Latest news with #2025budget
Mail & Guardian
22-05-2025
- Business
- Mail & Guardian
Public sector wage bill must be contained – but not by DOGE methods
Public sector wage bill 2023 The government of national unity (GNU) has experienced major ructions since the country's 2025 budget was aborted in February. Although the budget deadlock was about VAT, it is a symptom of a bigger problem affecting the fiscal sustainability of the country's public finances. This has exposed rifts between political parties over how best to increase revenue and cut expenditure. One of the biggest contributors to the government's precarious fiscal position is what the state pays public servants. The public sector compensation budget, or 'wage bill', has increased pressure on the government's available revenues. This has been constrained by sluggish economic growth and significant debt-servicing costs. According to the treasury, the wage bill has nearly doubled as a share of GDP from 1994 to 2024. It might be tempting to try to control the wage bill by cutting the public sector workforce in the absence of realistic short-term prospects for significantly increasing revenue. But this comes with considerable risks and disruption to service delivery capacity, which must be mitigated if not avoided entirely by affordability concerns. As the finance minister prepares to present a revised budget this week, the GNU must plan boldly in the medium-term to alleviate the fiscal stress caused by the wage bill. But it should not pursue indiscriminate cuts in core service areas and instead focus on eliminating wasteful and superfluous expenditure that has created structural imbalances in the public sector workforce. Recent events in Washington offer lessons about the dangers of acting boldly but irresponsibly when managing the cost of the public sector. Under the department of government efficiency (DOGE), the Trump administration has set about firing tens of thousands of workers. The highly controversial actions have drawn wide criticism. The US federal bureaucracy has, for years, endured successive rounds of efficiency and performance reforms under various presidents. The broad mission of DOGE is therefore not unusual. What is unusual is the increasingly malicious and disparaging image of a wasteful bureaucracy that the Trump presidencies have created. The aggressive methods employed by DOGE, which has instituted deep cuts across the US federal government workforce, spending programmes and entire agencies, have caused massive disruption in the delivery of services, and unleashed panic and fear among civil servants. Nevertheless, there are also pockets of bi-partisan support for the general principle of reducing waste, inefficiency and streamlining the structure of government. Does the underlying reform spirit in Washington, as opposed to its harmful methods, offer any lessons to South Africa in controlling its public sector wage bill? Trend Salary increases have been the biggest driver of payroll costs compared to increasing the total number of public servants. Although this has disproportionately benefited public servants in core service areas, like medical and criminal justice professionals and educators, it hasn't improved the overall capacity of these key frontline professionals, whose total numbers have stagnated in recent years and failed to keep up with the demand for the essential services that they provide. This problem was laid bare during acrimonious negotiations between public sector unions and government during Adopting a bold approach to alleviating the pressure of the wage bill can be implemented in ways that don't have to compromise the public sector's capacity to deliver essential services. This could include: Re-allocating spending which has fuelled growth in the number of workers in non-core areas of the public sector. This includes public entities and state-owned companies, as well as ministerial office staff and central government personnel working in policy planning, oversight and regulation Reducing excessive spending and reliance on outside consultants. This has been More aggressively (but creatively) reducing the number of government departments and public entities and forcing departments to rationalise their internal structures. There is already broad multi-party support behind cutting the size of government — President Cyril Ramaphosa But there may be little appetite in a more politically diverse GNU to embark on bold cuts to the machinery of government. Conversely, the GNU might provide political adversaries with a unique co-governing platform to finally reconcile their differences over the size of the state. Efforts to control the public sector wage bill should not be driven by an overzealous, indiscriminate and pernicious cutting of 'wasteful' bureaucrats, as the recent experience of DOGE has shown. Instead, the GNU should be seized by the magnitude of the fiscal crisis to act boldly but responsibly to create a more constructive pathway to balance affordability with capacity. VinothanNaidoo is an associate professor in public policy and administration at the University of Cape Town.
