A few weeks ago, following President Jacob Zuma’s ‘more of the same’ State of the Nation Address (SONA), Finance Minister Nhlanhla Nene delivered his Budget Speech. The 2015/2016 budget, balanced on the backs of the poor, indicated that while we would be getting more of the same from government, it would cost us more.
The Budget Speech is important for South Africans, as it demonstrates government’s priorities. It also gives an indication of government’s actual ideological framework, as opposed to the broad policy commitments made by the president. In the case of the budget, it is the spending that does the talking. Through the budget we are thus given insight into the true macroeconomic goals of the governing party.
The problem is that the budget has revealed a growing divide between the stated ideological sentiments of the government, and their commitment to implementing of policies that reflect these.
As the years have gone by, it has been increasingly unclear which ideological or policy framework the government is working from. Parliament and the Executive have long adopted the National Development Plan (NDP) as a policy framework, but it gets fewer and fewer mentions with each passing SONA and Budget Speech.
With each passing year, the goals of the NDP are becoming more unrealistic. With GDP growth for 2014 coming in at 1.5%, and the estimated growth rate for 2015/2016 projected to be 2,0%, the 5% average growth rate needed to create jobs is untenable. At the current rate of growth the idea that siyaqhuba (we are moving forward), as President Jacob Zuma claims, is simply wrong.
My vision for South Africa is for a small and capable state, and a free market economy that is equipped to respond to the nation’s economic challenges. The state should only intervene where it is necessary. The state should not be a big market player but rather serve to create the foundations on which the economy can grow.
But in order to spark economic growth and create jobs, we need to look at our cities, and their role in growing the economy.
First, we need to look at infrastructure spend, which has been underspent, despite the massive backlog and old unmaintained infrastructure.
President Zuma has on many occasions announced that the presidential Infrastructure Coordinating Commission (PICC) has achieved its targets, but according to Economic Development Minister Ebrahim Patel, this is untrue because according to an assessment done by his Department, infrastructure spend has slowed, and failed to deliver on the objectives, especially at the municipal level.
Policy is only as good as its implementation. Without a well-managed programme of quality infrastructure spending, and the maintenance of existing infrastructure, our economy will remain in first gear, at best.
Furthermore, we need to eliminate the corruption endemic to the ANC at all levels of government. In 2011, Willie Hofmeyr, the then-head of Special Investigations Unit (SIU) and Assets Forfeiture Unit, calculated that between R25 and R30 billion per year is lost through corruption in public procurement spending alone. Adjusting for inflation, even a 30% reduction in this figure would effectively negate the need to raise personal income tax in the 2015/2016 budget.
Second, we need to look at an economic and job creation revolution that is led by small medium and micro- enterprises (SMMEs).
As is evident with our BRICS counterpart, Brazil, if we are to progress economically, we need to empower SMMEs by giving them the necessary funding and support. We also need to reduce the red tape that serves as a barrier to entry for budding enterprises. These are the kinds of businesses that through their growth contribute to the transfer of skills and employment.
Our proposal as the Democratic Alliance is for a National Venture Capital Fund to fund start-ups; we need to roll out Opportunity Centres, where SMMEs can access business support and advice; and the Youth Wage Subsidy needs to be implemented in full, not the watered-down version which is currently being implemented by government.
Thirdly, we need to address land reform. This is and will always be a contentious matter. While this matter is generally spoken about in the context of agricultural land, we also need to look at our cities. Urban land reform is hardly ever spoken about but is integral to economic growth.
The Democratic Alliance policy is that citizens who stay in RDP homes, should have a title deed to that home after two years. This creates land ownership and economic opportunity, as the new homeowner can either sell the asset or borrow against it in order to invest in other opportunities, whether it is an investment in the market or in education.
These are a few of many necessary and progressive measures that the DA would put in place in order to grow the economy and create much-needed jobs. There’s no silver bullet to solving South Africa’s economic standing, but with the right policies and the political will, the situation can be made better.
Under the lacklustre leadership of President Zuma however, we are falling far short on both accounts. For South Africa to reach its true economic potential, it is incumbent upon the electorate to vote for a government that can make this happen. DM