Ecumenical Service for Socio-Economic Transformation Comments on the 2013/4 Budget

Thursday, 28 February, 2013 - 16:30

The Minister announced that government intend increasing the budget from R1.7 billion in 2012/13 to R2.2 billion in 2015/16 for the programme. It’s a great concern if much budget is spent on temporary jobs instead of creating sustainable permanent jobs

The Ecumenical Service for Socio-Economic Transformation (ESSET), an independent ecumenical organisation that works for social and economic justice, welcomes Minister of Finance, Pravin Gordhan’s unadventurous 2013 Budget speech which was presented yesterday amidst slow economic growth and huge budget deficit.

As was the case with the President’s State of the Nation Address, the Minister had a gargantuan task of appeasing different stakeholders. Like President Zuma, the Minister used his speech as a platform to urge the South African public to work together. Thus, the Minister’s emphasis of the National Development Plan (NDP) as government’s point of departure allowed him to appeal to the agriculture, manufacturing, tourism and communications sectors to play a part in expanding trade, investment and job creation. He mentioned exactly what the ear would have wanted to hear: “This budget is intended to accelerate growth, expand investment, support economic development and confront poverty and inequality.”

ESSET noted with concern the news that the government spent R190 billion more than it received in the past financial year. It was neither surprising hearing Minister Gordhan conceding that the economic uncertainty will be with us for some time and calling for resilience as we front difficult economic times. It was only a matter of time before we could start to realise the consequence of the disruption of mining sector last year and its effects on export trade performance.

ESSET welcomes the allocation of infrastructure spend to the tune of R3.2 trillion over the three years to realise a strong network of economic infrastructure designed to support the country’s medium and long term economic and social objectives. It was encouraging hearing the Minister offering to do a breakdown of monthly expenditure and making the information available to the public. We are also glad that the Minister is aware that some parts of government struggle to spend their full infrastructure budgets; depriving communities a right to have their basic services. It would have been great to hear how government is capacitating the three tiers of government to spend the allocated amounts in various projects.

We welcome the introduction of policies to tackle youth unemployment, particularly youth employment tax incentives. Even such a small measure to boost the demand for youth employment can go a long way in helping them get experience and secure jobs eventually. However, we are concern of more resources being allocated to the existing expanded public-works programmes. The Minister announced that government intend increasing the budget from R1.7 billion in 2012/13 to R2.2 billion in 2015/16 for the programme. It’s a great concern if much budget is spent on temporary jobs instead of creating sustainable permanent jobs.

We also welcome Minister Gordhan’s call for us to unite as a nation and fight against corruption. Further, the report that National Treasury is currently scrutinising 76 business entities with contracts worth R8.4 billion and 216 cases being finalised is encouraging news on the war against corruption. Further, the appointment of a Chief Procurement Officer is a welcome move that is long overdue. However, it’s high time that the Minister becomes firmer on the clamping of corruption and ensuring that there is compliance by all in the government procurement and financial management systems. We need targets and timeframes on how we will effectively deal away with acts of corruption within the public sector.

ESSET strongly support interventions by government to support small and medium enterprises. We also agree that trade opportunities in the Asian and African continents needed to be explored. However, government need not give the trade opportunities only to big businesses and micro-businesses. It should also consider extending the support and trade opportunities to even millions who live off the informal sector of our economy. Currently, many in the informal economy are doing cross-border trading and government can ensure that trade regulations are reviewed to permit trade friendly policies that enable regional integration.

We strongly oppose the proposal to use VAT to fund the National Health Insurance (NHI). We agree with NHI ideals which are noble, particularly the proposed plan to distribute financial and human resources equitably between the public and private health sectors because the current public healthcare system is largely ineffective and does not cater for the poorest of the poor communities. However, implementing NHI through increasing VAT is not the best route to take. Increased tax to fund NHI could be a severe blow in South Africa considering the rising fuel, wage and electricity prices pushing up inflation and negatively impacting on the poor.

Thabo Koole
Communication Coordinator
Ecumenical Service for Socio-Economic Transformation

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