MTBPS 2015: A missed opportunity to give hope to 8.4 million unemployed people
21 October 2015
The Minister of Finance, Nhlanhla Nene, missed an opportunity to present an ambitious medium-term budget policy statement aimed at dealing with the low-growth, high-unemployment spiral and giving hope to the 8.4 million people who do not have jobs in South Africa.
The Minister delivered a business-as-usual medium term budget policy statement. However, the numbers in the budget are a huge concern:
-Economic growth is projected to decline to 1.5% in 2015/16;
-Revenue collection has decreased by R7.6 billion in 2015/16;
-Expenditure has increased by R443 million in 2015/16;
-Budget deficit has declined to R157.9 billion, stable at 3.8% of GDP.
The debt situation remains serious with:
-Gross loan debt increasing from R1.98 trillion to R2.01 trillion, or 49% of GDP; and
Debt service costs, which is the fastest growing expenditure item in the budget, increasing from R126.4 billion to R127.9 billion;
-The Minister has committed to (1) minimising the budget deficit, (2) stabilising public debt, and (3) building fiscal space.
However the fact is that, over the medium-term, fiscal indicators are moving in the wrong direction.
With fiscal space evaporating, it is remarkable that there is a striking commitment to proceed with big spending items, including the nuclear build programme, evidenced by the allocation of R200 million to preparatory work for the procurement of nuclear.
There is a strong hint, despite no final decision being taken, that we can expect future revenue raising measures in the future, including an increase in Value Added Tax (VAT) to fund future expenditure.
We find ourselves in this situation because we have not been able to contain spending, particularly the public sector wage bill, and prioritise spending on service delivery. This is symbolised by the allocation of more than R2 billion, from the sale of Vodacom shares, to the BRICS bank which could be used to fund tertiary education.
However, critically the Minister did not tackle the key roadblocks to economic growth and job creation by announcing changes to economic policy, which boost private sector investment and lift the economy out of the low-growth, high-unemployment spiral.
What this means is that:
-hard working people with jobs will end up paying more tax, paying higher interest on loans, having less disposable income, and be at increasing risk of losing their jobs; and
-the 8.4 million people, who do not have jobs, or have given up looking for jobs, will have very little prospect of finding a job in the near future.
In the end, the Minister’s business-as-usual medium-term budget policy statement provides very little hope for the 8.4 million people who are unemployed and live without dignity and freedom in South Africa.
Statement issued by David Maynier MP, DA Shadow Minister of Finance, 21 October 2015
