Public Sector Flashcards
What is the composition of the government
Central Level
Provincial
Local
Public Corporations
What are three necessities of the public sector
Supply Public goods
To conserve resources
Manage the economy
What are the 5 objectives of the government
Ensure job creation
Price stability
Economic growth
Stability of the exchange rate
Economic equity
What are the 6 problems of public sector provisioning
Accountability
Efficiency
Assessing of needs
Pricing policy
Semi state enterprises
Privatisation
What is the problem of accountability
State enterprises are not directly accountable to taxpayers
State officials do not always act on behalf of the public and may act in their own interest
Why is Assessing of needs an issue
It is difficult for government enterprises to determine the needs of the population - This is why public goods and services are sometimes over or under supplied
What is the issue with pricing policy
The state does not operate within the market system of supply and demand
Prices can be overvalued or undervalued
What are the 3 issues with Semi State Enterprises
May become monopolies
Can face large losses and place a burden on the government
Some function inefficiently which can harm the economy
What is privatisation
The transfer of functions, activities and ownership from the public sector to the private sector
What are the 4 aims of privatisation
Reduce the relative size of the public sector
Stimulate the growth of the private sector
Improve overall efficiency and performance of the economy
Broadan the economic base of the economy so that tax levels can be reduced
What are the 7 advantages of privatisation
Provide additional funds to the government
Broaden the tax base and increase government income
Improve the efficiency of the economy
Attract foreign investment
Reduce pressure on government’s budget
Promote BEE
Reduce personal income tax and government debt
What are the 3 disadvantages of privatisation
Public monopolies are replaced by private ones
People lose jobs
Ownership of assets are transferred
What is nationalisation
The opposite of privatisation - Transfers from private sector to public
What is regulation
Deliberate actions to put laws, regulations and prescriptions in place to regulate economic activities
What is deregulation
The deliberate action by government to remove all unnecessary restrictions
What are the 5 macro-economic objectives of the government
Economic Growth
Full Employment
Exchange Rate Stability
Price Stability
Economic Justice
Read through descriptions of Macro-Economic objectives
What is the budget
A document with expected income and projected expenditures
What is the financial year of the government
1 April to 31 March
What is the main source of income for the government
Income Tax
What is the importance of the budget
Long Term planning - Departments need to know the extent of their future involvement
Dominant role of the government - Certain sectors need to know in advance to adapt capacity
What are the 3 considerations when setting up the budget
Financial - Whether taxes will be increased or decreased
Economic - Needs to know requirements of economy. Taxes and spending must meet these
Political - Political parties use budget to implement their policy
What are the 3 different types of budgets
Medium Term Budget Policy Statements - Delivered at end of October. Any changes that occurred since February
Medium Term Expenditure Framework - 3-year rolling expenditure and revenue projections
Conditional Grants - To promote spending on National Priorities
What are the 3 rules that apply to Discretion
Deficit Rule - Shortages on the budget should not be more than 3% of GDP
Borrowing Rule - Borrowing must only be used for capital expenditure. Current expenditure should be financed by current income
Debt Rule - Public debt and guarantees should not exceed 60% of nominal GDP
