MTBPS not bold enough to grow our economy and create jobs
The Medium Term Budget Policy Statement (MTBPS) today by finance minister Nhlanhla Nene did not do enough to restore confidence in our economy, assist economic growth, or create new jobs.
After analysing the MTBPS, it has become clear that positioning the state at the centre of our economy cannot work. State-owned entities are bankrupting South Africa, with Eskom alone requiring R270 billion to remain afloat. The deficit for this year alone will come to R153 billion.
The Minister's primary response to the state's rising debt is a R27 billion tax increase. The DA will not support this increase in taxes, as it will slow down our economy further and kill jobs.
Instead of increasing taxes, Minister Nene should have cut the waste. According to the SIU, R30 billion is being lost to corruption and waste every year. We needed to see urgent action from Minister Nene to cut this waste and corruption that is crippling our economy.
There was nothing new in this MTBPS. It was a short speech and it was short on ideas. The only major announcements from the speech were increases in taxation and significant bailouts of state-owned entities.
What Minister Nene should have done was to cut the budget of our bloated cabinet, and put a comprehensive and coherent plan on the table to stop wasteful expenditure and corruption once and for all.
We also needed significant action to boost the economy and job creation. A DA MTBPS would have, amongst other things:
Announced new measures to eliminate corruption and waste, starting with a law stopping all state employees from doing business with the state.
Significantly increased the allocation for NSFAS, small business development and other youth development priorities to empower our young people to grow the economy.
Announced a moratorium on all further bailouts for unprofitable state-owned entities.
Clearly rejected any suggestion of an above-inflation pay hike for state employees. We do not support the proposal to implement a blanket freeze on all state vacancies. The rational approach is to fill the required vacancies in key services like nursing and policing, but to contain the salary budget by cutting the deployment of cadres to senior positions where they are overpaid and unproductive.
Abolished all exchange controls to encourage foreign investment.
Announced new measures to bolster trade, in particular by increasing export promotion.
The unfortunate reality is that instead of cutting the waste, we are now facing higher taxes. The bottom line is that the ANC is wasting the people's money, and making us all pay for it with more taxes. The DA will not support this budget.
Statement issued by Dr Dion George MP, DA Shadow Minister of Finance, October 22 2014
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