South Africans must brace themselves for expenditure cuts on frontline services, political parties who worked with finance minister Enoch Godongwana on the proposed budget to be tabled before parliament said on the eve of the speech.
In an interview with TimesLIVE Premium, Rise Mzansi and Bosa leaders Songezo Zibi and Mmusi Maimane said the budget would not grow the economy, arguing the blame could not be placed at the feet of Godongwana.
The Sunday Times reported this week that the finalised budget would include spending cuts of about R60bn to make up the shortfall.
Sources who spoke to Sunday Times said to try to narrow the revenue shortfall Godongwana was likely to slash government expenditure — projected at R2.59-trillion in the first budget — by no less than R60bn.
Our rate of investment or growth capital formation is so low relative to our peer countries that actually that is what the budget must answer. We are not investing enough and that is the headache
— Mmusi Maimane, Bosa leader
Zibi said that the newly proposed budget did not mean austerity in the strict sense, arguing revenue would still increase but not by the same amounts proposed in the first and second budgets.
“The only problem with [this budget] is that it still reflects South Africa's structural problems. He has produced a budget that parliament will pass, not a budget that South Africa should have, but it's not his fault,” Zibi said.
“We don't like some of the choices in it because we think different choices can be made, but nobody has an appetite for that. The minister will have to cut frontline services, parliament has said he can't have additional revenue. So there is nothing he can do.”
Zibi said some of the areas facing cuts include health, education, infrastructure and local government spending.
“Now when you want to grow the economy, you should not be cutting those things, but that is what the political parties — all of them, including those who are not in the GNU — have effectively said. We can’t say to him, we don't like the budget that you are placing on the table. He has been told he must produce this kind of budget and that is the effect.”
Minister in the presidency Khumbudzo Ntshavheni announced last week that cabinet had approved the budget and agreed to submit it to parliament.
ANC chief whip Mdumiseni Ntuli said the caucus would meet Godongwana on Tuesday afternoon to be briefed on the budget.
first budget on February 19 and the second on March 12 were rejected by the DA, its main partner in the GNU, and several other parties including the EFF.
The first budget, which proposed raising VAT by two percentage points , was even rejected by some of Godongwana’s colleagues in the ANC. The second version compromised by reducing the VAT increase to two increases of 0.5 percentage points over two years, but the DA and the EFF rejected this too.
Maimane said Godongwana had limited room to manoeuvre.
“The reality is that South Africa is heavily indebted, South Africa is not growing fast enough to deal with its social expenditure ... In truth, when you have that situation from a fiscal point of view, it means you can’t meet your expenditure. You are effectively running a deficit of about 5% annually, that is not going to change in a rush,” he said.
“We don’t have a growth strategy. In my engagement with the finance minister, he has done the best he can with very limited space.
“I do think what needs to happen is that South Africa can’t keep doing what it’s always done. South Africa needs urgent reform, it needs proper spending reviews, it needs to say to itself, how do we make some policy choices?”
Maimane said some of the choices government must consider is whether it can afford the public servants wage bill, which increases at about 5.5% yearly in a country with 1% GDP growth.
He said South Africa must also debate whether it can afford the social relief grant.
“Our rate of investment or growth capital formation is so low relative to our peer countries that actually that is what the budget must answer. We are not investing enough and that is the headache.”
Maimane said the budget would not grow the economy, but this was not Godongwana's fault.
“It’s the fault of the GNU because it doesn't have a growth plan and we keep fighting as Bosa. Because there isn't a plan there aren't agreed priorities, and because there aren't agreed priorities we are going to keep fighting about VAT or no VAT. If we had a plan and South Africans were involved in that plan — like the growth charter we proposed — suddenly we could talk about the sacrifices that we need to make to fund that plan.”
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