When the Zulus said “kazi iyozala nkomoni? "(what cow will be born?) they could not have imagined it would be relevant in a year when the country is operating without a budget. A time when a nation is in limbo and economic distress and the only solution on the table is to further milk the citizens dry. One is left to wonder what the outcome will be!
There comes a time in every leader’s life where they must consciously decide to put their own ego, shortcomings and self-interest aside and take counsel from those around them — give a subject many eyes. Recently the minister of finance's budget speech was postponed. As we later learnt many were critical of raising VAT by two percentage points. So the minister and his team went back to the table to try to reach some consensus with the rest of government leadership by March 12, which is only a couple of days away.
Sunday Times recently learnt there have been heated debates and tension between multiple levels of government finance committees. The minister argues that if we do not raise taxes, the consequence will be government’s inability to provide services as there will be a budget shortfall. Just last week unions in KwaZulu-Natal were up in arms as there was speculation that the education sector in the province could be hard hit, resulting in job losses. Already we can see the cracks in government spending not going far enough. Furthermore, the private sector steel industry is shedding jobs, which will surely impact the tax base. And this is not the only industry cutting jobs. Almost everywhere you look, manufacturing, mining and logistics are laying off workers.
I am by no means suggesting something as destructive as Elon Musk’s DOGE (department of government efficiency), but it is about time the department of monitoring and evaluation monitored and evaluated our situation and made meaningful input along with the department of public administration.
At the same time the government is unable to boost economic activity that will stimulate industrialisation and job growth. This problem has been facing South Africa for a long time and it seems that no-one in all of government and support services has a clue how to turn our economic nightmare around. Now here we are between a rock of over-taxation despair and that hard place where services are cut even further. While I understand the conundrum that the finance minister finds himself in, I am not convinced that enough is being done. It seems we are always trying to find ways to just kick the can further down the road until “my term of office is up”. No-one is looking to innovate, reimagine and inject new ideas and stimulation to grow our economy. As a result we keep misdiagnosing the problem and Band-Aiding it, hoping it will somehow go away.
We have a stagnant economy problem, though some might argue it is more of a regressive economy problem, but I will try remain a little optimistic. We have an economy concentration problem, which results in us being the most unequal society in the world according to the Gini coefficient. That then results in a bloated social grant programme that includes the SRD (Social Relief of Distress) grant, which if cancelled, the minister argued, he would not need to increase VAT. Of course this is not something that can just be done without process within the realm of our laws, but this just highlights the perspective of our government. We seem to be suffering from a very defensive type of thought process where the concern is mostly about where to cut costs rather than where to increase income and grow a revenue base. Austerity is not the answer.
Some would also argue that the minister needs to look at bloated public administration costs. Perhaps this is finally the time to clean up and make our government functions leaner and more efficient. I am by no means suggesting something as destructive as Elon Musk’s DOGE (department of government efficiency), but it is about time the department of monitoring and evaluation monitored and evaluated our situation and made meaningful input along with the department of public administration. Let’s face it, if our government was sufficiently efficient , then we would not be having load-shedding, infrastructure decay, rampant crime, service delivery protests and so on.
The bottom line is that even if the minister could cut the SRD grant and even increase VAT to 17% or even 20%, as long as there isn’t a plan to grow the economy and make government work efficiently, we are going nowhere slowly. We need more imaginative solutions and more sustainable plans. Adding more tax or just simply cutting social grants needed by the vulnerable is easy and lazy when you live in a protected bubble that shields you from crime, which will grow as things get worse economically, from transport to energy costs, because you rely on the state to provide for you as minister.
Perhaps at this time it would be better for the minister to have some humility and realise that while he might be competent in other matters of finance, turning this ship around is not his strong suit. He simply does not have the strategic creativity to stimulate growth and neither does he have the testicular fortitude to cut away at public administration. The minister should simply admit his shortcomings and invite others with younger, fresher and more inventive ideas to contribute to an actual plan that will benefit all of us and not just a lazy, consequence-riddled tax increase or social relief cost-cutting exercise.
We don’t know yet what the final verdict will be with regards to the VAT increase, though some have speculated it could be increased by anything between 0.5 and one percentage point.
At this rate, whatever “nkomo” will be born, it seems like our government is ready to milk it from birth.
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