Budget speech: What I wanted from Pravin Gordhan

2016-02-24 11:29

Today the Minister of Finance Pravin Gordhan presented the SA 2016 Budget Speech. In an article from 9 February, the public was asked to provide some ideas to the Minister on what to focus on in the Budget Speech. There were certain categories which were given and IDI Finance which I am part of responded as follows:

What are the three things that government does very well?

a) Coming up with policies for different sectors of the economy which are well documented and in line with global standards.

b) Adhering to the separation of powers between the judiciary, legislature and executive. Even when one might not agree with the decisions of the other, due processes are followed.

c) Following proper procedures for gazetting of bills, consultations with the public for inputs and incorporating the inputs in bills which end up tabled in parliament.

What are the three things that government should stop doing?

a) Coming up with policies and not ensuring all the necessary groundwork has been put in place to ensure the policy/policies can be implemented. Policies should move from the paper on which they are written to actual roll out in the economy.

b) Pursuing projects for political expediency instead of based on their socio-economic merits i.e. loss making State Owned Enterprises (SOEs) such as SAA must be commercialised instead of continually pumping tax payers money into a bottomless pit.

c) Deploying people into positions at national, provincial and local levels for which they are not qualified and/or have not requisite proven experience. The wasteful and fruitless expenditure which is happening in many government departments and local governments emanates from people without understanding of how proper governance and management of public finances should be done.

What are the three areas that government spending should be directed to?

a) Value addition and Beneficiation of the country’s mineral resources

b) Skills development: bring back technical colleges and teacher training colleges. The current high unemployment is structural in nature i.e. a mismatch between the available jobs and skills which people have.

c) Infrastructure development i.e. roads to improve accessibility of all parts of the country and to include small holder farmers to have access to the markets, schools in low resource areas, dams (for irrigation purposes) to assist in ensuring food security.

How can SA achieve inclusive economic growth?

a) Focus on equipping the low skilled people to use their hands i.e. working in trades such as welding, boiler making, and carpentry etc.

b) Revisit the different local economic development strategies to ensure all provinces and districts play to their strengths i.e. the Special Economic Zones bill has been ratified but this has not yet translated into developments on the ground. Mineral beneficiation should be coupled with establishment of manufacturing infrastructure in areas where the resources are.

c) Harness the expertise of everyone in South Africa regardless of race, language group or nationality. In all our communities there are people who have skills, expertise and experiences which could be passed on to others.

d) Focus on strengthening the small business landscape, leaving room for failure. Many small enterprises do not grow beyond being survivalist because of the fear of failure. One of the reasons why the US is a leader in the starting of businesses is because of an entrepreneurial culture which celebrates those who try...even if they might fail- they pick themselves up and try again.


Although there have been rumblings of possible increase in personal income tax, IDI Finance didn't think this would have been an appropriate move given the strain consumers are currently undergoing. Inflationary pressures and slow economic growth will make it a difficult juggling act for the Minister. Sin taxes were expected to be raised as has been the trend from previous Budgets.

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