ANC-EFF argue that spending taxpayer money responsibly is undesirable
26 March 2024
Today the Standing Committee on Finance voted on the motion of desirability on the DA’s Responsible Spending Bill.
As anticipated, the ANC and EFF jointly opposed the Bill's desirability, despite broad support from the National Treasury and other stakeholders who have South Africa’s fiscal health at heart. In fact, Treasury endorsed the Bill as an important step and substantial contribution towards stabilising public debt and government spending. Had it passed, the Bill would have protected the most vulnerable in our society by containing the unsustainable accrual of public debt and excessive deficit spending.
A government, like any entity, must operate within its means. When a government consistently spends more than it earns in revenue, a budget deficit forms. To secure the funds necessary to fund this expenditure, the ANC has resorted to excessive deficit financing via increased debt issuance, the funds of which were not channeled to infrastructure development or service delivery. Instead, it was used to sustain salary increases of the ANC’s politically tainted millionaire managers who add little to no value to the sector.
Throughout the last decade unchecked cycle of spending and borrowing has pushed our public finances to a crisis point. Our public debt burden has surged from just 27% of GDP in 2008 to 72.2% (R5.207 trillion) in 2024/25 as per the February National Budget. The Budget revised the debt stabilisation target to 75.3% of GDP by the fiscal year 2025/26.
The cost associated with servicing the increasing debt stockpile has been the fastest-growing item on the Budget and continues to occupy an increasing share of GDP and revenue. As a result, debt-service costs have risen from R307.2 billion to R356 billion in the span of a year. This means that we pay nearly R1 billion per day to service debt that has little to no positive impact on the living standards of vulnerable South Africans who are battling a government-induced cost-of-living crisis.
Moreover, the public sector is highly polarised while the wage distribution is heavily skewed towards exorbitant salaries at the upper salary bands. Had the Bill been passed, it would have served to normalise wage disparities and provide relief for lower income workers who are currently at a disadvantage.
In anticipation of the fiscal crisis that currently besets our economy, the DA presented a proactive solution in the form of our Responsible Spending Bill. The Bill would have introduced a fiscal rule to act as a guide towards more responsible spending. It would have stabilised our fiscal environment and encouraged a forward-thinking approach to budget planning.
Throughout the Bill’s processing in Parliament Treasury committed itself to engage meaningfully in a consultative process in developing and implementing fiscal anchor. The DA values and appreciates this commitment, and we emphasise our readiness to always embrace constructive feedback. We remain dedicated to collaborating with the Treasury to devise a strategy that promotes the well-being of all South Africans.
Since the Bill will not reach the House, it also stifles democratic debate on a larger, more public platform where all members could consider it.
The Responsible Spending Bill was the only proposal on the table to course correct and mend the consequences of Government’s self-imposed debt and spending crisis. In objecting to the Bill, the doomsday coalition voted against the future best interest of all South Africans.
On the 29th of May the ANC is set to lose its majority, and South Africans will have the opportunity to cast their vote for the only party capable of rescuing our economy from the brink of the fiscal cliff it is currently teetering upon.
Issued by Dion George, DA Shadow Minister of Finance, 26 March 2024
