POLITICS

The Budget: This Is How It Works

Its opponents have cast Treasury as a "state within a state", with the minister of finance calling the $$$ shots. Not quite, say insiders.

21/02/2017 14:01 SAST | Updated 22/02/2017 07:35 SAST
Gallo Images / The Times / Daylin Paul
Deputy President Cyril Ramaphosa, left, with Finance Minister Pravin Gordhan at an ANC meeting in January 2016.

When Minister of Finance Pravin Gordhan tables the voluminous national Budget — consisting of seven bills, the estimates of national expenditure and various other documents — on Wednesday it will be the product of a year-long process of consultation, consideration and cooperation.

Treasury has been accused by its political enemies, including at least two Cabinet ministers, of being a "state within a state", unilaterally deciding which government programmes are funded and which aren't. There have been calls for Treasury's "wings to be clipped" while attacks on the institution — widely considered one of post-1994 South Africa's success stories — continue unabated.

But insiders with knowledge of the process explain the mechanics of putting together the budget isn't simply the minister and his advisors sitting around a table and allocating taxpayers' money to departments and state entities it likes best: it's finalised with the buy-in of the whole of Cabinet before it's tabled in the National Assembly.

Here's how it works:

  1. The MinComBud — the Ministers' Committee on the Budget — is a sub-committee of Cabinet which consists of, among others, the minister of finance, Minister in the Presidency Jeff Radebe, Minister of Co-operative Governance and Traditional Affairs Des van Rooyen, and Minister of Water Affairs and Sanitation omvula Mokonyane. It meets at least six times a year and is the technical committee which decides "how the rands and cents are spent". MinComBud considers which government programmes deliver value and which don't and allocates future spending accordingly. This committee manages budget detail.
  1. M-Tec — the Medium Term Expenditure Committee — is a Treasury initiative, managed by senior officials and attended by directors-general and deputy directors-general. This is the body which forwards spending proposals to MinComBud and is effectively a clearing-house for departmental proposals. Departments go there and pitch their specific requests, presenting business plans and financials. This is all discussed within the fiscal framework.
  1. The Budget Council is a further level down, consisting of provincial members of executive councils and heads of departments. The council meets on the same basis as M-Tec, and all proposals are supposed to be accompanied by departments' business plans and financial statements before they are discussed and forwarded for consideration.

When MinComBud finalises its work — which is the actual finalising of the Budget, after Treasury's nuts-and-bolts work is done — the Budget is considered by Cabinet and either adjusted or agreed upon collectively.

"When the minister the tables the Budget he does it as the minister responsible for finance, but very much as part of the cabinet collective. It's impossible for any cabinet member to disavow the budget as 'Gordhan's budget' because it very clearly is the product of a collective, transparent and inclusive process," a source familiar with the budget process explained to HuffPost SA.

Gordhan has in past Budget speeches — and specifically 2016's budget and mini-budget — emphasised the contributions made by his Cabinet colleagues, referring to a number of them by name, including Mokonyane, who sits on MinComBud and has asked for Gordhan's "wings to be clipped".

Gordhan has continued on the inclusive and consultative path his first predecessor, Trevor Manuel, stuck to during his term as minister of finance, says a source with broad experience in government.

"Whenever there is trouble, like struggling revenues, and we can't seem to find a way out of the impasse, Gordhan is the one that can sit back and look at the problem from five different angles, looking for a creative solution. And he always consults: with his senior advisors and staff, within the broader Treasury family, with other ministers and also politically, with his party," he says.

"Gordhan always tries to bridge the gap between extreme positions, politically or economically. And he always tries to explain: 'Look, this is the envelope we have, this is what we can do and what we can't do.'"

Another insider with access to Treasury and Gordhan says the minister will try to reappropriate the economic debate, which has recently centred around so-called "radical economic transformation" and "white monopoly capital".

"The minister is expected to emphasise the importance of an inclusive and sustainable economy, an economy which is exposed to international headwinds and one which is still very much under scrutiny from ratings agencies. We have run out of road," he says.

Gordhan's team is expecting a more difficult reception in the National Assembly than this time last year, when he was cast as the saviour after the sacking of Nhlanhla Nene as finance minister.