Sharing SA wealth is idealistic

2010-02-20 00:00

IN the face of an unpredictable global economic future, rising tension over service delivery at home and reduced tax revenues, the 2010 budget was perhaps the most difficult one in our history.

But we are an extraordinary people confronting “several social challenges: an HIV and TB pandemic, unacceptably high rates of crime, angry communities and dysfunctional schools”.

Cosatu has said that “unemployment remains far higher than in any comparable country in the world, and as a consequence poverty is widespread, and we now have world-record levels of inequality … [It] is essential that we urgently adopt a completely new growth path to transform our economy into one based on labour-intensive industry and one that meets the basic needs of our people.”

At no time in history have the wealthy elite shared their wealth with the people who actually created it through work — the middle and working classes.

If this wealthy country’s government is even thinking of really sharing — the world’s top platinum and third largest gold producer — it will be extraordinary indeed.

RESPONSIBLE CITIZENSHIP

Gordhan asks for responsible citizenship, which can only come from free and equal access to the wealth of the nation.

“In delivering on its developmental mandate, Mr President, in pursuing the social and economic outcomes that we desire, government is ready to forge a new growth path, and to work tirelessly to build a future in which all South Africans can take pride and share in the benefits.”

Which must result in the responsible citizenship he asks for.

Gordhan yields to the current global economic situation on a positive note, but admits that “many commentators caution that these positive trends may be shortlived, and that the world economy may yet experience a second (double-dip) recessionary wave.”

He is likely referring to the European and American commercial property bubble which is about to burst with far more de­vastating global consequences than the sub prime bubble inflicted.

South Africa, therefore, needs a real economic cushion against the next global economic downturn, a cushion that at least ensures food on the table for everyone.

“… things are looking slightly better. Our growth expectation for 2010 is now 2,3%, rising to 3,6% by 2012 …” and so on — the mythical “green shoots”.

“These are significant improvements in the economic outlook, but not yet enough to address our challenges of jobs, growth and poverty reduction.”

And not enough to avoid the double-dip depression I believe is coming.

DRASTIC INTERNAL FINANCIAL CHANGES

I believe jobs, growth and poverty challenges can only be addressed through drastic changes in our internal financial structures, mindful of the SA Reserve Bank’s mandate “… to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic.”

Good start: “The recent crisis and its aftermath have led to a serious introspection and rethinking of what were thought to be robust and superior economic models …”

FORTY PERCENT OF GDP TO DEBT

Down side: “Our public debt is expected to rise from 23% of GDP in 2008/09 to about 40% in 2013, and will only stabilise in 2015.”

Would you hand over 40% of your total income to pay off the interest on your credit card?

Hoist by his own petard: “Higher government borrowing is only a temporary solution to our economic challenges.

“As the world recovers from the recession, those countries with low levels of debt will be better placed to take advantage of growth opportunities. Those burdened with high debt levels will find it more difficult to invest and trade due to a substantial tax burden, high interest rates and perceived financial risks.

“To ensure that future growth and public service delivery are not compromised by unchecked rises in interest costs, our medium term fiscal framework allows for a gradual reduction in the budget deficit.”

It would have to.

I will leave details of the sin and other day-today sums to the experts and just ask that you remember what your hard-earned tax monies have been promised to address:

•Improving the quality of basic education

•Enhancing the health of our people

•Making our communities safer

•Fostering rural development

•Creating jobs; and

•Investing in local government and human settlements.

Hope springs eternal.

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