OUTA Welcomes Godongwana's R10 Billion Fuel Relief, But See The Warning It Has For Government

 

Illustration: ThePulse

Finance Minister Enoch Godongwana's R10 billion fuel levy relief has been welcomed by the Organisation Undoing Tax Abuse (OUTA), but the civil action group has warned that South Africans are still paying for government waste, failing infrastructure and poor financial management. The reaction matters because it moves the debate beyond what motorists will pay at the pump and towards a broader question: whether the money collected from taxpayers is being turned into services that work.

OUTA said Wednesday's Medium-Term Budget Policy Statement (MTBPS) offers some respite for households struggling with higher transport and food costs. The organisation questioned, however, whether additional government spending will lead to better services on the ground. OUTA chief executive Wayne Duvenage said South Africans feel pressure every time they fill their tanks, buy groceries or pay for transport, and that the relief will help, but only temporarily.

Godongwana announced temporary reductions to the fuel levy of R1.50 a litre for petrol and R3 a litre for diesel from 4 November until 1 December. Smaller reductions will follow until 5 January 2027. According to OUTA, the cost of the relief is about R10 billion. The measure forms part of a larger budget statement that also dealt with growth forecasts, municipal funding and spending pressures across government.

OUTA's main argument is that the bigger issue is whether taxpayers receive value for the money government already collects. The group pointed to a Treasury review of R887 billion transferred to provinces and municipalities through infrastructure conditional grants between 2017/18 and 2023/24. According to OUTA, the review found that projects were frequently delayed, incomplete or failed to deliver their intended benefits.

The organisation was careful to stress that this does not mean the entire R887 billion was wasted. It said, however, that the findings raise serious questions about accountability. Duvenage said spending the money is not the same as doing the job, and that Treasury must tell South Africans which projects failed, how much was spent, who was responsible and what action has been taken. These are demands for transparency, and Treasury has not responded to them in the information available so far.

Conditional grants are funds the national government transfers to provinces and municipalities for specific purposes, such as building roads, water systems, clinics and electricity networks. They are meant to ensure that money intended for infrastructure is used for infrastructure. When projects stall or fail, the impact is felt directly by residents, who may go without reliable water, electricity or roads despite the funds having been allocated. That is the context in which OUTA's comments should be read.

The MTBPS also provides an additional R21.8 billion to the local government equitable share over the medium term, intended to help cover the rising cost of basic municipal services. OUTA said, however, that many municipalities spend too much on operating costs and too little on maintaining infrastructure. Duvenage said that when municipalities collect money for electricity and water but fail to maintain those networks, residents pay twice, first through their municipal bills and then through the cost and disruption of failing infrastructure.

The criticism is not new. Concerns about municipal maintenance, ageing networks and the use of conditional grants have been raised for years by auditors, civil society groups and communities affected by service failures. What gives the latest comments particular weight is that they come directly after a budget statement that adds funding to the system, which prompts the question of whether more money alone will change outcomes.

The property sector has also reacted to the fuel relief. Dr Andrew Golding, chief executive of the Pam Golding Property Group, said the intervention will help cushion consumers and businesses against rising transport and operating costs. He noted that higher fuel costs have implications well beyond motorists, influencing transport, distribution, food prices and inflation more broadly. He described the relief as temporary but said it offers some breathing space for households and businesses facing mounting costs.

Golding added that sustained improvement in housing affordability will require stronger economic growth, employment and access to competitive home financing. Samuel Seeff, chairman of the Seeff Property Group, described the MTBPS as a stable and fair fiscal plan under challenging macroeconomic conditions. He also called for interest rate cuts to ease pressure on strained consumers and support housing demand.

Economists have been more cautious. Momentum Group economist Sanisha Packirisamy said temporary fuel relief cannot shield consumers indefinitely from elevated international oil prices. She noted that Treasury has lowered its economic growth forecast for 2026 to 1.2%, down from 1.6% in February, and has revised this year's non-interest spending envelope higher by R45 billion.

According to Packirisamy, the additional spending is intended to support health, education, local government and regulatory enforcement. She stressed, however, that stronger growth and consistent infrastructure delivery are necessary for lasting improvement. A lower growth forecast means less revenue than previously expected, while higher spending increases the pressure on the budget, a combination that leaves less room for further relief if conditions worsen.

OUTA also wants close scrutiny of Treasury's planned R38.1 billion in medium-term savings. These include measures aimed at social grant fraud and at programmes considered ineffective. The organisation cautioned that efforts to eliminate waste must not penalise legitimate grant beneficiaries or undermine essential services. That caution is relevant because targeting fraud can sometimes lead to eligible people being wrongly excluded, a concern that has previously been raised about verification systems.

Treasury has lowered its economic growth forecast for 2026 to 1.2%, from February’s 1.6%, while revising this year’s non-interest spending envelope higher by R45 billion.

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The views expressed by OUTA, the property industry and economists reflect different priorities, but they share a common thread. All of them acknowledge that the relief is welcome in the short term, and all of them point to the need for stronger growth, better service delivery and careful management of public money. Treasury, for its part, has presented the fuel levy reduction as a temporary measure in response to exceptional pressure on household budgets. It is fair to say that reasonable people can disagree about whether the relief is large enough, whether it is well targeted, or whether the money could be used differently.

The fuel relief itself is expected to have a visible effect. Based on recent projections, the levy cut combined with the November fuel price adjustment could see petrol fall by about 50 cents a litre or more and diesel by about R1.50 a litre or more, although this depends on international oil prices and the exchange rate. You can read more in our report on what petrol and diesel could cost in November, and in our coverage of the extension of the SRD grant announced in the same budget statement.

For now, the situation is that the fuel levy relief has been announced and will begin on 4 November, while OUTA has put several questions to Treasury about infrastructure spending, municipal performance and the planned savings. Treasury has not yet answered those questions publicly in the information available at the time of writing.

What happens next will depend on several factors. The relief will be tested against international oil prices over the coming weeks, and the debate over infrastructure accountability is likely to continue as Parliament examines the MTBPS in more detail. Whether Treasury publishes the project-level information that OUTA has requested will be an important indicator of how seriously the accountability concerns are being addressed.

Do you think the fuel levy relief goes far enough, and do you believe government is getting value from the money it collects? Join the conversation in the comments, and share this article with others who want to understand what the budget statement means for them.

ThePulse.

Source:
IOL 

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