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Gordhan must trim fat: DA

Sapa | 2011-10-24 13:11:57.0
Finance Minister Pravin Gordhan
Image by: SIPHIWE SIBEKO

Finance Minister Pravin Gordhan needs to trim the fat and spend money carefully on programmes enabling growth and new jobs, the DA says.

President Jacob Zuma's promise of 2011 being the "year of the job" had not materialised, Democratic Alliance spokesman Dion George said at Parliament.

Instead, the economy had stagnated and unemployment had steadily risen, and was now approaching crisis levels with nearly seven million people unemployed.

George was briefing reporters ahead of Gordhan's medium-term budget policy statement (MTBPS) in Parliament on Tuesday.

He said this MTBPS was Gordhan's opportunity to be bold and decisive by cutting waste and spending on items that would grow the economy and improve people's lives.

The government needed to disband "pointless state entities" that failed to deliver any real value to the people, such as the National Youth Development Agency (NYDA), and the economic development department.

Other pointless entities, such as district municipalities, should also be scrapped. This alone would free up roughly R5 billion annually for more productive investments.

George said "indulgent" spending on ministers and officials should be cut, and that plans to eliminate inefficiencies due to poor financial management should be announced.

"The minister needs to give a clear indication that financial management, and the elimination of irregular, fruitless, and wasteful expenditure, is put on the agenda as an urgent priority."

Gordhan should use the opportunity to follow through on some important proposals relating directly to job creation.

Most importantly, the youth wage subsidy needed to be introduced, George said.

In the MTBPS, Gordhan should announce a range of new incentives to stimulate small business creation and development.

These should include a tax holiday for newly-established small businesses, increased support through the Small Business Development Agency and tax rebates for training programmes run by small businesses.

Besides small business, the labour-intensive manufacturing sector was crucial for job creation, George said.

"But we need to create stronger incentives for investment in this sector."

Four industrial development zones (IDZs) already existed. They cost billions to establish and yet had not been successful in attracting large-scale investments.

"So we need to strengthen the incentives we offer to foreign manufacturers in these IDZs. This should include subsidies, stronger tax incentives, labour market reforms, and cutting VAT on utility costs," he said.

Gordhan needed to clarify in much more detail than before exactly what the fiscal implications of the national health insurance were expected to be, and how he intended to pay for it.

"The state cannot propose a massive plan, with huge fiscal implications, without clarifying its cost, how it is going to be paid for, or who is going to pay for it," George said.

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