is unbelievable and we must call a spade a spade and not a big spoon."
Mboweni said he would also be "reinvigorating" government's early retirement programme as few qualifying civil servants were taking up the offer to retire without incurring tax-related penalties.
The finance minister proposed that cost-containment measures should also be applied to board members and executives of poor-performing state-owned enterprises, who have become increasingly dependent on government bailouts to stay afloat.
He said: "In the same breath, we would like to send a message to state-owned companies, public entities and the private sector: board and executive management compensation should be reduced."