Statement from the Jesuit Institute
“A WELL-BALANCED AND PRAGMATIC BUDGET, IMPLEMENTATION IS KEY”
25 February 2016
The past year has posed a sizable economic challenge to South Africa. A shrinking demand for commodities, stubbornly high unemployment numbers, persistent poverty, questionable leadership decisions and a tough drought have created a perfect storm. To make matters worse, our credit rating and currency have come tumbling down.
This economically dire situation is what the Government’s budget had to contend with. Yesterday all eyes fell on Minister of Finance Pravin Gordhan to provide direction and leadership in his budget speech.
Refreshing, from the onset, was the honesty with which the unenviable task was carried out. The Jesuit Institute congratulates the minister on a well-balanced and pragmatic budget. There was frank assessment of our challenges as well as an accurate valuation of our strengths and weaknesses. South Africa would be served greatly if the theme of transparency, honesty and integrity were reflected not only in the budget, but in its implementation.
The key proposals in the budget were the following:
- The reduction of the budget deficit to 2.4% by the 2018/2019 financial year
- An increase in taxes, which for this year excludes income tax and VAT
- A cut in government spending on personnel
- An Increase in funding for higher education
- An increase in social grants to cushion the impact of a rising cost of living
- The provision of funds to relieve the impact of the severe drought we experienced this summer
- What must be praised, without reservation, is the way the Government has structured the budget to ensure that the poor don’t bear an undue burden in these challenging economic times. Tax relief for low to middle income earners; keeping VAT the same; and increasing social grants are all budgetary decisions that will ease the load of the most vulnerable.
In light of the student protests that have swept across the country, the proposed increase in funding for higher education should be welcomed. This investment in education will not only accelerate much needed skills development but will also help bring an end to entrenched patterns of exclusion in higher education. Exclusion on financial grounds only serves to trap the poor in a cycle of poverty and cement the racialised arrangements of skill and wealth distribution.
We are cautious, however, about the proposed cut on government personnel. Although tough times like these necessarily call for a reduction in spending, such cuts should be aimed at levels that can afford it. Cuts that could result in job losses to low level government employees must be undertaken in a way that doesn’t just ease the load on the poor by passing it on to the poor. For this we would hope that cuts come at the higher levels of government – the levels that can afford it.
The budget alone will not be enough and the Government must commit to its implementation. We must hold government accountable to its commitment to the poor and we condemn any corruption that steals from the poor. Additionally, in these grim economic times we must commit ourselves to doing what we can, even in our more restricted means, to ease the plight of the poor. Now, more than ever, is the time for every South African to rise and be their neighbour’s keeper.