Balancing the budget, NDP-style
- Styli Charalambous
- 27 Feb 2013 (South Africa)
Part 1: Job and business creation
So many of South Africa’s social and economic ills stem from the fact that 4.5 million people out of a potential economic workforce of 12 million, are unemployed. And with the guiding light of the NDP, now rubber-stamped by the ANC, we need concrete action to make the goals a reality, starting with budget speech by Finance Minister Pravin Gordhan that encourages job-creation.
Many teeth have been gnashed arguing over the merits and costs of the Youth Wage Subsidy, a plan which, if implemented, would see government picking up the tab for all or part of the cost of first-time job seekers in a rebate-type scheme. Only the bickering and opposition to the plan by the ruling party’s alliance partners has kept the plan from creating new jobs for a segment that now represents 71% of job seekers. Clearly, sitting on our hands is not helping, so it’s time Gordhan stepped up to the plate and put the alliance partners in a corner by implementing the plan, or any variation of it, that will get South African youth working.
And while we’re at it, some help for the sector responsible for creating the bulk of those new jobs would be appreciated. Starting and running a new business in South Africa is about as pleasant as root canal treatment by a poorly trained dentist. Funding is scarce; administration is overly time-consuming and burdensome. It’s high time the IDC and other government-funded funding organisations started getting out there and doing what they were intended to do, help businesses grow by providing favourable funding programmes. Anyone who has approached these organisations understands how the constrictive lending criteria and admin-heavy process of applying has resulted in fewer approvals than unicorn sightings in the last year.
But why rely on government-funded organisations, when we could be incentivising the venture capital industry to shed it its shackles of South African conservatism and greasing its wheels with some tax incentives? We need to inject a shot of funding-steroids into a venture capital investment culture that for too long has erred on the side of conservatism, retarding not only business growth but the growth of the venture capital sector. By allowing 100% capital gains tax breaks on investments up to R10 million, we can stimulate a sector of the economy that is most likely to fund the creation of jobs that require skilled labour and facilitate the creation of the kind of economic heroes that will only spur others on to emulate the likes of Mark Shuttleworth.
Part 2: Government efficiency
Many believe that corruption is the single biggest threat to South Africa when, in fact, it is the silent assassin off-spring of corruption that costs us more. The inefficiency and ineptitude of government departments caused by cadre deployment and political appointments ahead of suitably qualified persons costs the country more than palatial homes and shiny German sedans dished out like Jelly Tots.
Because of the mess we currently find many of our departments in, there is very little incentive to attract highly skilled people to join the government workforce and attempt to guide the Titanic back on course. Visit any government office, even parts of Luthuli House, and you will find shabby, often derelict work environments that only further breed an inefficient state of mind. Rudi Giuliani implemented the “broken windows” theory while serving as mayor of a then crime-ridden New York City, and our government departments need something similar.
The theory goes that if a building has a few broken windows, and is left unrepaired, it will only encourage further breaking of windows and degradation until, eventually, squatters take over the empty building. By applying this principle to law enforcement in NYC, most petty crimes were rigorously policed, easier arrestee processing catered for, along with background checks for all those arrested to address serial offenders. We need a “broken windows” policy for government to weed out the freeloaders and inept government officials, policed by an internal-affairs type department whose sole objective is to clamp down on the efficiency perpetrators, starting with the education, health and policing departments. We realise this may cut away many government employees from the workforce, but that is how you deal with cancer, cut it out.
This would go hand in hand with a general upgrade of government department facilities to acceptable standards. In some cases, this may just mean a lick of paint, but oh, what difference it makes. Funding for all these renovations will come from the clampdown on government spending on renovating the private residences of ministers and official.
And in the course of this process, we shall implement a government-wide freeze on the use of consultants, which totalled some R102 billion last year. This spending should rather be directed to the recruitment of the highly skilled people with remuneration packages to rival the private sector. We need to make government an aspirational workplace for talent in South Africa, and that starts with a better workplace environment and remuneration packages matching the corporate sector.
Part 3: NGO and NPO assistance
The ultimate goal of any state is to arrive at a point where NGOs and NPOs are no longer required. But we realise that is merely a Utopian ideal and NGOs and NPOs are a critical component in fixing the leaking tap when it comes to social services and activism.
The main area of concern for these organisations is, just like our small and medium enterprises, funding. It’s a travesty that so many of these organisations have to seek foreign and corporate aid in order to do the work our government should be doing in the first place.
So it’s imperative that Department of Social Development be given a kick up the backside and move from being a burden to these organisations, to playing the support role it should. Like so many departments, the use of technology has yet to be properly embraced to create efficiencies or has been bungled, making life in this sector even harder. A case in point is the deregistration of thousands of organisations in December mistakenly listed as non-compliant.
We need better systems and competent people to use those systems, in the department – platforms that facilitate easier access to potential donors, and registration, reporting and feedback mechanisms that allow burning issues from the grassroots to reach government level. And for heaven’s sake get the local municipalities, districts and provinces meeting with national decision makers on a regular basis to co-ordinate efforts. Right now, it seems the left hand doesn’t know what the right hand is stealing.
So there are some of the wide-ranging concepts I’d implement in the budget speech, were I standing before Parliament on 27 February, only to be followed by the following pilot programmes to blow my fellow MP’s minds. Drastic times call for creative measures, and here are mine:
Wildcard pilot programmes
Education: So many of our secondary and tertiary education problems are the result from the lack of good teaching facilities and teachers. At secondary school level, teachers and principles just aren’t cutting it for the majority of our population. So let’s implement a two-shift schooling programme where kids use the facilities of functioning schools in hours after the normal school day ends. In this way, more teaching posts are created, errant teachers can shadow those who do their jobs properly and, above all, our kids get access to quality education.
Daylight saving and axing the 16 December holiday: Supporting a switch to the two-shift schooling programme, would be the implementation of daylight saving and a revision of the holiday calendar to do away with the unofficial start of summer, the 16 December holiday. Most people plan their holidays to coincide with this date and, in a country already beset by too many public holidays, our economy shuts down prematurely when our biggest trading partner, Europe, is still grafting away. By removing this holiday from the calendar, we remove the psychological incentive to start the holiday season early and keep the entire country from shutting down a week early. And when coupled with economic benefits that daylight saving could bring through a reduced demand for electricity and possible reductions in road accidents and even crime, we could up our summer-time productivity exponentially.
Legalising marijuana and other recreational drugs: Here’s a quick stat for you: if marijuana was legalised in the US (and it now has been in some states) it would be the most traded commodity on the CBOT exchange, after wheat. Now there is a plantation-load of tax revenue being lost by the fiscus. We know people do it, and will continue to consume recreational drugs whether legal or not. Just like alcohol was once considered contraband, we need to acknowledge that we have already lost the war on drugs and we should rather move to a policy of legalisation and regulation.
Regulation will increase the quality of product manufactured, provide untold additional tax revenue and, very importantly, move the trade out of the hands of gangsters who use the commodity to control addicts. Part of the pilot programme, similar to that one implemented in Portugal with hugely positive results, will be to decriminalise the trade in marijuana and make ”softer” recreational drugs available for sale in select adult outlets like bottle stores and chemists. Not only will state coffers be a net winner in the economic scales, but the demands on our already creaking Department of Correctional Services will be reduced.
So there you have it, the budget speech to put South Africa back on track. And celebrated with a spliff. DM
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