MTBPS: Godongwana unable to act decisively and fails to stop the cadre gravy train

Minister Enoch Godongwana addressing the media at the Imbizo Media Centre in Cape Town ahead of the 2022 Budget Speech. (Photos: GCIS)
Minister Enoch Godongwana addressing the media at the Imbizo Media Centre in Cape Town ahead of the 2022 Budget Speech. (Photos: GCIS)
  • The finance minister’s sense of fiscal responsibility is welcome, but wholly insufficient given the scale of the crisis. With deeply vested interests, his colleagues do not want the gravy train to stop.
  • Austerity is good: More money needs to be inside the economy, not outside it in political hands. A state with less money is a state that will interfere less in the economy and allow it to grow.
  • Government has long bitten off more than it can chew – using an expanded mandate to collect more revenue. Less money in government hands means less corruption and more room for citizens to prosper, and it is highly concerning that billions are looted each year.

Blaai af vir Afrikaanse weergawe.

The Minister of Finance, Enoch Godonwana, delivered the Medium-Term Budget Policy Statement (MTPBS) today. It is concerning that National Treasury’s deficit forecasts were revised higher than the February estimates, adding to a 15-year long trend of expenditure overshoots. Government continues to spend above its means in an unproductive and highly consumptive way.

While the Free Market Foundation (FMF) welcomes Minister Godongwana’s conservative intent, the budget includes few hard commitments to meaningfully cut spending. We urge National Treasury to take the steps needed to mitigate the current economic crisis that South Africans are facing.

‘Our economic situation demands decisive action. The current gross deficit is R54.7 billion higher than forecast in the February Budget, and could well be much higher if current budget trends are realised. Taxpayers simply cannot afford the extent of government spending. Serious cuts need to be made urgently’, says David Ansara, CEO of the FMF.

The Minister’s intimations of ‘fiscal responsibility’ are welcome, but wholly insufficient given the scale of the crisis. His colleagues do not want the gravy train to stop, and as a result, he was unable to announce anything substantive that would introduce real fiscal responsibility into the public service. He proposes big cuts in future years, but we have heard this narrative before. Godongwana’s promises will not be binding on whoever follows him as the next finance minister.

Sovereign borrowing is way out of hand. In the 2023, 2024, and 2025 fiscal years, government will borrow as much as R1,747 trillion, enough to buy 920,000 brand new BMW X3s.

The claim that government has taken concrete steps to support growth is false. There are no ‘concrete steps’ in the MTBPS or in government’s policy agenda that will indeed support growth, with the state among the largest employers in the economy while stifling investment and growth in the real economy. Growth can only come on the back of widespread liberalisation and deregulation – especially in the overregulated labour market – none of which is contemplated.

The unconcretised idea that government will allow municipalities to generate electricity themselves for additional revenue is a welcome one, but one that is too abstract at this juncture and difficult given the lack of technical capacity in state institutions. Eskom has shown remarkable resistance to its loss of dominance in the past, even ignoring President Ramaphosa’s July 2022 instruction to develop a mechanism for households and businesses to sell excess power to the grid.

It’s time to take action. The FMF urges government to start limiting state spending by cutting any Cabinet portfolio and Cabinet department that is not clearly required by the Constitution or essential to the functioning of the economy. We also call on government to drop financially unsustainable plans like National Health Insurance or the Basic Income Grant.

‘More money needs to be inside the economy, not outside it in political hands. A state with less money is a state that will interfere less in the economy and allow it to grow. The Minister’s sombre tone unfortunately reveals that he remains subscribed to the harmful and fallacious notion of a ‘developmental state”, Ansara concluded.

Ends.

Press inquiries

Anneke Burns
FMF Publicist 
071 423 0079 | press@fmfsa.org 

***

MTBPS: Godongwana misluk in poging om beslissend op te tree en die kader-soustrein te stop 

  • Die Minister van Finansies se sin vir fiskale verantwoordelikheid word verwelkom, maar is geheel en al onvoldoende in die lig van die omvang van die krisis. Met diep gewortelde belange ter sprake, wil sy kollegas nie hê dat die soustrein tot stilstand kom nie.
  • Besuiniging (austerity) is goed: Meer geld moet binne die ekonomie wees, nie buite daarvan in politieke hande nie. ’n Staat met minder geld is ’n staat wat minder in die ekonomie sal inmeng, dus die ekonomie toelaat om te groei.
  • Die regering het al lank meer as wat kan kou afgebyt – die staat gebruik hierdie uitgebreide mandaat om meer inkomste in te win. Minder geld in regeringshande beteken minder korrupsie en meer ruimte vir burgers om voorspoedig te wees. Dit is van ernstige kommer dat miljarde elke jaar geplunder word.

