Budget 2011: DA unveils a Budget to Address Poverty

Note to editors: The following statement was distributed at a press conference today held jointly by Dr Dion George MP, DA Shadow Minister of Finance, Kobus Marais MP, DA Shadow Deputy Minister of Finance, and Sejamothopo Motau, DA Shadow Minister of Energy.

The Democratic Alliance (DA) is today unveiling our alternative budget for 2011 - a Budget to Address Poverty. A copy of the alternative budget is available for download.

There is no greater indicator of a political party's priorities and vision than its proposed budget for the nation. Too often in politics, numerous actors from across the political spectrum call for a range of interventions, often with little thought as to how they will be implemented or indeed costed.

The DA has provided an alternative policy platform for South Africa in various elections, a platform which increasingly finds resonance amongst a greater proportion of the electorate each polling day. Part of the reason for this is that every recommendation we make has been carefully considered as part of our country's fiscal framework. Good government is not only about having vision; it is about the means of making that vision a reality.

The alternative budget released today shows how a DA alternative economic policy platform would be implemented and how it would impact on the state's finances. In a climate of rampant unemployment, and with unacceptable levels of poverty in the country, its focus is on job creation, economic growth, creating opportunities and choice for as many people as possible, and combating poverty in all its forms. Ultimately, it shows how we would give life to our vision of an Open, Opportunity Society for All.

In this regard, the DA is pleased to announce several key proposals that are the cornerstones of our alternative budget and economic vision for South Africa: 

• An R18 billion three-year escalating appropriation for a general wage subsidy (costing R9 billion a year every year thereafter).
• A R3 billion appropriation to grant increased access to NSFAS loans for matriculants, and a R5.2 billion designation to FET colleges, paid for by scrapping SETAs (which will save R8.4 billion a year).
• A R300m appropriation for zero-rating VAT on books, paid for by shutting down the R370m National Youth Development Agency.
• A R4 billion additional allocation for land restitution.
• A comprehensive R2 billion tax rebate plan to start moving our economy into more carbon-sensitive territory.
• An R8 billion appropriation for road maintenance as part of our plan to improve South Africa's crumbling infrastructure.
• A new R150 million performance incentive system to improve school, teacher and principal performance.
• A R5 billion allocation to produce serviced plots.
• A R2.6 billion plan to fill critical vacancies in our healthcare system.

The common theme throughout these proposals and indeed the entire alternative budget is clear: all interventions will be aimed at stimulating the growth of our economy's productive capacity in order to create more jobs and pull more people from poverty. That is the fundamental challenge our society faces and that is the first priority of this alternative budget.

Creating an economic framework to ensure that we work towards this imperative can be difficult. It requires a strategic economic view that compartmentalises several key failing areas and deals with them in a seemingly segmented way while at the same time addressing them through a common means of intervention. In this regard, the DA has identified several key thematic areas which require profound intervention in order to make serious progress in the fight against poverty and unemployment. To this end, the alternative budget focuses on eight key priorities:

• Creating jobs and growing the economy;
• Education and skills development;
• Fighting poverty;
• Increasing opportunities for housing and land reform;
• Preventing and fighting crime and corruption;
• Increasing savings and investment;
• Eliminating wasteful expenditure;
• Building a greener economy.

The DA's 2011 alternative budget represents a fresh approach. It is the most expansionary budget ever proposed by the DA and includes large interventions aimed at jumpstarting economic growth and job creation at a rapid pace.

We believe that the timing is uniquely suited to such a bold approach for several reasons. First, South Africa has comparatively little debt, and we thus have some "space" to extend our spending in the short term.

Secondly, our economy is gently recovering from recession, but has not yet recovered the majority of jobs lost during the recession of 2009/2010. This budget, and the interventions held within, has been carefully developed to blow strong winds in the sails of our economy's recovery and will aid the process of growth, job creation and skills development. The DA believes that the policies outlined in our alternative budget represent healthy investments in the productive side of our economy that will deliver impressive returns in the medium to long run.

Ultimately, our policy package is underpinned by the idea that an Open Opportunity Society for All requires the state to actively facilitate the creation of opportunity - but to do so in a way that efficiently uses all levers available to it, including those in the private sector. This means, in practical terms, that our budget, while expansionary, does not also represent greater state interventionism.

On the contrary, our policy programme is constructed around the idea that the state should use market mechanisms, where possible, to engender desired policy outcomes. For instance, our targeted wage subsidy will use the efficiencies of the market to drive skills development, and our concomitant scrapping of the SETA system will move skills development away from the current ineffectual state-centred model.

Additionally, our careful frameworks and policy interventions would mean nothing if they were not accompanied by sound financial management and the underlying principles of good government, rigorously enforced across all departments. This budget is therefore only the basic framework of the DA's alternative economic vision for South Africa. The actual implementation is what gives it meaning; implementation which has unfortunately been lacking under ANC governments.

Yesterday, the DA unveiled our Every Rand Counts campaign. It is a running tally of how much money has been misspent by the Zuma administration on unnecessary and self-indulgent expenditure. It totals R3,8 billion. This is an indictment on the management of public resources and sadly demonstrates that, for many ANC politicians, being in government is about serving themselves before serving the people. We have factored some of this amount into our calculations for the alternative budget today.

We also make the commitment that this alternative budget would be rigorously implemented and used for its intended purposes in all instances under a national DA government. It is the same spirit of careful financial management of the public's resources that has seen the DA-governed City of Cape Town receive its fourth unqualified audit in a row under our party's administration, and the DA-governed Western Cape receive a clean sweep of unqualified audits last year, which was a first for any South African province.

Addressing our country's problems, most especially poverty, unemployment and socio-economic gulfs, requires both careful financial planning and careful financial management. We have already demonstrated our capacity for the latter in those places where we govern in South Africa. Today, we present our vision for the former as the DA's approach to the economic management of South Africa.

Statement issued by Dr Dion George, MP, Democratic Alliance Shadow Minister of Finance, February 22 2011

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