Public sector wage bill strains fiscus

Thursday, February 18, 2010

Cape Town - The Financial and Fiscal Commission says while it welcomes the increased budget allocations in the areas of health and education, it remains concerned about the rapid increase in the public sector wage bill.

Finance Minister Pravin Gordhan revealed on Wednesday in his Budget Speech, that the wage bill for public servants had doubled in a period of five years.

Gordhan called for a more moderate approach in future wage negotiations to prevent pressure on the national fiscus.

Speaking during a media briefing on Thursday, the commission's chairperson Bethuel Setai said the issue of the high public sector wage bill could imply that significant amounts of the debt service cost increases were driven by personnel expenditure.

The Financial Fiscal Commission is a body formed in terms of the Intergovernmental Fiscal Relations Act and makes recommendations for the division of national revenue.

"If this is indeed the case, it would be important that this development is reversed as soon as possible," Setai said.

Large amounts of debt that are driven by the current consumption as opposed to the financing of capital assets are known to compromise future economic growth and destabilize the domestic financial systems, he said.

Setai welcomed the priorities and divisions of revenue with respect to the fight against HIV and AIDS. Gordhan announced a further R3 billion funding towards a national HIV prevention and treatment programme.

This is on top of the R5.4 billion provided in October last year. Presently, about 920 000 people are on anti-retroviral treatment and the budget provides for the number to be increased to 2.1 million in the 2012/13 financial year.

Setai said the anticipated introduction of the National Health Insurance (NHI) scheme had a potential to play a key role in preventing the future spread of the diseases which have claimed the lives of millions of South Africans.

The Commission has further recommended that national government limits the number of conditional grants awarded to municipalities. It said the conditions that often accompanied the grants placed an enormous burden on the affected municipalities.

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