Budget cuts didn't affect service delivery – Treasury

Cape Town – National Treasury painstakingly juggled numbers to ensure budget reductions did not cut service delivery down to its bare bones, Parliament's portfolio committee on public service administration has heard.

This means state-owned entities – particularly those that underperformed and those that had projects that could be concluded in other years – would have to make do with less money in the 2018/19 financial year.

The reprioritisation of the budget over the medium term included the following:

• a R85bn reduction in departmental baselines
• R57bn to phase in subsidised higher education and training
• a R10bn contingency reserve, and
• a downward revision of the expenditure ceiling of R5.8bn for 2018-19 and 2020-21.

The submission to the committee said programme reductions would not have an immediate impact on all portfolios, as a number of programmes had been underspending and underperforming at the time the reductions were considered.

"Administration saw an across-the-board 2% reduction on the programme for all national and provincial departments.

"Public entity cuts reflect a 5% reduction on transfer to all entities receiving more than R300m in the 2018-19 financial year," the submission read.

Some areas were spared, while in others, cuts were increased. "The research councils, health entities and Water Trading Entity were excluded from the cuts. In some instances, the cuts were increased to more than the proposed 5%, like the Special Defence Account and the South African National Road Agency Limited," the submission added.

"Public entity transfers were reduced for entities that have a surplus or have capital projects that can be rescheduled, like SARS, Special Defence Account and SANRAL, while in other entities the reductions aim at improving efficiency through general cuts to the baselines."

Treasury’s submission said compensation for employees, as a reduction of R25bn, had already been in effect through the 2016 national budget.

However, the reductions sought to minimise exposure to critical programmes such as social grants, local government equitable share as well as education, healthcare and Aids programmes.

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