“Cyril Ramaphosa does seem to bring something different to this government, along with his team of finance minister Tito Mboweni, and public enterprises minister Pravin Gordhan,” says Nicolaas van Wyk, CEO of the SA Institute of Business Accountants (Saiba), in response to Mboweni’s Budget speech today.
Van Wyk says there were some notable positives from Mboweni’s first Budget, including the announcement that first-time home buyers will benefit from a R950 million subsidy over the next three years. This is part of the government’s “Our Help To Buy” initiative to help first-time buyers to own a home.
“We support the efforts to increase property ownership and funding – more people need homes,” says van Wyk.
Also positive was the absence of any increase in personal taxes, and the lack of any mention of a wealth tax on the rich. This was particularly brave in an election year, when it would have been expedient to introduce a wealth tax without harming the ANC’s election base.
There also appears to be some serious effort to curtail out of control public wages, with the announcement that 30,000 public servants would be encouraged to take early retirement. This, and a cap on salary increases, should save R27 billion over the next three years.
Public sector wages currently swallow 35% of the consolidated national budget, and has to be reined in, says van Wyk. This is one of the areas of greatest concern in the country, as the public sector is the only area where jobs are being created. Despite this, the evidence suggests public sector efficiency is declining. That represents a poor return on investment.
“What was missing from the Budget is how much government will collect from its fight against fraud and corruption – we have a new institution to fight crime, but what budget does it need to collect this additional revenue? We have to get the billions back that were stolen by corrupt officials and their private sector accomplices.
“We also need to get the people to pay their electricity bills, and it is good that Mboweni raised this point in his Budget speech. There are billions of rands outstanding to Eskom.”
We are in dire straits on debt repayments
We are in dire straits with regards to debt repayment, hence we urgently need to become tourist friendly, adds van Wyk. “We can make billions if we clean up the country, become tourist friendly and attract retiring Europeans to come and settle in SA. But first we need to solve the crime issue.”
Lastly, we need to sell SAA and get rid of other dead wood in the state enterprise portfolio, which can save billions over the short and medium term.
We can also save hundreds of millions a year by reducing the number of ministerial posts to about 20, says van Wyk.