Politicians are often asked what they will do once they are elected. There is a clarion call for clarity, if you like. What are you going to do? is the urgent demand of an expectant and exasperated electorate. But perhaps they should be asking the opposite question: what does the government currently do that it should simply stop doing because it is, well, nuts?
Which brings us, somewhat unexpectedly, to former finance minister Nhlanhla Nene and the Financial & Fiscal Commission (FFC).
President Cyril Ramaphosa last week appointed Nene as the new chair of the FFC, along with five other commissioners. On paper, it is an impressive group. The deputy chair is Malijeng Ngqaleni, formerly a senior National Treasury official; Andrew Donaldson was for years one of the Treasury’s most formidable policy brains; and the other appointees bring experience from provincial government, SARS and financial regulation.
They will need it. The organisation they are taking over is in an extraordinary state.
At the end of March last year, the FFC had an approved staff complement of 51 and precisely 18 people in the posts. The vacancy rate was 65%. More startlingly, the research division — notionally the whole point of the exercise — had 10 people filling 32 positions. During the year the commission hired three people and lost eight.
Its own audit committee said the finance function had been badly affected by vacancies and leadership instability. It had an acting CFO until January last year. The auditor-general found weaknesses in record-keeping, procurement and expenditure management. Parliament subsequently noted that the organisation had received an unqualified audit but with findings and remained worried about its capacity constraints.
So what on earth happened?
There are presumably the usual explanations: leadership problems, budgets, recruitment difficulties and the debilitating effect vacancies have on further recruitment. But I wonder whether the truth is that nobody is quite certain any longer why the organisation exists.
The FFC emerged from the constitutional negotiations for a very good reason. The national government would collect most of the tax, while provinces and municipalities would spend large amounts of it. The question of who gets what was then, and is now, both economically important and intensely political.
Nobody wants the central government deciding, all by itself, how much central government should retain and how much everyone else should receive. Hence the FFC: an independent body that would advise parliament and the three spheres of government on the equitable division of nationally collected revenue.
But 30 years later it is worth asking an impolite question: do we still need it?
The actual division of much of this money is overwhelmingly formula-driven. The local government equitable share, for example, starts with a formula incorporating basic services and institutional and community-services components, adjusted for municipalities’ ability to raise their own revenue.
Once you have agreed what goes into the formula, this is not the Manhattan Project. A computer can do it before breakfast.
Of course, the obvious response is that deciding what goes into the formula isn’t mechanical at all. Should population count for more than poverty? How do you compensate rural municipalities with tiny tax bases? Those are genuine policy questions. But do they require a permanent constitutional institution with a chair earning more than R2m a year, a bureaucracy, an administration programme, offices, annual reports, audit committees and 32 contemplated research posts?
Why not put the formula in legislation, make the underlying data and calculations completely public, and commission an independent expert review every three or five years?
There is another problem. The FFC doesn’t actually decide the allocations. It recommends. The Treasury can disagree with it ... and apparently does.
Former chair Patience Mbava complained to parliament last year that the Treasury had not adequately consulted the commission over the Division of Revenue Bill, despite being legally required to do so. The FFC has complained previously that its recommendations were ignored.
You can see how institutional ennui might eventually set in.
But Nene does arrive at an unusually good moment to test whether the FFC still has a useful role. Census 2022 produced demographic numbers which are creating potentially enormous headaches for the division of revenue. Joburg is the most obvious example.
The census put Joburg’s population at about 4.8-million. Census 2022 itself had an extraordinarily high national undercount, and its municipal-level results have been questioned by demographers. The Treasury has consequently held back from simply feeding the new census figures into the local-government equitable-share formula.
If Joburg really has substantially fewer residents or households than previously estimated, then by rights some of the money currently allocated to it should eventually go somewhere else. And that is where the FFC is facing something approaching a moment of truth.
South Africa has accumulated government institutions in much the same way an old garage accumulates paint tins: each one had an entirely plausible purpose when it arrived, and nobody quite wants to throw it away.
