Supplementary Budget 2020

Gigaba: SA could look at nuclear again 5 years from now

Cape Town - South Africa simply cannot afford to invest in nuclear energy at present, Finance Minister Malusi Gigaba said on Thursday.

He was speaking at a post-Budget 2018 breakfast event hosted by Brimstone at the Cape Town International Convention Centre.

Gigaba said Eskom has more than enough power supply to meet the economy's current demands. On top of that, the renewable energy programme is also coming on stream.

"There will come a time when SA reaches 6% to 7% growth and the economy - including mining and manufacturing - is kicking. We will also reduce coal power stations and focus more on renewable electricity generation," said Gigaba.

"We would then have to look at base-load power supply and at that moment we might decide we need nuclear. It will be an open process, maybe in five years' time."

Only Cabinet can decide to scrap nuclear

He said the policy on nuclear has not been changed and only Cabinet can decide to scrap the nuclear option.

As for the increase in value-added tax (VAT) announced in his Budget Speech on Wednesday, Gigaba said this step was probably already a year or two overdue.

"We first had to squeeze the budget until we ran out of options to cover the shortfall," he said.

Gigaba explained that the question asked in compiling Budget 2018 was whether to defer making some difficult decisions now, only to be forced to make them later.

In his view, 80% of people affected by the VAT increase will be higher income earners, while the remaining 20% will benefit from free higher education and grants.

"Financial markets have reacted well to the decisions we made this time. We have engaged with them to highlight the challenges we are facing," he said.

Free higher education

On the topic of free higher education Gigaba said this was a milestone decision, which must be implemented in a way that actually benefits the poor in South Africa so that even the unemployed can send their children to university and break the cycle of poverty for the entire family.

"This does not mean we do not have to go through some pain in the process. Fee-free education does not mean fee-free for the government and the rest of the people of SA. At the same time, we need to be very blunt and not spend money on people who keep on failing," he said.

"If we educate our children and give them degrees and diplomas, you take them away from social grants. In this way we are shaping the future while providing for today’s needs."

In his view, starting to implement fee-free tertiary education while government is trying to balance the books was a bold move.

"We cannot do everything. We must try and live within our means and do what we can afford. Budget 2018 is a balance between unlimited needs and limited resources. It is also about balancing the needs of today with future demands," he said.

'A lot of government fat needs trimming'

Another focus area for Gigaba is trying to find a way to curb wasteful and unnecessary expenditure by government departments.

"Due to expenditure cuts announced in Budget 2018, we expect government departments to review the way they function so that they are still able to deliver their services. This includes the police, correctional services, home affairs, justice services and more," he said.

"There is still a lot of fat in government that needs to be cut so we can implement our policies."

As part of looking at government spending, Gigaba expressed the wish for a fiscally sustainable public sector wage settlement.

"Yes, you can raise the salaries of health workers and teachers, but then someone else will say you are taking money from housing. And if you give money to housing, some will say we are not giving money to agriculture," explained Gigaba.

"We cannot fulfil all expectations, but we still try to meet needs through other programmes announced in Budget 2018."

As for reducing costs by cutting down ministries and departments, Gigaba said this is the prerogative of the president.  

"We presented him with a way of streamlining our budget expenditure programmes and we will be guided by him," said Gigaba.

"All of us have to bear the pain of the policy decisions we make. The benefits of these decisions will in future eclipse the pain we currently suffer."

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