Scroll up for English version.

Die Minister van Finansies, Enoch Godongwana, het vandag die Mediumtermynbegrotingsbeleidsverklaring (MTBBV) gelewer. Dit is kommerwekkend dat die tekortvoorspellings van die Nasionale Tesourie hoër as die Februarie-skattinge is, wat bydra tot ’n 15-jaar lange tendens van uitgawe-oorskrydings. Die regering bly bestee bo sy middele op ’n onproduktiewe en hoogs verbruikende wyse.

Terwyl die Vryemarkstigting (FMF) Minister Godongwana se konserwatiewe voorneme verwelkom, sluit die begroting min harde verbintenisse in om staatsbesteding betekenisvol te sny. Ons dring daarop aan dat die Nasionale Tesourie die nodige stappe neem om die huidige ekonomiese krisis wat Suid-Afrikaners in die gesig staar, te versag.

‘Ons ekonomiese situasie vereis daadwerklike optrede. Die huidige brutotekort is R54.7 miljard hoër as voorspel in die Februarie-begroting, en kan baie hoër wees as die huidige begrotingstendense werklikheid word. Belastingbetalers kan eenvoudig nie die omvang van staatsbesteding bekostig nie. Daar moet dringend ernstige besnoeiings gemaak word’, sê David Ansara, Hoof Uitvoerende Beampte van die FMF.

Die minister se intimasies van ‘fiskale verantwoordelikheid’ word verwelkom, maar is geheel en al onvoldoende in die lig van die krisis. Sy kollegas wil nie hê dat die soustrein tot stilstand kom nie, en as gevolg hiervan was hy nie in staat om enige substansiële aankondigings te maak wat werklike fiskale verantwoordelikheid in die openbare diens sou inlei nie. Hy stel groot besnoeiings in toekomstige jare voor, maar ons het hierdie narratief al voorheen gehoor. Godongwana se beloftes sal nie bindend wees vir wie hom opvolg as die volgende Minister van Finansies nie.

Soewereine lenings is buite beheer. In die 2023, 2024, en 2025 fiskale jare, sal die regering soveel as R1.747 biljoen leen, genoeg om 920,000 splinternuwe BMW X3’s te koop.

Die bewering dat die regering konkrete stappe neem om ekonomiese groei te steun, is vals. Daar is geen ‘konkrete stappe’ in die MTBPS of in die regering se beleidsagenda wat werklik groei sal bevorder nie, met die staat een van die grootste werkgewers in die ekonomie, terwyl dit belegging en groei in die werklike ekonomie onderdruk. Groei kan slegs kom op die rug van wye liberalisering en deregulering – veral in die oor-gereguleerde arbeidsmark – waarvan niks oorweeg word nie.

Die vaag geformuleerde idee dat die regering munisipaliteite sal toelaat om self elektrisiteit op te wek vir addisionele inkomste, is welkom, maar is tans te abstrak en moeilik weens ‘n gebrek aan tegniese kapasiteit in staatsinstellings. Eskom het ongelooflike weerstand getoon teen sy verlies van dominansie in die verlede, selfs deur President Ramaphosa se instruksie in Julie 2022 te ignoreer om ‘n meganisme te ontwikkel vir huishoudings en besighede om oorskot krag aan die netwerk te verkoop.

Dit is tyd vir optrede. Die FMF dring daarop aan dat die regering begin om staatsbesteding te beperk deur enige kabinetsportefeulje en -departement te elimineer wat nie duidelik deur die Grondwet vereis word of noodsaaklik is vir die werking van die ekonomie nie. Ons roep die regering ook op om finansieel onvolhoubare planne soos die Nasionale Gesondheidsversekering of die Basiese Inkomste Toelaag te laat vaar.

‘Meer geld moet binne die ekonomie wees, nie buite daarvan in politieke hande nie. ’n Staat met minder geld is ’n staat wat minder in die ekonomie kan inmeng, wat die ekonomie dus toelaat om te groei. Die minister se somber toon openbaar ongelukkig dat hy steeds geabonneer is op die skadelike en valse idee van ‘n ‘ontwikkelingsstaat’,’ het Ansara afgesluit.

Einde.

Persnavrae

Anneke Burns
FMF Publisiteitsbeampte
071 423 0079 | press@fmfsa.org

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