Treasury’s first ‘pre-budget consultation’ closes the space for debate

By refusing to engage on fiscal strategy, it forces contributors to accept austerity as a precondition

The National Treasury offices in Pretoria.
The National Treasury offices in Pretoria.

At noon on Saturday the Institute for Economic Justice’s (IEJ) budget policy lead researcher received a phone call from the National Treasury. It went something like this: “Congratulations, based on your written submissions you have been selected to make an oral presentation to the National Treasury’s pre-budget consultation. You are required to submit slides by 9am Monday morning, participate in a dry run later that day and present on Tuesday. We’d like your presentation to focus on the second question we posed.”

This phone call encapsulates the numerous problems with the National Treasury’s inaugural “pre-budget consultation”. The first step in the consultation process — part of the Fiscal Openness Accelerator project led by the International Budget Partnership and the Global Initiative for Fiscal Transparency — was a call made on September 10 for pre-budget input.

Bizarrely, given the months of planning, the deadline for submissions was September 17. Providing one week for detailed input on such an important issue is, of course, unreasonable. It is also disrespectful of the pre-existing commitments contributors may already have. Similarly, the 36-hour time frame — over a weekend — to submit slides (for vetting?) is outrageous.

Even more disturbing is the manner in which the call for input was crafted. The call overtly circumscribes as “off limits” the critical fiscal policy questions facing South Africa. It specifically states that it takes as given a fiscal strategy that includes stabilising the debt‐to‐GDP ratio via cutting non-interest expenditure growth; precludes long-term spending measures to support the economy; and proposes cuts to the public sector wage bill.

Instead, the call requests contributors to answer two predetermined questions: asking where cuts should be made and taking as given “limited resources”. The National Treasury is well aware that this “fiscal strategy” contains precisely the issues that are exercising public debate and require interrogation. By refusing to engage on this fiscal strategy and channelling contributions towards how this strategy is to be implemented, the Treasury seeks to manufacture a false consensus. It forces contributors to implicitly accept austerity as a precondition to contributing to the process.

There are three presumptions. First, that “fiscal consolidation” via cuts in non-interest expenditure is economically appropriate and grounded in sound economic theory, and will not unnecessarily damage the economy. Second, that “there is no alternative” given the debt predicament SA finds itself in. Third, that we need to share the pain of this adjustment across society.

This is how David Cameron justified the failed, harmful and unnecessary austerity programme in the UK, saying: “We are all in this together, and we will get through this together. We will carry out Britain’s unavoidable deficit reduction plan in a way that strengthens and unites the country. We are not doing this because we want to, driven by theory or ideology. We are doing this because we have to, driven by the urgent truth that unless we do, people will suffer and our national interest will suffer.”

As has been argued elsewhere, all three of these presumptions are false. By beginning on this basis the National Treasury removes the SA conversation from global debates and scholarship that have questioned the wisdom and necessity of austerity and the distribution of its hardships, and shown it to be an ideological project.

This approach follows a long-standing trend of the National Treasury limiting, not encouraging, participation in crucial budget decisions. It dates back to the unilateral implementation of the dominant fiscal framework in 1996, and is most recently seen in the National Treasury’s exclusion of fiscal policy matters from the 2018 presidential jobs summit and pushing these into a task team within the National Economic Development and Labour Council, where they have been systematically stifled.

Even the online portal for submissions limited input to the two questions the National Treasury has unilaterally determined. The oral presentation format does likewise, with selected organisations being prescribed which issues they are and are not “selected” to speak to, and slides requested for review in advance. Less than a day is given for oral presentations.

Concerns raised by an advisory group of civil society partners about the process have been ignored by the Treasury. Civil society organisations have subsequently written to the organisations, leading the Fiscal Openness Accelerator project asking that SA be suspended from the process.

Of course, a pilot pre-budget consultation must be manageable in scope and timing, and this would require structure for inputs. But what has unfolded to date goes well beyond this and is fundamentally flawed. This is a process shaped by the National Treasury’s agenda — not those of the public — and deliberately constrains opportunities for meaningful input into the budget process.

• Dr Isaacs is director of the IEJ.


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