“Speaker, today we consider the Fiscal Framework and Revenue proposals. This against the minister of Finances recent budget speech, which clearly showed the dire financial state our public finances are in.
This is largely reflected in the Committee’s report, and must be seen against the background of slowing economic growth - a paltry 0.8% for the past financial year, resulting in lower than projected revenue collection.
The ANC-led government, in our view, is failing dismally in its central economic policy goal of accelerating inclusive growth and job creation, and ensuring sustainable finances by containing the budget deficit and stabilising public debt.
Economic growth has been revised downwards to 1,5% of GDP. Estimates of revenue collection have deteriorated further since the October 2018 MTBPS - down by R42.8bn. This is shocking and can be largely attributed to the hollowing out of SARS, as highlighted by the Nugent Commission.
This results in an upward trajectory of the debt-to-GDP ratio, set to reach 60.2% in 2023/24, which is very concerning. This ratio should be below 40%. The budget deficit is set to rise from last year’s projected 3.5 % to 4.5%, a staggering R242.7bn requiring R202bn to service a gross loan debt of R3.042 TRILLION (ie more than R3000 billion). This is hardly stabilising public debt. How then did we land up in this situation?
The main reason is that after 10 years of economic mismanagement and policy bungling under the Zuma administration - during which the country has staggered under the dead weight of state capture - the economy just isn’t competitive any more. Last year’s technical recession and poor economic growth is evidence of the cumulative damage done to the country’s competitiveness over the past decade, especially since 2014.
It is estimated that the country’s GDP is about R500 billion smaller than it would otherwise have been over the past 5 years, tax revenue is about R150bn less, and roughly 600 000 fewer jobs were created. This is disgraceful.
The fiscal slippage must be stopped in order to prevent a further credit downgrade by Moody’s the one credit agency with an investment rating for the country. Moody’s is expected to consider its credit rating at the end of this month. It will study the credibility and actual implementation of plans to stabilise the SOC’s. They, together with the ballooning public sector wage bill, pose the largest threats to the fiscal framework.
It is disgraceful that R69bn over three years (R23bn per annum) is required to assist Eskom to service its debts. This once-internationally acclaimed power utility is a poor shadow of its once glorious self. We in this house exposed much of the state capture and corruption that was allowed to flourish under the Zuma-administration - costing the state hundreds of billions of rand in lost state finances and low economic growth. This evidence was referred to the Zondo Commission, which has further amplified the rot that existed at Eskom.
We in the ACDP have consistently called for arrests and prosecutions to take place. We are concerned that very little progress has been made - and that it becomes increasingly difficult to recover the lost billions of rands. Maybe this is the plan.
Minister Mboweni quoted liberally from scripture during his Budget speech. He stated that we are ‘walking through the darkest valley….’ Under the ANC-government, with widespread crime, state capture and corruption, we agree.
He concluded that we ‘shall go out with joy, and be led forth with peace; the mountains and the hills shall break forth with singing, and all the trees of the field shall clap their hands.’
The ACDP again agrees. But this will happen on the 8 May when South Africans turn out in numbers to reject the ANC at the polls and vote for the ACDP because ‘when the righteous are in authority the people rejoice.’
I thank you.”
ISSUED BY: STEVE SWART MP
6 March 2019