# General Business Category > Business Finance Forum >  The cost of government

## Dave A

Where is the money going to come from?



> Already facing falling tax revenues, the government purse is under new pressure from President Jacob Zuma's creation of new departments and the splitting of departmental functions. 
> 
> Budget processes are still under way, but billions of rands will be needed to accommodate the new departments of economic development and rural development and the splitting of the education and minerals and energy portfolios.
> 
> Government departments are scrambling to get their wish lists together for the coming budget votes in Parliament, when ministers will present the priorities and proposed budgets of their departments.
> 
> Starting from scratch, new departments will have to assemble strategic plans and budgets.
> 
> The treasury was officially informed of the new structure of government only when President Jacob Zuma announced his new Cabinet. It may need to rejig the budget and a Special Appropriations Bill may be on the cards, requiring Minister of Finance Pravin Gordhan to ask Parliament for approval for additional spending.
> full story from M&G here


All I see so far is an increase in overheads.

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## tec0

I think JZ functions under this law âMore is betterâ I really donât belief that he sat back with a cup of coffee and a cigarette and just thought things trough. See JZ wants better control and he so beliefs that if he divided the functionality of departments into smaller departments that we will have a better functioning system because they department can then only focus on its half of the picture.  

However, I fear that JZ needs to understand that effective systems start with effective management and infrastructure. Secondly is training of staff thus we get a little thing called functionality. Then it comes down to monitor performance and work on the problem arias.

In short throwing money at it will not make it go away!  :Whistling:

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## Marq

> billions of rands will be needed to accommodate the new departments of economic development


Economic development is a bit of an oxymoron these days - like military intelligence - just does not make sense any more thanks to the economists. Everybody has these pie in the sky diagrams of how economics works and then having supposedly got the big picture goes away and stuffs up the bottom line by introducing kak little pictures.

Lets start a new department, like....oh I don't know, lets make one up - how about industrial tourism....then lets pump a brazillian rands at that and see what happens. Oh gosh a few fat cats and no results..mmm...ok how about labour education? No......to many people understand those words not enough fat to trim there.....right lets use the weather department - they always get it wrong...Mix it with Human Settlements...nobody understands that one yet - so now lets have Tokyo in charge of The Weathering Settlements division. - Don't understand that term? - well its no different to many of the other departments they have going and the results will be spectacular in comparison.

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## Marq

Oh - and wheres the money going to come from...good question.

I am sure by placing the sars man in the finance seat, we have one answer.

The sheriff of Nottingham will ride again and the story of Robbing Hood has been misinterpreted.

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## Dave A

> Oh - and wheres the money going to come from...good question.
> 
> I am sure by placing the sars man in the finance seat, we have one answer.
> 
> The sheriff of Nottingham will ride again and the story of Robbing Hood has been misinterpreted.


That's the one that worries me. It can only lead to higher taxation rates, especially if these higher overheads don't produce the goodies.

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## tec0

Let us look at the small picture. The one where normal people have to live with... For every bad judgement call our government makes people will end up dying. This can be due to crime or our horrible hospitals take your pick. In the end there will not be anything left then you get poverty where people will be dying because of no-food no-clean water no-nothing! Is this at all possible? âDo I really have to answer that?â Yes it is possible that due to bad government millions of people can end up standing on their own graves. 

So what do we do? Well with the mentality as it is right now... Nothing... We are powerless, now this little word âpowerlessâ gets under the skin a little bit but the truth is what it is...

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## Tok-a-lot

The direction of the introduction of a South African National Health System is scariest idea of all. In no country has the implementation of the National Health System been sustainable. Britain and Japan are good cases of this proponent of semi-socialism. With Japan it started before the 2nd World War and was a shining light to the success of the country up and till the crash in the late nineties and then they found out what it was actually costing them. In Britain they have developed NH since WW11, their health system is a joke and they agree it is basically bankrupting the govt. Now SA wants to do the same and we are not even on a near footing economically as these developed 1st world nations. This will bankrupt this country, quicker than adding any new departments.

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## tec0

Again it is called Planning! You know âAn act of formulating a program for a definite course of actionâ Now it is simple. Stability comes from market export and Fabrication of goods. If government wants to do something positive then start with government owned Fabrication plants that will produce computers, cars and other useful items such as Food Processing. This will create infrastructure and if well disciplined it will generate work and profit. Now once you have a sound infrastructure you can look at Industry and see how you can facilitate them. This is known as Partnership. Once a Partnership is established you get cooperation. Then you push in things like National Health systems, Police systems, School and training systems and Transport systems. Because the infrastructure will provide that extra cash-flow allowing for sustainability. The thing is before we can have all that we need to get rid of corruption... But in all the possibility exist.  :Yes:

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## wynn

Talk about putting the 'Tailgate' of the Cart before the 'Horse' (we be going before we be coming)

Just add a few more 'Stealth Taxes' and we will all be standing in the 'Hand Out Queue'

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## Dave A

How about this story on local government.



