SA biggest welfare state in world: economist

2010-02-18 13:43

SOUTH Africa is the biggest welfare state in the world, economist

Mike Schussler said today.

“Look at South Africa’s dependency ratio – it’s three people to one

taxpayer and it’s unsustainable,” he told a post-budget speech breakfast hosted

by Absa and the SA Institute of Tax Practitioners in Johannesburg.

He said Minister of Finance Pravin Gordhan’s budget was

conservative, “and financial markets like conservative budgets”.

Schussler welcomed Gordhan’s stance on not widening the inflation

target.

In his budget speech, the minister made it clear he had rejected

calls from the left to widen the SA Reserve Bank’s (SARB) inflation target of

three to six percent and to broaden the SARB’s mandate to include economic

growth and unemployment.

“It must be realised that the SARB and interest rates won’t be able

to fix everything,” Schussler said.

“Besides, this was the minister’s first speech and it wasn’t time

to play around ... Gordhan has been very prudent here and it’s good that

inflation targeting is going to be debated.”

Schussler said it was important for South Africa to show that it

did not change policies every time there was a new president.

Turning to the National Health Insurance (NHI) scheme, he said it

was clear from Gordhan’s speech that not much would happen for the next three

years.

“The left don’t know how to read an income statement. The NHI

scheme will be very expensive and would make us the most taxed society in the

world,” Schussler said.

He gave Gordhan seven out of 10 for his first budget speech in

circumstances where South Africa’s first recession in 17 years drastically

reduced revenue. “His revenue has fallen away but he still has done a very good

job.”

According to Schussler, the new finance minister had illustrated

that he was more conservative than former minister of finance Trevor

Manuel.

Asked if Parliament could change Gordhan’s budget, Schussler

confirmed that this could theoretically be done.

“They typically don’t change things – but there are one or two

things in expenditure that may not stay the same.

“This would involve about R2?billion and that’s not much when your

expenditure amounts to R800?billion.”

 


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