Appropriation Bill ‘will burden future generations with debt’ – opposition parties

2014-07-25 17:55

Parliament passed the Appropriation Bill and the budgets for 38 government departments amid protest from opposition parties that accumulated borrowing, set to reach R2 trillion in three years, would saddle future generations with an unfair debt burden.

Economic Freedom Fighters’ MP Godrick Gardee said today his ultra-left party could not support the bill because borrowed money was being wasted on projects that held no benefit for generations to come – notably the upgrades at President Jacob Zuma’s Nkandla home.

Though the EFF did not object in principle to borrowing to finance public spending, it could not support the way the ANC did it, he added.

“It is problematic where one of the basic principles of the fiscal policy, which is that of inter-generational fairness, is being overlooked,” Gardee said.

“Borrowing should not be used to buy goods and services from which future generations will not accrue benefit but be burdened with obligations to pay back a debt used in futility by a preceding generation.

“Such goods and benefits like the Nkandla residence, that asset of R230 million, is financed by a state debt and that debt is going to be paid by future generations.”

A similar point was made by Steve Swart of the African Christian Democratic Party, who asked whether government fully grasped the implications of its actions.

“We need to understand the enormity of what we are busy doing, and I share the concern of other members about our debt service costs.”

Swart added that given the rate of borrowing, it was unconscionable that up to R30 billion from the state’s coffers was lost to corruption annually.

The Democratic Alliance said the bill attested to “dismal economic and financial management” on the part of the ANC and showed the ruling party had no plan to solve the jobs crisis.

In his response, Finance Minister Nhlanhla Nene denied that borrowing exceeded responsible limits.

Though debt servicing costs had risen and the fiscal space had shrunk, Treasury was keeping to the principles of sustainability and inter-generational equity, and remained committed to stabilising the growth of public debt over the next three years.

In a jab at the EFF’s lack of experience in Parliament, Nene said that being new they had perhaps not had time to study the state’s consolidated operating accounts. Government was building schools and clinics “that will benefit our children and not burden them with debt”.

Swart questioned whether government would be able to achieve debt stabilisation in the face of shrinking growth. “Whether you are able to achieve this of course, that is the challenge... given the various political pressures from various quarters,” he said.

“And it is also premised on economic growth reaching targeted levels, initially 2.7%, but now revised downwards significantly.”

The EFF objected to every single budget tabled by Cabinet ministers in the past fortnight, each time spelling out an ideological reason for doing so.

On land reform, the EFF repeated its offer to the ANC to support a constitutional amendment to allow the state to seize farmland without compensation.

“We won’t support the budget because it is about buying back our stolen land, which is wasteful expenditure and promotes illegality,” the party’s Andile Mngxitama said.

The DA also objected to the land reform budget, saying it was woefully inadequate to deal with fresh claims that would be lodged in the new five-year period that began last month.

The bill will now be sent to the National Council of Provinces for concurrence.

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