> The national treasury has insisted it will not give more money to struggling municipalities to meet the pay claims of striking council workers. 
> 
> This could result in local governments taking drastic measures, including cutting "lifeline" water and electricity supplies to the poor or hiking basic service tariffs, the South African Local Government Association (Salga) has warned.
> 
> Salga spokesperson Mogomotsi Mogodiri said increases could result in some municipalities collapsing.
> 
> "Figures [of R30,3-billion] owed to municipalities paint a grim picture of the dire situation most are in," Mogodiri said. "It's not that we don't want to pay workers -- we just can't afford it. The perception that we have money is unfortunate."
> 
> Mogodiri said the pay rise would leave municipalities no choice but to compromise service programmes needed by communities.
> read the full story on M&G here


Or they could retrench workers like the private sector has to  :Whistling:

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## tec0

In any event, we are losing grip on the things that are important. Fact is we need clean water, we need a working purification plant so that all the condoms, tampons and wedding rings can be extracted from the faeces and other rotting things like the many dead cats you will find in our storm drains. Now I am making a point of it to make it sound horrible because that is what it is. Horrible!  :EEK!: 

So if it was you that needed to keep the water supply going wouldnât you want a bit more money to make it worth your while? Perhaps a good medical plan to go with it? Fact is; when is asking to little asking too much?  :Confused:

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## Dave A

> The Federation of Unions of South Africa (Fedusa) said on Tuesday it had concluded an agreement to work with government, organised business and labour to tackle recession. 
> 
> The agreement comes after Fedusa met Economic Development Minister Ebrahim Patel earlier on Tuesday to discuss the impact of the global recession and the framework for South Africa's response to the international economic crisis. 
> 
> Fedusa general secretary Dennis George said in a statement the first aspect of the agreement would be to obtain serious commitment from CEOs of companies. 
> 
> They would also seek commitment from all the relevant Sector Education Training Authorities to urgently implement the agreed upon Training Lay-off Plan. 
> 
> George said this would be done by ensuring that the R2,4-billion training allowance reached the pockets of working people.
> ...


Any chance the national pledge will also bind workers not to demand crippling pay increases?  :Whistling:

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## Yvonne

> They would also seek commitment from all the relevant Sector Education Training Authorities to urgently implement the agreed upon Training Lay-off Plan. 
> 
> George said this would be done by ensuring that the R2,4-billion training allowance reached the pockets of working people.


Can anyone elaborate on this?

Yvonne

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## Marq

Good question - reminds me of the guy, who while standing in the UIF handout queue, complained bitterly about the delay as he he a job to go to. (True story - I was there).

Is this going to be a hand out grant thing again or a proper training scenario so the guys being laid off can better themselves and get into a more skilled job position?

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## Dave A

It's part of Jacob Zuma's response plan to the recession.

Can anyone tell me this - apart from showboating, name *one* constructive thing organised labour is doing to turn the tide of this recession?
One concession?
One sacrifice?

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## Dave A

For example:



> South Africa's National Union of Mineworkers (NUM) said on Wednesday its members had rejected the latest wage offer from Impala Platinum, and demanded a higher wage rise plus housing and transport pay. 
> 
> Impala Platinum (Implats), the world's No. 2 producer of the metal, is facing a strike by more than 20 000 workers at the company's main mine.
> 
> The group had on Sunday offered a one-year wage agreement with a 10% pay increase for all workers.
> 
> "They have rejected the offer," NUM spokesperson Lesiba Seshoka told Reuters.
> 
> "They want the wage deal to include transport and housing allowances, and they also want a pay rise of 13%."
> full story from M&G here


Is there no concept of where inflation comes from, and from there what drives interest rates?

And to extend that line of thought, where does capital formation come from? And how important is capital formation in the creation of jobs?

In lifesaving you are taught the greatest danger to you in the ocean is the drowning person you are trying to rescue. I kinda feel the same way about organised labour at the moment.

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## Yvonne

Our company complied with all the requirements of our SETA.
We use a professional consultant, who submits everything on our behalf.

I don't have the ability to skills to deal with the returns, so have no way of verifying that everything is correctly submitted, as we have no correspondence from the SETA advising a claim is denied, assuming all is in compliance.

We have yet to receive a single cent for rebates in training provided to our employees from the Skills Development Fund.

Yet the TETA claimed they still had the funds available to carry out their committments, now those funds can be diverted?

I have no desire to incur additional wasted time and effort to attempt to follow this up, assuming our rebate is hardly worth the trouble.

But if many small businesses have the same attitude as ours, how much is actually being received in rebates from SETA's? 

Yes, Dave your quote comes to mind! -


> Understanding the will of the people:
> Ten people who speak make more noise than ten thousand who are silent. Napoleon Bonaparte.


 better follow this up.

Yvonne

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## Dave A

50% of your contributions are recoverable as a *mandatory* grant, Yvonne. It's pretty much a case of doing the paperwork and the SETA *has* to pay up. Given a thrshold of R500k before you have to pay, that's a minimum of R2500.00 per annum that should be coming back.

Not a bad return for filling out some forms.

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## Yvonne

> Can anyone tell me this - apart from showboating, name one constructive thing organised labour is doing to turn the tide of this recession?
> One concession?
> One sacrifice?