News.com.au
15-05-2025
- Business
- News.com.au
The Block serial buyer Danny Wallis, REIV reveal landlord fears for Vic budget, what it would take to win them back
Victoria's top real estate industry group has revealed they fear landlords will be hit again in the state's 2025-2026 budget next week. It comes as The Block serial buyer and prolific property investor Danny Wallis has revealed the state government has broken the trust of landlords and can no longer hope to stop an exodus that has wiped more than 20,000 rental properties from the state. Last weekend Mr Wallis sold his fourth investment property since the Allan government announced a land tax increase for the start of 2024, and expects he will have divested six properties from his portfolio by the end of this year. The 6 Gray Lane, Albert Park, property fetched $2.15m at auction. He still retains about 10 homes bought from hit reality renovation show The Block as part of his expansive investment property list, which also includes homes that have been made available to house families getting treatment for kids with cancer via the My Room Children's Cancer Charity. But the tech entrepreneur said the only homes he would buy in the state today were now the high-end listings from The Block, and only then because they come with tax benefits that outweigh the levies implemented by the state government. He is now selling whenever tenants leave his investments, and in most cases not to other investors — meaning they are being lost from the rental market. In the September quarter of 2023 Homes Victoria reports show there were 671,109 active residential tenancy bonds across the state. The latest data in December last year showed just 649,978, reflecting a 21,131 decline from the peak of available rental homes in the state. Earlier iterations of the report reflected a 677,492 peak in September 2023, but have been revised. The exodus has widely been blamed on land tax tweaks implemented by the Allan government at the start of 2024. 'I don't think they can do anything to stop it, the trust is broken,' Mr Wallis said. 'I'm expecting the state budget will be hitting landlords again, this government seems to hate landlords.' Real Estate Institute of Victoria president Kelly Ryan said she too held concerns. 'We do have concerns around the investment side,' Ms Ryan said. 'The new treasurer, in one of her first media engagements, said landlords are rich and can afford the land tax. 'If that flows through this budget, that would be a concern as we know the majority of investors are school teachers, and nurses and tradespeople.' She added that one of the best things the next budget could do for rebuilding investor's confidence in Victoria, and to help build a larger supply of rental homes, was to leave landlords alone. 'No announcement is an announcement when it comes to the investor market at the moment,' Ms Ryan said. 'If they can slow down the pace of change, that's a big thing for the market. Give them a chance to catch their breath and get their heads around things.' Noting more than 150 reforms made since just before the pandemic, many of them requiring expensive upgrades to homes, she said ongoing budget and policy tweaks targeting landlords had resulted in many being forced to sell. Ms Ryan added the most important step the government could take would be to use land tax as an incentive scheme to encourage longer-term availability of rental properties by providing discounts to investors who keep homes available for tenants for extended periods. While that would 'make things better than they are', Ms Ryan said it wasn't clear if it would be enough to stop the tide of investors selling up. Real Estate Buyers Agents Association of Australia Victorian representative Matthew Scafidi said the government could win some investors back by relaxing tax burdens on those who only held one home – while raising the cost for those who own large numbers. 'If you have one, you shouldn't pay as much land tax, and if you own 10, you would pay more — as that person is running that as a business,' Mr Scafidi said. 'And the mum and dad who have bought an investment property … they can't afford it.' The Abode Advocacy Group founder said with instances of land tax going from $5000 a year to $30,000 for some investors, forced sales had been inevitable. Mr Scafidi said interstate buyers were now eyeing Melbourne as an alternative to Sydney, Brisbane, Adelaide and Perth, where prices had comparatively surged during the past two years. Mr Wallis said the interstate investors were probably tenants' best hope for more rental choice in the future, but warned they too could be scared off if the government pursued investors again in next week's budget. 'They are thinking it's easy money, but they're not coming at the same rate as others are leaving,' Mr Wallis said. 'And they don't realise what they are going to get hit with.'
Zawya
19-02-2025
- Politics
- Zawya
South African parliament speaker says budget postponed
South Africa's National Assembly Speaker Thoko Didiza said the 2025 budget, which was meant to be tabled on Wednesday, had been postponed. Didiza told lawmakers that there was no agreement yet on the budget. (Reporting by Kopano Gumbi and Wendell Roelf in Cape Town, and Tannur Anders, Sfundo Parakozov and Olivia Kumwenda-Mtambo in Pretoria; Writing by Bhargav Acharya; Editing by Alexander Winning)
