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Parties laud 'conservative' budget

2014-02-27 07:27
Finance Minister Pravin Gordhan delivers his budget speech. (Schalk van Zuydam, AP)

Cape Town - Finance Minister Pravin Gordhan's budget contained few surprises, political parties said on Wednesday.

The ruling African National Congress said it understood the tight fiscal constraints under which Gordhan was forced to operate.

"The fact that he has not increased taxes reflects the gut feel that you don't need to penalise South Africans because of difficult times," ANC secretary general Gwede Mantashe said.

"He has actually increased the amount that goes to the most vulnerable. Non-pensionable tax increased from R350 000 to R500 000 and is quite a massive improvement for pensioners."

The budget was largely in line with ANC expectations.

"Increases on education spend continues to be the mainstay of the ANC," Mantashe said.

DA MP Tim Harris described Gordhan's budget as very conservative.

"There were no big new incentives on the tax side or any other side to get the economy going. On the other side, the cost containment measures are welcome if we can hit the targets he sets," Harris said.

Harris said Gordhan was not clear on what would happen if ministers did not manage to cut costs in their relevant departments.

The fact that the debt peak would increase to 44% by 2016 did not bode well for the country, he said.

Not brave enough on jobs

"At best he's just holding the fiscal line here and if we don't get growth going, we're not going to start drawing down that debt and get to a more fiscally sustainable situation," said Harris.

"It's not brave enough on jobs, not brave enough on growth and frankly we needed more."

The Congress of the People was impressed with Gordhan's speech.

"I think Pravin Gordhan has just shown why we need him for a next term and I hope he will be the new finance minister after the elections," Cope MP Nick Koornhof said.

The fact that there were no big surprises and that Gordhan "toed the line" would build confidence.

Good news, bad news

"He was starting bit by bit to implement the National Development Plan and he's keeping the credit rating agencies from our door with his good news budget," Koornhof said.

While Cope welcomed the fact that there were no major tax increases, the rise in the fuel levy was problematic.

"It's not a good time for consumers to have that on top of a weak rand, so maybe that was not good news," he said.

Inkatha Freedom Party leader Mangosuthu Buthelezi said while he understood South Africa was sensitive to global economic pressures, other emerging economies such as Turkey and India showed that growth was possible in the current climate.

"On poverty and inequality, the minister is honest about it. He doesn't sweep them under the carpet, but I don't think his speech goes anywhere near addressing these problems," Buthelezi said.

Aligned with NDP

The African Christian Democratic Party broadly welcomed the speech.

"Obviously we see the budget is aligned with the NDP and that's very good for job creation," said ACDP MP Steve Swart.

Freedom Front Plus leader Pieter Mulder said the speech was part of the ANC's election campaign.

"He boasted about the past and handed out a lot of money in a clear attempt to create a positive climate for voters before the election."

Mulder said something was wrong with the South African economy if it could only average 2.7% growth in future, while other African economies were averaging 6%.

"Clearly something huge is wrong with the South African economy and the minister has to look at the labour unrest and rigid labour legislation to find the problems."

Joining MPs outside the National Assembly steps, Banking Association of SA chairperson Cas Coovadia expressed confidence in Gordhan and his forward-looking speech.

"We're very happy that he emphasised the NDP. We'd like to work with him to make this happen now," Coovadia said.

Working with business

Gordhan's prediction that the current account deficit and budget deficit would go down was good news for the banking sector.

"I think he re-emphasised on working with business and creating the environment for business to create jobs. We believe that's the way to go," Coovadia said.

The tax incentives attached to the development and promotion of small and medium businesses were also welcomed.

"The minister also emphasises that government expenditure needs to be controlled. We're happy National Treasury will have oversight over major contracts across government and that sends out a message of confidence that we're serious about managing the way we use taxpayers' money."

Read more on: pravin gordhan  |  cape town  |  politics  |  budget 2014

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