This is why I feel discouraged, we need "hope" that there is understanding of the problems in their entirety.
Our country needs the "feel good" stories of concessions and sacrifices made by the "powers in control".

Is it possible to separate organized labour from the ANC, etc. ?
Expanded govt. and public servants ("Filled from labor ranks potentially!), security, vehicle dealerships etc. 

I have concerns: the decision process of the industry sectors targetted?
Tenders to SETA's: family, friends and cronies as providers of the training?
Definitely providers favored by B.E.E. 

Pockets of the workers?




> George said this would be done by ensuring that the R2,4-billion training allowance reached the pockets of working people.


The funds should not "reach" anyone's pockets - the target should be their minds! (Skills)

Darn!  that is the basis for all the problems in the first place!  
Common Sense has dissapeared! 

(Note: sarcasm intended! 
I do understand the concept of funds "move from the SETA's into the pockets of the working people" the economy should benefit by increase in spending etc. ), it is just that for me, this confirms the "entitlement" perspective of workers, and the material aspect rather than the emphasis being on the funds being for the ultimate good of increasing the workers skill value for potential employment.

Yvonne

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## Yvonne

Perhaps I dont understand it at all.

The rebate is calculated on your submission of training to be provided (prior year), (Can't remember the name of the return!) then with a formula of the percentage of much of the training proposed was actually carried out, plus proof provided that the courses were undertaken and paid for etc. Providing evidence regarding Accreditation of the provider of the training, that they are in line with the framework applicable for your specific industry etc?

If it is as easy as filling out a form and getting a rebate I am going to be furious with myself.

We pay approx R13,500 to Skills Development, and spend R18,000 per annum for the consultant to keep our own accreditation applications as a training provider in order.  

This is my point, how many small business owners have the capacity to handle all these issues.

If the cost of professional assistance is more than the Skills Levy rebate, small business just accept it as a tax.

Do you know of any consultancy that offers a full service to small business at a reasonable cost?

We need a small business in South Africa Business Management for genuine dummies! publication. (Wiki?)

Yvonne

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## Yvonne

Dave, Are you referring to a Learnership rebate?  

Not all small business would have learnership potential.
The report I was referring to is the Annual Training Report and The workplace skills plan.

I found a pretty simple site: http://www.labourguide.co.za/sdl.htm for "dummies" like me. 

Yvonne

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## Dave A

> We need a small business in South Africa Business Management for genuine dummies! publication. (Wiki?)


I really need to get back to working on that.



> The report I was referring to is the Annual Training Report and The workplace skills plan.


Yep - we're talking about the same thing. Submit the WSP and ATR and you get the mandatory grant.

One thing to note on this - it's not as if you have to spend as much as you get either. As long as the WSP and ATR are reasonably aligned, you get the grant. It's also not limited to "accredited" training - that's more an issue for getting access to discretionary grants.



> We pay approx R13,500 to Skills Development, and spend R18,000 per annum for the consultant to keep our own accreditation applications as a training provider in order.


That pretty much sums up one of the major weaknesses in the system. It's been made so complex, too much money is ending up in the pockets of consultants instead of being invested in training - or as you so aptly put it, getting knowledge "into their minds."

The system is ridiculous. I hate it. But them's the rules to be used and abused. My current theory is the best way to make sure they're changed to something more sensible one day is for them to be raped to the max, because pointing out the flaws and loopholes hasn't had any effect.

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## tec0

If I may be so bold to point out a little thing called cost of living. Now it is true that Eskom is stating that they have lost so much money that it makes me sick to think about it. Fact is why is there no audit being done on Eskom to see where the money is going. After all we are paying more money than ever just to keep the lights on! However let us not forget that Eskom is still Government so this massif negative income will have an effect on us. 

Now let us look at you and I. Fact is if you work for someone Government will take TAX from you and they will demand it and take it by force and liquidate you for their money! Who benefits from this money? Fact is you see little benefit if any.

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## Dave A

At least Tokyo Sexwale is setting a good example:



> Human Settlements Minister Tokyo Sexwale said on Tuesday his department was introducing austerity measures to slash official travel, accommodation and administration costs. 
> 
> Sexwale and his deputy Zoe Kota-Fredericks this week started flying economy class to Cape Town to attend parliamentary sittings and all staff had been ordered to do the same, his spokesperson Chris Vick said.
> 
> Vick said had Sexwale told his staff: "We need to lead by example. We have to tighten up on expenditure, particularly on some of the big-ticket items such as travel."
> 
> The department had placed a moratorium on promotional items and instructed officials to share transport wherever possible.
> 
> It had also given orders to cut down on printing and photo-copying costs.
> ...

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## Marq

> He said the human settlements department was doing a study of how much it could realistically save and would report to the national treasury once it was completed.


mmmm.....the crux of the message..methinks. A plan to make a plan to see what they potentially could do about this scenario, that has no deadline date and no real intention to do anything. Lets save some paper costs, do a ra ra about that and no one will realise that we are skimming the bucks from these big projects and other tender stuff where he real savings could be made.

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