Minister of Finance Budget Speech & response by DA
04 May 2016
Minister of Finance, Mr Pravin Gordhan gave his Budget Vote Speech on the 04 May 2016.
Politics is killing economics in South Africa: David Maynier DA Shadow Minister of Finance
We all know the Minister of Finance, Pravin Gordhan, has a tough job – perhaps the toughest job – in South Africa.
But spare a thought for us. Because we are up against:
· a minister – whose powers of political seduction are hard to resist;
· a minister – who is supported by more than a thousand superbly professional National Treasury officials; and
· a minister – who has a “secret weapon”, known to some by his code-name, “The Bull”, but known to us as “Momo” Momoniat, tormentor-in-chief of the Standing Committee on Finance.
You see, “Momo” does not seem to be able to draft a Bill with less than two hundred clauses, which only he understands.
And “Momo” has no shortage of Bills: no sooner have we gotten through one Bill, when “Momo” arrives brandishing another Bill.
So, being a member of the finance committee is to suffer cruel-and-unusual punishment and to endure what amounts to legislative waterboarding by National Treasury.
2. “Junk Status”
We are hurtling towards a sovereign ratings downgrade which will have major implications for everyone and which will spare no one in South Africa.
We all recall that during his State of the Nation Address, on 11 February 2016, President Jacob Zuma spoke about “doing things differently” in order to avoid a ratings downgrade in South Africa.
And yet, since then:
· economic growth forecasts have been revised down to 0.6% for 2016;
· doubts remain as to whether National Treasury can hold the fiscal line; and
· Dudu Myeni remains the chairperson of “zombie” airline South African Airways.
We recognize and support the important work done by the minister and his team to avoid a sovereign ratings downgrade in South Africa.
But the fact is:
There is no leadership: President Jacob Zuma is not leading a national effort to avoid a ratings downgrade.
There is no focus: government is not focused on a national effort to avoid a ratings downgrade.
There is no coordination: government is not coordinating a national effort to avoid a ratings downgrade.
And, most terrifying of all, there is a perception that a ratings downgrade does not matter: the International Monetary Fund, the World Bank and ratings agencies, we are told, are imperialist institutions, and besides we’ve apparently got China waiting in the wings to bailout South Africa.
You only have to listen to the Minister of State Security, David Mahlobo, explain that Brazil’s economic crisis is the result of a destabilization campaign, presumably by “the West”, to understand the kind of rubbish masquerading as “economic intelligence” being whispered in the presidential ear, by the “spooks”.
All this makes it almost impossible for the minister to bring together an effective “coalition for change”:
· to mobilise the political resources necessary to lead a national effort to avoid a ratings downgrade; and
· to mobilise the political resources necessary to implement the structural reforms required to boost economic growth and creating jobs in South Africa.
The minister has called on government, business and labour to work together to avoid a ratings downgrade.
But, the fact is that government – itself – is not working together to avoid a ratings downgrade.
The minister is on the field, and he is at the crease, but his bat has been broken, by his own cabinet colleges and comrades.
In the end, the truth is that politics is killing economics in South Africa.
3. National Treasury
However, there is one institution whose commitment to fighting a ratings downgrade is not in question, and that is National Treasury.
We welcome the news that National Treasury director-general Lungisa Fuzile’s contract will be extended to 2018.
We regard this as a victory for the minister and a blow to those desperate to capture National Treasury.
Now, we have a very high regard for the 1218 officials who work so hard at National Treasury.
Whether one is speaking to foreign investors, or local investors, they never fail to complement National Treasury.
Which makes it hard to understand why our experience is so different when it comes to National Treasury.
My letter, dated 01 October 2015, to the minister, concerning the nuclear building programme, has never received a reply.
That is: 146 working days; no response; and no explanation.
My letter, dated 18 March 2016, to the deputy-minister, concerning his recent public statement, has never received a reply.
That is: 28 working days; no response; and no explanation.
And my letter, dated 04 April 2016, to the minister, concerning expenditure reviews, has never received a reply.
That is: 20 working days; no response; and no explanation.
My request for a detailed breakdown of baseline reductions, from National Treasury, has been outstanding for 44 working days.
And my request for documents on certain questionable investments, from the Public Investment Corporation, has been outstanding for 14 working days.
My question, dated 10 February 2016, on the South African Revenue Service, has been outstanding for 55 working days.
My question, dated 18 February 2016, on the South African Revenue Service, has been outstanding for 49 working days.
And my question, dated 25 February 2016, on the South African Revenue Service, has been outstanding for 44 workings days.
Shockingly, of the 22 questions submitted by myself this year, only 5 questions have been replied to by National Treasury.
This is simply not good enough and we hope the minister will consider ordering a review and setting new professional standards with a view to resetting the relationship between National Treasury and Parliament.
4. Banking Crisis
National Treasury, it seems to me, have perfected a bureaucratic style designed to obscure, rather than to illuminate.
So, let me put some straight questions to the minister:
Will you be joining your cabinet colleges to meet certain banks to discuss their decision to terminate their business relationships with the Guptas?
Will you tell us whether, following my request for an investigation on 15 April 2016, the South African Reserve Bank, and the Financial Intelligence Centre, will be investigating certain banks’ compliance with the Financial Intelligence Centre Act (No. 38 of 2001), relating to their decision to terminate their business relationships with the Guptas?
And will you tell us whether, following my request for an investigation on 15 April 2016, the Financial Intelligence Centre, will be investigating allegations that the Guptas illegally removed assets from South Africa?
And hopefully, this time, we will get some straight answers from the minister.
Now, this is not my maiden speech, but it is my maiden speech on the National Treasury [Vote no. 7], budget vote, in Parliament.
So, it may be useful to set out my approach, which is simple:
· we will support the minister when we think he is doing the right thing; and
· we will oppose the minister when we think he is doing the wrong thing.
But, most important of all we look forward to engaging with the minister on alternative proposals to take us forward in South Africa.
And for that reason we have set ourselves an ambitious agenda for 2016/17.
First, we will propose over 300 amendments to the 2016/17 budget, adjusting the budget by over R9.5 billion, to fund proposals aimed at: creating jobs; fighting crime; supporting poor students; combatting corruption; and providing relief to the poor.
Second, we will propose a comprehensive spending review aimed at identifying savings and eliminating wasteful expenditure in all three spheres of government in South Africa.
Third, we will introduce four Private Members Bills including:
· the Public Finance Management Amendment Bill providing for an expenditure ceiling;
· the General Laws Amendment Bill providing for a debt ceiling;
· the Public Service Amendment Bill providing for concurrent powers for the finance minister to sign off future public sector wage agreements; and
· the Employment Tax Incentive Amendment Bill to provide a youth wage subsidy for young people who do not have jobs, or have given up looking for jobs, in South Africa.
And finally, we will be working hard to crack open the Public Investment Corporation and ensure that it is “firewalled” from becoming a “corporate battering ram” and a “piggy bank” for the ruling party in South Africa.
We look forward to engaging with the minister – and with National Treasury – on alternative proposals to take us forward in South Africa.