The trade union Solidarity today said the budget speech that was delivered in Parliament yesterday came as no surprise.
According to Connie Mulder, head of Solidarity’s Research Institute, this was the fourth consecutive budget speech that pointed out the desperate situation of the South Africa economy. From this budget and mid-term budget speeches it was also clear that the ANC knew South Africa was in a crisis but they had no idea how to get us out of it. “Minister Mboweni was doing good work by explaining every single iceberg, but then he steered the country’s economy full-speed into them,” Mulder said.
South Africa’s debt burden was pointed out by Minister Mboweni as one of the country’s major problems. According to Mulder it is worrying that government was already spending about R1 billion per day on interest on debt, and then nevertheless announced a budget deficit of R243 billion, bringing our projected state debt to 60,2% of GDP. “All the snares were clearly identified in the budget speech, but then time and again we are caught squarely in those same snares,” Mulder said.
According to Mulder, poor management of state institutions in general is a major issue for South Africa, and state institutions frankly are referred to as problem children. “In spite of the fact that state institutions’ value for tax money is perceived as horrific, and that Minister Mboweni questioned the need for certain state institutions, once again lifelines of R69 billion to Eskom, R6,2 billion to SAA and R1 billion to Denel will be paid out,” Mulder said.
Mulder explained that the public was already being overtaxed, yet even more tax was announced in the form of fiscal drag, fuel levies and excise duties. “Almost half of the number of cigarettes in a packet now are tax, as well as R65 of every bottle of whisky or brandy,” Mulder added.
Mulder said the three main focus points in the budget again were education, health and social grants. “These are the departments where the taxpayer is getting virtually no value for our money, but still Minister Mboweni spends more funds on these bottomless pits – without any questions or guarantees for performance. On the contrary, he stated that the public service should be made smaller but stronger – but he wants to cut the public service by means of voluntary early retirement. In this way we will lose people with many years of experience, which means that a public service that is already struggling will be struggling even more,” Mulder said.
Mulder also said it was heartening to hear that Minister Mboweni appreciated that job opportunities should be created by the private sector and not by the state. “He said regulations and taxation for entrepreneurs should be relaxed and lowered – but then he announced a carbon tax that will affect everybody,” Mulder said.
“As with the previous budget speeches the ANC is blinded by the headlights – they can see all the problems coming, but they are powerless to make the necessary changes of direction to bring about deregulation of the economy and a freer market. Consequently, with our eyes wide open and realising all the problems, we hit every single pothole – indeed, we accelerate into those potholes,” Mulder concluded.