DA calls Gordhan's speech out on lack of solutions
DA spokesperson for finance Tim Harris said the party welcomed that the budget was broadly aligned to the national development plan (NDP), but said it lacked detail on key reforms in the plan that would drive growth higher or hold public servants or teachers to account.
“In particular, the minister has failed to table solutions to deal with the state’s incapacity to spend on infrastructure, which has led to infrastructure budgets remaining underspent by an average of 22% over the past three years.
“To exacerbate these shortfalls, spending on infrastructure as a percentage of GDP in the budget is projected to fall to 7% over the medium term; well below the 10% targeted by the NDP,” said Harris.
He described the country’s fiscal policy as being “in a holding pattern”.
“Faced with a R16-billion shortfall in tax revenue, the finance minister has been forced to run a budget deficit in excess of 5% of GDP for the first time since 2009, when we had to respond to the global financial crisis.
“The effect of the larger deficit will be to drive government debt higher over the medium term and when contingent liabilities are included, government’s net indebtedness now extends beyond 50% of GDP. This will not mitigate the ratings agencies' concerns about a lack of fiscal space,” said Harris.
But the DA was pleased as some of its key economic policies were included, albeit with modest funding, he added.
These policies included a watered-down version of the youth wage subsidy funded with R500-million; considerably less than the R1.6-billion earmarked for the original version; a R2.9-billion tax incentive package for special economic zones, including a generalised wage subsidy and cut in income tax from 28% to 15%; minor reforms of small business taxation totalling a modest R360-million and increased tax deductibility of charitable donations..