We are of our time. Just a few years ago, even a relatively progressive Budget from a National Party government drew almost universal howls of outrage and fury at its lack of concern for the majority of people in the country. Now, a conservative budget from an ANC- led government draws almost universal praise for its caution and discipline.
The clearest indication of this mood is that the Government of National Unity is able to propose raising the maximum marginal tax rate from 43 to 45 percent, without raising the capping from a low R80 000 — and those most affected are tepid in their response. Nowhere in the world can this happen without cries of pain from those who will have to pay more. But, for example, Business Day justified the move; Price Waterhouse described it merely as “surprising”; only Syfrets stuck its neck out, and then only called it
It is not because those paying more are not vocal or organised, but because there is an acceptance that not just the rich but the middle classes have to pay for reconstruction and development. We are of our time — and this is still a honeymoon time.
Finance Minister Chris Liebenberg has bet his money on continued growth in the economy to fund social spending.
The Budget is aimed mostly at boosting local and foreign confidence in the economy to fund greater Reconstruction and Development Programme work in the
The underlying motivation here is that this investor confidence is dependent on discipline — and this is reflected in the government meeting its deficit reduction targets and containing demands for social
But there is a myth here that needs to be challenged. Investors want to know that our economy is being properly managed — and that there is successful delivery on the RDP to ensure long-term political stability. Nobody wants to invest in an uncertain future, and there is an acute awareness that peace in this country will disappear quickly if there is no noticeable movement to address our gross social
So a word of caution is necessary. Spending on housing went up significantly in this week’s Budget, but health and education increases were below inflation.
It is true that there is large room for manoeuvrability in ensuring more effective use of existing budgets in these departments.
But combined with the need to adjust the imbalances in spending between provinces, the effect will almost certainly be cuts and job losses in education and health in the two most populous provinces, Gauteng and Western Province.
Liebenberg’s carefully crafted balancing act depends not just on growth, but on showing that the government is being effective in cutting wastage in social spending and redirecting it to maximum effectiveness.
His speech was short on details of this side of the