Mboweni says SA must act now … but unveils a plan act now-now instead – IRR

25 June 2020 - There is no getting away from the fact that Minister of Finance Tito Mboweni has disappointed South Africans with a budget speech that is all talk and no action.

Press Release 

There is no getting away from the fact that Minister of Finance Tito Mboweni has disappointed South Africans with a budget speech that is all talk and no action.

Instead of laying the groundwork for recovery, he did nothing more than pay lip service to prudent fiscal management. Lip service, it seems, is the only payment the ideological stranglehold of the Tripartite Alliance left Mboweni free to make.

On the eve of yesterday's emergency budget, the Institute of Race Relations (IRR) called on the finance minister to courageously choose productive enterprise and job creators over the rent-seekers and wealth extractors. The IRR set out five measures the minister could have announced to get South Africa back to work.

These were to:
 

  • commit the government to ending the ANC’s disastrous policy lockdown with immediate effect;
  • announce that the government is slashing expenditure on all SOEs, maintaining only necessary expenditure on SOEs such as Eskom to provide at least a measure of infrastructural stability for economic recovery;
  • summon the courage to ruthlessly cut the bloated public sector wage bill;
  • relieve the enormous tax burden that is smothering South Africa’s SMEs and curtailing their potential to recover from the current crisis; and
  • commit the government to protecting the property rights of all South Africans as a key step to attracting investment.
     

Instead, however, the emergency budget Mboweni delivered had the interests of the ANC and the South African Communist Party at its core, not the interests of hard-working South Africans. To borrow Australian Prime Minister Scott Morrison’s phrase, South Africans just want a ‘fair go’ – a ‘fair go’ to offer their labour and ingenuity in meeting the needs of their neighbours and in earning incomes.

The best way to unleash economic prosperity, attract investment, create jobs, eradicate poverty and empower South Africans is no mystery. Common sense economic policy and government spending delivered record numbers of jobs in South Africa between 1996 and 2008, securing the upliftment of millions.

The ANC understood then what it has now clearly forgotten: if you give people a chance to work, give businesses the freedom to grow, spend less than you collect as a government, and dedicate the powers of government to making life and earning a livelihood easier rather than more difficult, economic growth uplifts all.

Said IRR deputy Head of Policy Research Hermann Pretorius: "In this emergency budget, Minister Mboweni warned of the danger of debt, but took no steps to address it. He gave a strong indication of raising R40 billion through increasing taxes over the next four years while failing to reduce the size of the bloated public wage bill or turn off the tax taps to failing SOEs.

“Looking ahead, the Minister seems to place our country’s economic hopes on vast infrastructure expenditure with money we simply do not have. You cannot borrow your way out of debt or spend your way out of insolvency.

“The Minister’s unaffordable infrastructure spending plans are probably a consequence of his wanting to use this emergency budget to kick the fiscal can down the road, only to realise that he has to borrow desperately to build more road first. While Minister Mboweni insisted that a debt crisis and economic disaster must be avoided by acting now, the best he could do was to hint that he’d act now-now.”

Coming on top of the paralysing economic lockdown of the past ten years, Mboweni's impotent supplementary budget yesterday dispels all doubt that if South Africans want pro-growth, prop-enterprise reform, they will have to impose it on the ANC through sustained, determined pressure.

This is why the IRR has embarked on a global initiative to bring home to South Africa’s creditors and prospective creditors the destruction wrought by the past decade of ANC policy and the ruling party’s refusal to learn from not only its mistakes but even the successes of South Africa’s first decade and a half of democracy. By campaigning to ensure strict, but common-sense conditions are amended to any financial support the IMF gives to the South African government, the IRR is committed to fighting for a fair deal for South Africans.

South Africans want to get back to work now, not now-now.


Media contact: Hermann Pretorius, IRR Deputy Head of Policy Research – 079 875 4290; hermann@irr.org.za
Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za
Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za
Ends

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