Budget speech: Pravin Gordhan caught between two fires

2014-02-26
Dr Pieter Mulder

Minister Pravin Gordhan’s budget speech should be judged as being part of the ANC’s election campaign. He boasted about the past and handed out a lot of money in a clear attempt to create a positive climate for voters before the election.

The real test will lie with the credit rating agencies which will be studying the details of the budget. They will determine whether he succeeded, in-between the money dispensing promises, in retaining the fiscal discipline which the country needs.

South Africa needs a growth rate of 5% to create enough jobs and to get out of our economic difficulties. The minister previously predicted a growth rate of 3% but had to accede today that it would only be 2,7%. This while the growth rate for African countries is averaging at 6%. Clearly something huge is wrong with the South African economy and the minister has to look at the labour unrest and rigid labour legislation to find the problems.

The FF Plus welcomes the measures announced to promote the establishment of small and medium business enterprises. These businesses could create up to 60% of all new employment opportunities if they are not prevented by rigid labour legislation and red tape in doing so.

According to the ANC, up to R179 billion is needed to finance the new land claims which are now expected. The approximate R7 billion which has been budgeted for land reform is totally insufficient for this. This confirms the FF Plus’ criticism that expectations are being created which cannot be fulfilled. These types of decisions lead to violent protests at a later stage.

It is important to expand the tax base, as nearly 3 million people are at present paying 96% of the taxes while there are 51 million people living in South Africa. No attempts to succeed in this were announced today. This creates an untenable situation in which these taxpayers are being taxed senselessly and the economy does not grow.

“I will give the minister a mark of 7 out of 10 for the year’s work, but will like a teacher, write on his report card: “Jannie has very difficult domestic circumstances. He is performing well if it is considered where he comes from, with his colleagues wasting money and trade unions bungling,” Dr. Mulder said.

 

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