Madam Speaker, Hon Premier, Hon members of the legislature, departmental officials and guests, good day to you all.
Madam Speaker the global economy has recovered from the most recent global recession and is once again firing on all cylinders. All members of the OECD will see positive growth this year, for the first time since 2007. Global inflation is not too high, and interest rates are low. This is known as the Goldilocks economy – not too hot, not too cold, just right. Predictions are that this phenomenon should persist for at least the next twelve months.
In Africa, we are experiencing high economic growth rates and it is expected that nine of the top ten growing economies towards 2024 will be in Africa. There is massive urbanisation and consumer expenditure is expected to expand rapidly. In fact, household consumption is expected to increase by 3,8% per annum towards 2025. This should all augur very well for South Africa’s economic recovery, but the sad reality is very different.
Madam Speaker, we were once referred to as the gateway to Africa. This is no longer the case. Investors are directing their funds directly to central and East African countries, who don’t have half the infrastructure that we have. So why is this happening? Economic analysts put it down to the following factors:
- Firstly, as a country, we have a poor economic policy with weak planning strategies. Our economic growth sits at a mere 2,6% while the rest of sub-Saharan Africa is cruising at 5,2%.
- Secondly, we have uncertain mining, land and financial policies
- Thirdly our BBBEE policy has been ineffective and cosmetic at best
- We have random cabinet reshuffles which make global investors very nervous.
- Next, we have sustained poor education outcomes at global standard
- We have Poor capital allocation decisions around public entities such as ESKOM and SAA
- We receive Poor national treasury forecasts, which always overinflate our growth and then have to borrow more. This has resulted in our national foreign currency debt reaching a shocking 52% of the GDP. In layman’s terms, we owe R2 trillion rand and this costs us R170 billion rand a month in interest. That is the same as two annual provincial budgets. Every month.
It is apparent that the national government does not understand that capital is global and that we have to compete with the rest of the world for that capital. We are not an attractive option right now.
It is no surprise therefore, Madam Speaker, that our fiscus is shrinking and that we have been downgraded by yet another rating agency to junk investment status. This has resulted in an immediate shortfall of R40 billion rand on interest owed. The president announced yesterday that a four-point plan would be effected to mitigate this shortfall.
Firstly, we would have to introduce further cost-cutting measures to the tune of R25 Billion rand, provided they did not impact on economic development. Where will these cuts then be made? If we cut the social needs cluster, our health, education and social development departments will collapse. Local governments are already financially stretched or in some cases bankrupt, so where else would these cuts be made that will not impact on economic development? Surely the President is aware that we have NO fiscal space in which to manoeuvre.
Secondly, taxation will have to increase in order to make up the other R15 billion shortfall. In a country where approximately 5% of the population contributes 80% of the tax base, the President may just have to set the example by actually paying his own taxes which are outstanding since 2006, before he can expect anyone else to contribute more.
Thirdly, the president would like measures to be put in place for free tertiary education to be introduced for all poor matriculants. How exactly will this contribute to making up a R40 billion rand shortfall?
And the fourth and final measure – the president says we are to look for opportunities to expand our economic growth. Is that not what all economic growth directorates have been trying to do since their inception? And how is this possible when our investment reputation is a rock bottom?
At a provincial level,
A major concern for our province, Madam Speaker, is whether the Department of Transport has been able to set aside sufficient budget for scholar transport for all qualifying scholars in the next academic year. We cannot repeat the unmitigated disaster that led to 33 thousand learners standing stranded on roadsides in an attempt to get to school. My sincere hope is that the MEC for Finance has made this a priority for next year.
In the finance report, the MEC stated that the tide is turning against poor financial management. However, a huge concern is that too many of our municipalities, through poor fiscal practices, are facing financial free fall and there is no longer a financial safety net for them. There has been a distinct lack of leadership in this regard, both provincially and nationally.
In Makana municipality, A DA councillor tabled a motion to ring-fence monies due to ESKOM which had previously fraudulently been spent on municipal salaries. This motion was unanimously adopted by the council. This speaks volumes about how desperate local governments are for strong leadership. Hon MEC, it is worth considering rolling out this positive action step towards financial recovery across the province, in order to address the dreadful ESKOM backlogs.
At national level, the Minister of Water and Sanitation has demanded that all municipalities pay outstanding water accounts by the 8th of December or face cuts. This means innocent rate paying citizens must pay the price for municipal ill-discipline in this regard. Further, our Shadow MP for Local Government has called upon the Minister, Des van Rooyen, to place 30 struggling municipalities under administration which will see them adopting a financial recovery plan. This will be geared towards preventing their collapse and placing them on the road to clean governance and payment of all outstanding debts. The bottom line is this – there is no money to bail them out if they go under. The pot is empty.
There is, however, light at the end of the tunnel.
In order to restore investor confidence, our national policies need to be tightened up so that potential investors know where they stand in terms of labour, BBBEE and other pertinent policy issues.
Secondly, we need to stabilise and clean up our state-owned enterprises and stop throwing money at those which cannot be saved. Billions and billions of rands have been wasted through corrupt practices and protectionism through these structures and the rot must be stopped as a matter of urgency. While State-owned entities play a role in generating income, this should not be at the expense of the consumer. Competition would bring down consumer costs and open up many avenues for doing business in this country.
Thirdly, and most importantly, we need a change in leadership in our country. Our president has proven time and time again that his economic interests are based upon self-enrichment first, and nepotism next. Madam Speaker, the train has left the station….and President Jacob Zuma isn’t on it. We only need to look north to understand that a battered and bruised electorate will only tolerate so much….and no more. The people of South Africa want clean governance. The Democratic Alliance will continue to give them what they want.
The DA supports the budget.