N5 – Module 3 The Allocation of Funds
“The ultimate authority to allocate (distribute or give out) funds must undoubtedly rest with The Legislature” (Gildenhuys 1993:88), and not with public officials who might be members of the administrative or executive authority. The principle mentioned above would then apply here also. Legislation, even on local government finance, is a political matter and is not left to office bearers – the following remains the realm (the duty, responsibility) of The Legislature: • Approval of the local budget; • Imposition of tax; • Calculation of consumer tariffs.
Gildenhuys says that the allocation of funds amounts to a distribution of values (1993:88) – when funds are allocated, values are taken away from one group and given to another group. David Easton (1967) says that politics is the authoritative allocation of values; this makes the collection and distribution of funds a political matter. Because this is always a political matter only those with a mandate should be allowed to tax and to distribute funds. We know by now that by this we mean the elected representatives who should be fully accountable to the voters-cum-taxpayers.
These elected political representatives and/or officials: • act as the legislative authority; • have a mandate to act on behalf of the voters; • must give account for the allocation of funds to their voters.
We should now ask how these officials allocate funds to the various competing departments. The main instrument for the allocation of funds (values) is the annual income and expenditure budgets. This presentation, reading and passing of the budget is one of the most important political events in any Parliament – see full details in Module 7.
Functions of the Government Budget
Unfortunately no matter how the distribution takes place, there is always a win-lose situation. Money is taken from some to be given to others. No government can simply print money when it needs it – this is one of the direct causes of inflation.
Case Study: Insatiable Demand versus Limited Funds: the Competition Never Ends It is easy to see this “competition” in the media – every day there are ministers, directors-general or officials from various departments making promises to their voters. They promise better services: better parks, better pay for their employees, larger and more hospitals, increasing numbers of schools, better bursary programmes, more sporting facilities, larger highways, etc.
The representatives (usually the ministers themselves) are keen to please – they have been voted into office by their voters and are aware than unless they satisfy them they might lose their vote in the next general election. You can imagine how difficult it must be for The Legislature to decide who should get funds and exactly how much. It is a constant battle that rages in the press, in Parliament and in every corridor of every department. Of course the Minister of Health considers his/her portfolio to be extremely important, but then so does the Minister of Education.
The Minster of Housing might argue that his/her portfolio is even more important because the voters have been promised housing more than any other service. It is in Parliament where these matters are debated and decided. Unfortunately for most governments there is a dark principle that awaits them at every turn: the principle of insatiable demands versus limited funds.
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