Finance Minister Tito Mboweni has called for the government to “seriously consider” adopting zero-based budgeting.
Mboweni was providing closing remarks in the National Assembly Appropriation Bill debate on Friday.
Reflecting on the state of public finances since he came into office in 2018, Mboweni told members of Parliament that what has been increasingly clear is the fact that the country needs to “adapt with changing circumstances”.
“When we thought we were rich we would do things in a particular way; we are no longer as rich as we used to think we were and therefore we have to adapt to the new situation,” said Mboweni.
Mboweni said the new situation calls for “zero-based budgeting” — a process of wiping the financial slate clean and drafting the national budget from scratch, where funding is allocated based on programme efficiency and necessity as opposed to budget history.
When implemented successfully the process could result in great savings and release departments from established methodologies.
Since the February budget, Mboweni said there have been dramatic changes to the assumptions that were previously made about economic performance, with the country being in a recession and tax revenues declining sharply.
“In other words, [we have to] refocus our energy on the things that we can do, reflect our energies on the growth-enhancing activities and no longer take for granted that the baseline that was there last year will always be the case going forward,” said Mboweni.
The Appropriation Bill based on the February 2020 budget was passed by the National Assembly, with 230 votes in favour and 130 votes against.
It will now move to the National Council of Provinces for consideration, as part of all the processes that need to be completed before Mboweni tables the supplementary budget that takes into account the disruption caused by Covid-19.
Mboweni said the zero-based budgeting approach would directly complement the district development model put in place by President Cyril Ramaphosa, intended to streamline planning and spending across the three spheres of government in order to improve oversight on projects and service delivery.
Mboweni said the issues that members of Parliament had raised in the debate would be dealt with in the supplementary budget that Treasury will be ready to table on June 24.