“Don’t tell me what you value. Show me your budget, and I will tell you what you value.” This is a frequently repeated line from US President Joe Biden’s stump speeches, and the advice is sound — if you want to cut through the rhetorical fluff about what government cares about, the most fruitful approach is to look at the budget.

So what does our budget say about the priorities of government?

Consider some data points. Since 2008 overall spending has increased by more than 230%, but the cost of servicing SA’s ballooning debt has increased by more than 600%.

Over the same period consumer prices have increased by 120%, but spending on the public sector wage bill has increased by 220%. This despite the number of staff employed by government growing by less than 10%, which implies that most of the inflation-adjusted increase in spending on salaries has been to raise public servants’ salaries, not to increase the number of them available to deliver services.

From 2008 to 2024 spending on education, health and social protection increased at about the same rate as the budget as a whole (230%), but spending on policing, justice and correctional services has increased far less than the budget as a whole (170%).

The budget for goods and services has grown less quickly than the budget as a whole, but the budget for capital spending has done worse still, and hasn’t even kept pace with inflation.

Since 2008, nearly R460bn has been allocated to the recapitalisation of state-owned entities, a sum equivalent to about 2% of all spending. Critically, though consolidated spending increased by 230%, revenues have only increased by 200%.

From 2008 to 2024 the government’s gross debt went from about R600bn to R5.2-trillion, a figure that is projected to rise by about R1bn per day over the next three years.

The inescapable conclusion to be drawn from these data points is that the government is far less committed to fiscal sustainability than it claims to be. More than 15 years after the vast gap between the government’s spending and its revenues emerged in the wake of the global financial crisis, the gap remains large, and as a result debt continues to accumulate faster than the economy grows.

The second unavoidable conclusion is that whenever the government has had to choose between expanding service delivery and improving the salaries of existing public servants, it has chosen the latter. This is why the number of police officers per 100,000 people in the population fell by nearly 20% from 2011 to 2023, and why the number of teachers per capita has fallen by close to 25% since 2008.

This is the context in which the finance minister will table the 2024 medium-term budget policy statement (MTBPS) in parliament on Wednesday. This will be the first such statement since the inauguration of the government of national unity (GNU) and the renewal of the partnership between the presidency and organised business. It will be interesting to see if there is any departure from the unsustainable business-as-usual approach that has governed the past few budgets, but the portents are not auspicious.

There appear to be two fundamental deficiencies with the government’s approach to budgeting. The first is that it seems unable to grasp that an unsustainable fiscal trajectory constitutes an existential risk to the country’s long-term prospects.

The National Treasury and the Reserve Bank seem to understand this, but it is far less obvious that the presidency and the departments responsible for delivering public services do. They seem to think there is no limit to what the government could spend, if only the Treasury would open the spigots.

If there is one thing we should have learnt from the experience of the plast 15 years, it is that the challenges do not diminish with time.

This is simply false: unsustainable fiscal policies put a country on a path to macroeconomic crisis. Because both lenders and investors know this, the result is that interest rates rise and lending slows long before funding runs dry. These effects have long been evident, and there is no reason to think any kind of corner has been turned yet.

The second deficiency in the government’s approach to its budgets is that it has failed to engage seriously with the reality that a budget constraint means choices must be made. You can’t have more of everything when the budget is not growing. More importantly, unless you are engaged with the question of what activities are most needed, you will cut everything equally, and in so doing the makeup of your spending will become less and less efficient.

The effects of this are apparent everywhere. Because the government has been unable to say no to public servants, spending on maintenance and new investment has suffered; because infrastructure spending has not kept pace with the economy’s needs, growth has suffered. Because public servants’ salaries have risen faster than the growth of tax revenues the government has had to borrow money to make payroll, which has raised debt service costs. The result? There is even less investment and even less growth.

Every year the Centre for Development & Enterprise makes these points at the time of the annual budget and MTBPS, and every year they remain true — unless the government gets the public finances back on a sustainable trajectory there is no prospect of achieving long-term prosperity. Instead, we will one day lurch into a crisis from which recovery will be so wrenching that it will put social and political stability at risk.

Difficult as it may be to imagine (and hard as it would be to actually deliver), this MTBPS really — really! — needs to chart a new direction. But what would that look like?

• The rate of growth of overall spending needs to be constrained to less than the growth in nominal GDP (which has averaged about 7% a year), and the rate of growth of salaries needs to be constrained to significantly less than that.
• The government needs to identify some programmes for meaningful cuts. While most activities in government sound good in theory, too many of them deliver too little to be worth the money. For example, little real damage would be done to the economy if the sector education & training authorities and some of the technical vocational education & training colleges were discontinued. Cutting those programmes and retrenching the relevant staff is necessary to create fiscal space, some of which should be used to expand spending on critical infrastructure. By weeding out the least desirable spending and redirecting the resources to infrastructure the government would do more for growth than any number of feel-good statements with organised business.
• The government needs to get serious about getting value for money from government spending. The most obvious way to do this is to end public procurement policies that raise costs, lower quality and bog everything down in unnecessary bureaucracy. Fixing this would improve public spending while reducing corruption. If ever there was a low-hanging fruit, this would be it.

No-one should underestimate the political, economic and institutional difficulties the government faces in balancing its books. But if there is one thing we should have learnt from the experience of the past 15 years, it is that the challenges do not diminish with time. If the GNU is to achieve anything with long-term consequences for SA’s prospects, this is what it should be focused on.

• Bernstein is executive director of the Centre for Development & Enterprise. 

This article was published on Business Day