What Godongwana’s budget must be

THE upcoming national budget to be presented by finance minister Enoch Godongwana months before South Africa’s seventh election, will be very interesting to watch.
There are numerous critical things…


THE upcoming national budget to be presented by finance minister Enoch Godongwana months before South Africa’s seventh election, will be very interesting to watch.

There are numerous critical things we must watch in Godongwana’s budget. The numbers on tax revenues over the past year will be interesting. How did South Africa do on revenues over the past year given the blackouts that have harmed economic productivity, and logistical challenges due to Transnet’s collapse?

Eskom’s power supply continues to be a challenge. South Africans deserve to know the financial and reform plans about Eskom.

The kind of budget South Africa needs is a budget that tilts towards investment, not consumption. Investment, along with structural reforms, are what is needed to achieve stronger growth over the long-term. Investment would range from infrastructure investment to human capital investment. Are we going to hear a budget that tilts toward investment from Godongwana?

The International Monetary Fund (IMF) projects that South Africa’s economy will grow below the Sub-Saharan Africa average this year. It will be interesting to see how Godongwana’s Treasury sees growth this year. I doubt it will be much different from IMF and World Bank projections.

Economists are concerned that “Government debt could reach 80% of GDP within two years and 90% by the end of the decade, weighing on the economy and the government’s ability to deliver services, economists warned ahead of finance minister Enoch Godongwana’s budget speech”, Business Day has reported.

Higher levels of debt are counterproductive for the economy and debt service costs compound the problem, weighing on the economy.

Governments cannot be trusted when it comes to debt reduction efforts. Politicians love spending. The real reason government debt has continued to rise over the years is because politicians love spending taxpayers’ money. Well, they love spending money they don’t have that’s why we have government debts and budget deficits.

South Africa’s problems cannot be addressed by welfare. Welfare corrodes our society and creates government dependency. It is also expensive. Hence, I will be disappointed if I hear the expansion of welfare from Godongwana’s budget.

It was fulfilling to see the Public Protector Kholeka Gcaleka voicing concern that South Africa is on its way to becoming a welfare state, recently. We need more influential people to speak up against the expansion of welfare. If I were President of South Africa, my main goal would be to slash welfare by 50% by the end of my first term.

The COVID19 pandemic gave politicians an excuse for the expansion of welfare. The COVID19 Social Relief of Distress (SRD) R350 was one form of expanded welfare.

During COVID, Politicians recklessly shut down economies and printed money. They said the grant was temporary. Of course it was not temporary. It was permanent from Day 1.

I was reminded of late Nobel economist Milton Friedman, who once said “Nothing is so permanent as a temporary government program”. Milton’s words spoke to South Africa’s R350 COVID grant.

There is also the National Health Insurance NHI – a government program of socialised healthcare that the members of parliament have proposed.

In his recent State of the Nation Address (SONA), President Cyril Ramaphosa said, “The National Health Insurance (NHI) will provide free health care at the point of care for all South Africans, whether in public or private health facilities.

We plan to incrementally implement the NHI, dealing with issues like health system financing, the health workforce, medical products, vaccines and technologies, and health information systems.”

There is no funding for NHI. Some have said that it will be socialized healthcare in name because there will no funding for it – that the ANC government knows that there is no funding for it.

My question then is, why are they continuing with the NHI program when they know it cannot be afforded? Why cause uncertainty in the healthcare sector if it is known that the program will not be funded? This is unacceptable! It shows that the government don’t take us seriously. Besides funding, NHI is a horrible idea in its entirety.

Even Godongwana has been critical of the NHI initiative and has said that the government must focus on fixing the current public healthcare system that is in a dire state.

I will be disappointed and shocked if I hear an announcement on NHI funding from Godongwana’s budget because the program will be a disaster that won’t be afforded.

A Nedbank senior economist has said that raising taxes in a weak economy would be disastrous. Correct. It’s also an election year, so raising taxes is not a good idea politically. Our government must focus on suppressing spending, not increasing taxes. More money must be kept in people’s pockets so they spend it proportional to their needs and wants.

There must be no expansion of welfare in this budget. What’s needed is a budget that tilts more toward investment, and stimulates economic productivity. PM

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