Little hope in sea of dismay

2016-10-27 11:03
President Jacob Zuma shakes hands with Finance Minister Pravin Gordhan at the 2016 Mid Term Budget Speech in Parliament, Cape Town on Wednesday.

President Jacob Zuma shakes hands with Finance Minister Pravin Gordhan at the 2016 Mid Term Budget Speech in Parliament, Cape Town on Wednesday. (Kopano Tlape)

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'Our institutions only please the shower head man' - DA student leaders

2016-10-26 13:01

DA student leaders spoke outside Parliament about the necessity of free education for the poor on Wednesday. Watch.WATCH

A crowd of #FeesMustFall protesters, police in riot gear, stun grenades and razor wire formed the backdrop for Finance Minister Pravin Gordhan’s Medium Term Budget Policy Statement (MTBPS) in Parliament on Wednesday.

Once his speech was over — deemed the most important in his career given the many political and economic obstacles facing the country — parliamentarians were told to sit tight until the volatile situation outside improved.

Gordhan, himself facing what are widely believed to be trumped up charges of fraud brought against him by the National Prosecuting Authority, said the country is at a “crossroads, politically and economically”.

There was little good news for the consumers and some R43 billion will have to be found over three years through additional taxes, with some R28 billion to be raised in 2017/18.

A debt management company warned that tax proposals that had been deferred such as the sugar tax and the carbon tax were already going to hit consumers “like a ton of bricks”.

“It’s not just that our economic outlook is distressed. There is the possibility of downgrades in the credit ratings and the cost of debt,” said Gordhan.

“Consolidation and balance” would have to be the key words on government finances over the next three years, he said.

Business leaders in this region were generally positive about the MTBPS, but they warned that while Gordhan “is making the right noise, the key will be in the implementation”.

Pietermaritzburg Chamber of Business CEO Melanie Veness said the mismatch in the amount to be raised in taxation, and a much lower amount to be cut from government spending would not create private sector confidence in the political and economic stability in the country. This confidence is necessary for businesses to invest and create economic growth, she said.

Umgeni Residents and Ratepayers Association chairperson Mano Naidoo said although the government had promised to improve service delivery and reduce corruption countless times before, the “wake-up” effect of the steep decline in ANC support in the last election would boost government delivery in future.

Local businessman Darryl Taylor, owner of Accpick Point of Sale, described the MTBPS as “extremely positive”, but added, “Can we carry this all out?”

Taylor said drought support to farmers was welcome, as was the commitment by government to pay businesses for services, promptly, something that had caused the demise of many small businesses. From his perspective, government should do more to bring affordable Internet access to townships to stimulate entrepreneurship in these areas, said Taylor.

Gordhan said other challenges include the most severe drought in decades, rising food prices and the “unsettling effect of legal matters and court challenges”.

These problems however, could be addressed — “rationally, deliberately, and through the appropriate procedures”, he said. Much more disturbing was the rise in our own communities of anger and discontent, spilling over into violence and destructive protests.

“They present immense challenges to the leadership of our higher education institutions, municipalities and community organisations. Highly stressful demands are made on our police and security personnel. Destruction of property diminishes the inheritance of our children,” he said. “Our social contract is under pressure,” he said.

Listing possible reasons, he said policy statements were sometimes “unclear” or in conflict with each other. Commitments were sometimes made without clear resource plans; implementation was derailed by institutional instability; investment was held back by uncertainty and erosion of trust and “vested interests and political contestation” interfered with decision-making.

Main points in the MTBPS were an additional R17 billion for universities and students over the medium term; a total tax increase of R28 billion in 2017/18; a downgrade of the economic growth rate for this year from 0,8% in the February budget to 0,5%; a narrowing of the budget deficit from 3,4% to 2,5% of gross domestic product in 2019/20; and keeping a lid on government spending increases.

Subsidies to universities would grow at 10,9% each year for three years, with transfers to the National Student Financial Aids Scheme growing at 18,5%.

The overall average growth of post-school education and training was 9,2% per year. This was only surpassed by the growth of debt service costs (10,1%) among all budget items, with social protection and health (both 8,2%) coming in next.

Gordhan said the office of the Chief Procurement Officer was working to improve spending efficiency and counter corruption.

The Draft Public Procurement Bill would be completed by March 2017 and public procurement systems modernised. Cost containment measures had succeeded and the budgets for essential goods and services had grown by only two percent in real terms.

Read more on:    parliamant  |  #feesmustfall  |  pietermaritzbrug  |  free education

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