The Minister of Finance, Mr Enoch Godongwana, presented his department’s budget vote in a mini-plenary of the National Assembly (NA) yesterday, saying that resilience is the bedrock on which the department will build to address current difficult economic circumstances.
“For National Treasury, this will require a determined effort in pursuing our ongoing endeavours to accelerate a growth economy including tackling structural constraints, applying measures to restore investor confidence and public trust, safeguarding the fiscal framework, reducing policy uncertainty and lowering the cost of doing business,” he said.
Although public finances remain under some strain, Mr Godongwana continued, the fiscal position has improved somewhat since last year. These improvements he attributed to the recommendations arising out of the spending reviews that, when implemented correctly, improve expenditure efficiency and programme delivery over the medium term.
The crippling effect of dysfunctional municipalities, which are supposed to drive economic growth, cannot be overstated, the Minister went on to say. Healthy municipalities will boost the quality of life of citizens, encourage economic activity and investment, and will encourage ratepayers to pay their taxes and for the services they receive.
In its quest to curb borrowing, National Treasury will continue to impose funding and borrowing ceilings on state-owned enterprises, Mr Godongwana explained. However, Eskom’s large debt that it cannot service without government intervention and its role in South Africa’s economy make it an exception to this rule. National Treasury is therefore working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders, the Minister claimed.
In addition, National Treasury is proposing to amend tax legislation and eliminate loopholes in an effort to meet the government’s revenue needs. These proposals will only receive public support if people perceive that Treasury is championing an ethical government, Mr Godongwana said. At the heart of this effort is the Public Procurement Bill. “We received over 4 000 submissions on the revised Procurement Bill and these have all been considered along with the recommendations from several recent commissions of enquiries. Consultations with Nedlac commenced on 6 May 2022 as the Bill progresses towards Parliament.
The department’s budget over the next three years is R2.8 trillion. Close to 60 per cent, or R1.7 trillion, is for transfers to provincial governments for the provincial equitable share. According to the Treasury’s projections, debt-service costs amount to 34.4 percent, or R1 trillion, of the department’s budget over the medium-term economic framework period. With an additional R3 billion, a total of R34.3 billion has been allocated to the South African Revenue Service, to build the capacity of human resources and implement ICT projects.
The Democratic Alliance’s Dr Dion George responded to all this by saying that the mismanagement of the public purse will lead to starvation. He blamed this on government fiscal policy and black economic empowerment. He also blamed state-owned enterprises for draining public finances with minimal return on investment.
To turn the economic tide, he proposed that government place itself at the centre of tax breaks and a privatisation model that will create a conducive economic environment for business.
Meanwhile, the Chairperson of the Portfolio Committee on Finance, Mr Joe Maswanganyi, mentioned the committee’s concerns with Afriforum’s court challenge of the Preferential Procurement Act, which they fear might impact on the government’s policy of transforming the economy and inclusive growth. He welcomed the Minister’s assurances that black economic empowerment will not be affected.
The committee also welcomed the news that the Procurement Bill is on its way to Parliament, as it could enable procurement as a means to stimulate transformation and inclusive economic growth.
The Economic Freedom Fighters’ Mr Floyd Shivambu mentioned rising unemployment as a big stumbling block, affecting over 12 million South Africans, who are fit to work but remain jobless, and impacting mostly black people and women in particular. Inequality remains racialised in a status quo that “reflects the vison and plan of the architectures of colonialism and apartheid, which wanted the indigenous people to remain hewer of wood and drawers of water,” he said.
Mr Shivambu also challenged what he perceived to be the South African Reserve Bank’s tendency to punish black financial institutions. “It’s task is to ensure black financial institutions thrive. But due to narrow political interests, all black financial institutions are destroyed by it,” he alleged. He also criticised the South African Revenue Service’s inability to collect tax from multinational corporations and the digital economy, and threatened court action against the privatisation of South African Airways (SAA). “We are against the privatisation of state-owned enterprises; we will soon be challenging the privatisation of SAA in court,” he warned.
19 May 2022