Make government budgets and spending visible to all

Kevin Phillips

In mid-September Finance Minister Pravin Gordhan revealed that South Africa’s municipalities could have saved R27 billion last year, or a whopping 15% of their budgets, by cutting down on unnecessary expenses.To put that R27bn in perspective: It’s more than the R25bn that was allocated to the entire Department of Health in the national Budget for 2011, and only slightly less than the R33bn that’s been allocated to basic and higher education combined. That’s a lot of schools, hospitals, extra training for maths and science teachers, better working conditions for nurses and doctors… the list goes on.

In his speech at the launch of the Treasury’s Local Government Budget and Expenditure Review, Gordhan listed “expensive cars, cellphone allowances, sponsorships, catering, work sessions, luxurious offices, overseas trips and consultants,” as items to cut down on.

To bring it closer to home, our cities and towns are crying out for investment in better housing, refuse removal, water and sewerage infrastructure. These are things that make a dramatic difference to the quality of life of ordinary people. Yet instead of building new houses and upgrading water treatment plants, our municipalities are spending money on frills. “Cut down on non-essentials and get your planning, budgets, service delivery and bureaucracy right,” Gordhan said.

A big part of the problem is that it has taken until September this year for the tax- and rate-paying public to hear about this – and the detailed information is buried deep in long reports on government websites.

“In the private sector, we know one thing,” says Kevin Phillips, MD of idu Software, “If you want accountability, you must first have transparency. And transparency means daily insight into the fine detail of what’s going on, not a yearly report that arrives 18 months after it’s too late to do anything about the problems.”

Imagine if your local municipality had a website where you could see, month by month, exactly how much was being spent on what. Imagine you could compare the spending on water services vs international travel. Imagine you could spot exactly who wasn’t spending their budget until nearly year-end and then frantically issuing half-baked tenders for “use it or lose it” last minute projects.

This is not a fantasy: It is technically possible to do it today. All the software exists, and there are hundreds of companies where authorized employees can access up-to-date expense reports via web portals. Cost centre managers are empowered to propose and manage their own budgets, and can comment on and explain individual line items. It’s all become pretty easy.

Of course there are limits to transparency: Most of us accept that there are good reasons not to know the details of the President’s security arrangements, for example, although what that security costs might be of interest. But those limits are way, way beyond what we have now. There is no good reason why we shouldn’t know exactly how often our municipal officials travel overseas, and what they do it for. Are they attending the world conference of municipal managers, or are they attending the Rugby World Cup?  And if they are attending the Rugby World Cup, who is attending? What are their roles or functions?

South Africans have become curiously passive about the way our tax money is spent. Perhaps it’s time we became more insistent, and demanded more regular, timely insight into exactly what is going on. If there are reasons why we shouldn’t know, then let our elected representatives tell us what they are.

About idu

idu simplifies financial management for non-financial managers. Its flagship product, idu-Concept, provides easy, effective budgeting and financial reporting for medium-sized to large businesses, including many of South Africa’s top firms.  idu-Concept integrates easily with ERP software, but unlike more cumbersome offerings, idu-Concept can be implemented quickly, requires little or no ongoing consulting fees and reduces budgeting cycles from months to weeks. For more information visit www.idu.co.za.

About Kevin Phillips

Kevin is an entrepreneur who has built a successful business, and so has a solid understanding of the challenges and questions business owners face. He has degrees in Commerce and Accounting, and started idu Softwarewith partners James Smith and Wayne Claasen in 1998. Kevin is fast becoming a thought leader in his field and makes regular comment in the media about current affairs affecting business as well as accounting, finance, budgeting and software. He is a columnist for Accountancy South Africa, Entrepreneur and Tech Leader and has been featured in Sunday Times, Business Day, Enterprise Risk, Succeed and Cape Argus; as well as being a guest speaker on Radio 702, Kaya FM and Summit TV.