Time to move forward

2009-10-31 13:51

The economy is continuing to bleed jobs, as we have seen with the Labour Force Survey. Isn’t it time that government considered interventions such as bail-outs to minimise the socio-economic ­effects of the job losses?

The government is committed to implementing its part of the Framework Agreement that was agreed to at Nedlac (National Economic Development and Labour Council). Within that are a number of provisions that try to assist people who have lost their jobs. For example, the period to draw Unemployment Insurance Fund (UIF) benefits has been extended.

There is the lay-off training scheme wherein the UIF and Sector Education and Training Authorities will put in money to encourage firms not to retrench. The employees will get a minimal amount from the company and the state will provide additional support.

Thirdly, the Industrial Development Corporation has come out to say it will provide R12?billion to companies in distress.

Our studies show that people operating in the semi-formal and informal sectors and in small businesses have been severely affected. As government we need to look at the studies to establish what further assistance can be established.

But the biggest challenge is to ensure that our economy is transformed to be more broadbased and produces more jobs. We don’t want a plan that just responds to the crisis. We want a plan that is going to take us forward.

How far are we from such a plan?

Over the next few months we will have a stronger discussion within government about how this transformation can take place. This is because government believes that if we do more of the same we are not going to be delivering new results.

Ministers will be making contributions about how their particular sectors can contribute to job creating. For example, government realises that it can do a lot more around agriculture and rural development. Both ministries will be focusing on how they can create jobs in rural areas and boost small agricultural businesses and output. Then they will look at how their findings can be linked to rural development and infrastructure provision.

As government we are putting serious thinking into how we give more people the dignity of earning their own money. More money will go to the expanded public works programme. We are also revitalising our health sector. The health ministry will soon announce a whole range of measures which will contribute to the wellbeing of our society. We are also putting more money into education.

How far is the implementation of the framework agreement?

Minister Ebrahim Patel is handling that. Most things are in place. The framework agreement is not just about short-term solutions. It is about building better communities over a longer period.

How concerned are you about the effect of the job losses on the income and VAT receipts sides?

Consumption is a big part of our gross domestic product. So people spending less and people having less to spend is damaging to the revenue we collect. We expect value added tax and customs duty to be down. Personal income tax is just about surviving, but it won’t grow at the rate it was forecast because fewer people are at work. All of this contributes to the R70 billion less we are going to collect this year.

Because we have managed the economy so well over the past eight years, we are in a position to borrow. We hope we can steer our fiscal boat in a way in which government can deliver the basics it needs to deliver and we are able to deliver on new priorities. We also need to manage our expenditure much ­better.

Would government consider ­delaying some of its expenditure?

Some aspects will be scaled up while others will be scaled down. The priority areas will get the ­attention they deserve, but other spending may be delayed. We need to make sure that everything fits within the fiscal framework.

You hinted that the government is looking at introducing new taxes. Would new taxes achieve much in a weakening economy?

All countries are faced with a challenge of the deficit. They need to bring in revenue, even in difficult times, in addition to the borrowing that they do. We are also looking aggressively at making savings. All countries are looking at situations where people may not be paying their share of the taxes.

The Forum on Transparency and Information Exchange has just met in Beijing and around 100 countries were represented. There is unprecedented collaboration among countries. In terms of tax treaties, countries can exchange information about the tax affairs of people and businesses that operate in different jurisdictions. An example is what is happening with tax havens. Last year tax havens were getting away with everything. Today that has changed because developed countries are looking for revenue.

Countries are also looking for ways to broaden their tax bases, even within their borders.

Apart from looking at new taxes, we are also looking at improving compliance, especially among people and businesses doing business with the state.

Green taxes are the future. The Treasury and the SA Revenue Service have been looking at global tax trends to encourage energy-saving usage of electricity. We are now looking at carbon taxes. More ­details will be announced during the budget speech in February.

The task team to effect savings, which you are part of, has identified employees in departments and provincial and municipal offices as suspects in activities that are not above board. Can you give us details and outline the process to be followed?

We would like citizens to help the government create a culture of looking down on people who are known to be illegally pick-pocketing from the state. Stealing from the state is bad for the country.

Before the end of the year, the law-enforcement people who are part of that team will take the process further. They have been able to draw a short list of about 50 people who defrauded the state. This will represent the government’s first ­attempt to tackle this area.

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