Godongwana’s plan to shrink the state

Finance Minister Enoch Godongwana announced his plan to shrink the size of the government to make up for the country’s significant fiscal deficit.

In his Medium-Term Busget Policy Statement delivered on Wednesday, Godonwana said a reconfiguration of the state will commence over the medium term. 

The 2024 Budget will propose measures to reconfigure government programmes based on the outcome of previous spending reviews.

Over the next three years, the government will focus on raising GDP growth by improving the provision of electricity and logistics, enhancing the delivery of infrastructure, and restructuring the state to be efficient and fit for purpose. 

This comes as the state faces a R56.8 billion tax shortfall as government expenditure continues to outpace revenue.

This is due to commodity prices falling faster than expected, higher than expected value‐added tax (VAT) refund claims, and an unbudgeted-for 7.5% public sector wage hike.

However, one of the measures Godongwana proposed to combat this problem is to shrink the size of the state.

In his 2023 State of the Nation Address, President Cyril Ramaphosa announced plans to review and reconfigure the structure and size of the state. 

Therefore, in the MTBPS, Godongwana announced a joint plan to rationalise government departments, entities and programmes over the next three years.

He said the following criteria will be used to determine whether a department or entity should be closed or merged:

• The performance and size of the entity or department, especially if it is no longer fulfilling its mandate or does not have the capacity to fulfil its mandate.
• The ability of a larger department to absorb the function/s of a small department.
• The duplication and overlap of functions across departments and entities.
• The clarity and execution of the legislative mandate.

Godongwana said the Presidency is formulating high-level recommendations on programme and entity closures.

He said a dedicated technical team consisting of the appropriate legal, financial and human resource expertise has been created to facilitate the implementation of this plan.

South Africa’s bloated cabinet

Earlier this year, Leon Schreiber, the DA’s shadow minister for public service and administration, exposed that the cabinet is costing taxpayers billions.

He said ministers and deputy ministers employed 624 personal staff members, costing taxpayers R1.9 billion since Ramaphosa took office in February 2018.

Ministers and deputy ministers live in 97 state-owned mansions in Pretoria and Cape Town, worth nearly R1 billion.

The DA’s plan for the government, set out in its Vision 2029 document, proposed a cabinet of only 15 ministries.

It explained that reconfiguring the executive and realigning some of the associated national departments could save an estimated R4.7 billion per year.

The DA’s plan to only have 15 ministries is in line with many developed economies like Germany and Japan.

Germany has a chancellor, a vice-chancellor, and 15 ministers. Japan has a prime minister and 19 ministers.

These economies are far larger and more complex than South Africa, showing that a lean cabinet can produce great results.

The chart below shows South Africa’s current cabinet size compared to many of the world’s top economies.