Government needs to do more to cut waste and create jobs
Today's Medium Term Budget Policy Statement (MTBPS) was an ideal opportunity for Finance Minister Pravin Gordhan to signal government's commitment to cutting the fat, and improving the lives of the South African people by growing the economy and creating an environment conducive to job creation.
We needed more detail on how government plans to tackle unemployment, cut wasteful expenditure, fund improvements in the quality of the public healthcare sector and more efficiently manage our public finances.
In particular, we would have wanted to see more in the following areas:
Job creation: The Minister has again failed to give a clear timeline for the implementation of the wage subsidy. There are seven million South Africans who are not able to find a job, and a wage subsidy alone can start addressing the problem by helping to create 400 000 new jobs. The Zuma government should make job-fuelling growth its absolute first priority by implementing the wage subsidy and spending more on job-related programmes. The Minister also failed to suggest a way of addressing the fact that government is now the biggest job creator in our economy. He should have considered some of the incentives the DA proposed to encourage small and medium enterprises in particular to grow and employ more people.
Trimming the fat: The Special Investigating Unit (SIU) has found that our government loses roughly R30 billion a year to financial mismanagement. This is enough to fund a massive job creation programme. On top of that, members of Cabinet spend billions on luxuries like mansions, hotel stays, luxury cars, expensive flights and other indulgent items. Despite openly acknowledging that the money government uses and spends is not its own, but that of South African citizens, Minister Gordhan did not adequately address how he plans to trim this fat from the system. It is not enough to speak about the virtue of cutting wasteful expenditure - the Minister needed to lay out a clear plan on how he planned to actually do it. We needed concrete details on how this systemic problem is going to be fixed.
National Health Insurance: The provision of quality healthcare for all South Africans is vital. However, we need more clarity on how our government plans to pay for National Health Insurance. That clarity was not provided in this speech. In addition, focus should first be placed on fixing the system we already have, instead of spending billions on creating a new, exceptionally costly, system.
Deficit management: The Minister presented a realistic picture of the difficult economic circumstances. Yet his future projections, on which his financial management plan is based, may well prove to be very optimistic. It could therefore result in extreme difficulty in keeping the deficit under control.
All in all, the MTBPS was a mixed bag. The problem is that the Minister did not adequately address the core economic challenge we currently face: fuelling faster growth and job creation. We cannot just focus on state investments in infrastructure, education and health as an economic strategy. We need programmes by government that help the private sector to employ more people. Most importantly on this count, the Minister failed to comment on the wage subsidy and other job-creating initiatives; and didn't lay out a clear plan to trim the fat from our national government expenditure. In this regard, the Minister fell short of expectations.
Statement issued by Dr Dion George MP, DA Shadow Minister of Finance, October 25 2011
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