Finance Minister Chris Liebenberg was quick this week to deflect any charges that his Budget was a holding exercise, insisting that “this must be the year to get points on the scoreboard”. He is trying to get the government’s fiscal ducks in a row and, while this is commendable, the route he has taken has resulted in a Budget almost as grey as the man himself.
One could argue that he was faced with an impossible task: holding in the reins on government spending at a time when demands on the fiscus, in terms of alleviating poverty, creating jobs and delivering services to those who have gone too long without, have never been greater. It is true he had little room in which to manoeuvre, and that his gradualist approach, being pragmatic, is the best route to take under the circumstances. But where were the bold moves?
Such as they are, they lie more in commitment than in reality. Creating 500 000 jobs a year, downsizing the public service, and setting up poverty-relief programmes are all goals to aim for but strategies to achieve them must still be fleshed out.
By cutting spending on non-priority items such as nuclear energy, the defence special account, the General Export Incentive Scheme and administrative expenditure in education, funds have been freed to help improve the quality of life of the poor. These resources will be used to boost health, education, welfare, community policing, water provision and other services. But South Africa’s problem is not so much a shortage of funds as a lack of capacity to deliver. This is perhaps best illustrated by the dramatic drop in the amount allocated to housing. It is down from last year’s R4-billion to R1,5-billion, although money unspent last year and “rolled over” will bring the total available to R4,6-billion.
VAT remains as is, for now, but will increase as soon as social security nets are in place to protect the poor. Taxing retirement funds — slammed by opposition parties as raiding the nation’s savings, and carrying the potential of inflaming labour as well as business — was courageous, but is unlikely to promote the kind of saving Liebenberg says is so necessary. And if it affects capital market interest rates, it will cost the government more to service its debt (budgeted to rise by almost 18% to R34,4-billion).
For women there was welcome news. Liebenberg committed the government to developing a statistical database that will provide information on the impact of expenditure disaggregated by gender, the implementation of targets and indicators of gender equality and equality in spending, and the development of a performance review mechanism in terms of which departments’ progress will be evaluated and reported on to Parliament. It was the only aspect of Budget reform on which Liebenberg was specific, and will provide the necessary yardstick to measure shifts in spending and the extent to which they impact on women’s status.