DA advises Gordhan on how to fix deficit problem

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The latest widening of the current account deficit to 6.8 percent of gross domestic product (GDP) showed that the government was failing in its management of the economy while undermining the country’s competitiveness, DA finance spokesman Tim Harris said yesterday.

According to the Reserve Bank’s quarterly bulletin, the shortfall between income from exports of goods and services and the income bill widened in the third quarter, despite the recent inclusion of trade revenue from fellow Southern African Customs Union member nations.

Out of more than 50 countries measured weekly by The Economist, South Africa had the third-biggest current account deficit.

Investec’s chief economist, Annabel Bishop, noted that the deficit widened from the second quarter’s 5.9 percent of GDP (which had been revised down from 6.5 percent because of the recalculation).

This she ascribed to costs of foreign goods – notably oil and liquid fuels and capital equipment – increasing in rand terms as the currency weakened. Exports of manufactured goods came under pressure “as prolonged strike action in vehicle production and related components sectors saw export volumes drop substantially”.

The DA said the deficit reflected “a lack of competitiveness across the South African economy that arose from the high cost of doing business, red tape and a failure on the part of [the] government to boost trade with the rest of Africa”.

Harris called on Finance Minister Pravin Gordhan to announce three reforms “to help turn around the widening current account deficit”.

First, the minister should increase the actual spending on infrastructure to 10 percent of GDP “as required by the National Development Plan”, Harris said.

Second, he should work to reduce increases in administered prices like electricity, communication and fuel costs, “which raise the cost of doing business”.

Third, budget allocations to the competition authorities and the National Consumer Commission should be increased while red tape should be removed, “to make it easier for new entrants to start a new business”.

That is the magic wand that Harris believes Gordhan could wield to sweep away that little deficit problem.

Corruption index

South Africa has slipped down three places from 69th to 72nd out of 177 countries in Transparency International’s Corruption Perceptions Index, released yesterday. The official opposition pointed out that this was a drop from 55th in 2009, when President Jacob Zuma assumed office.

Based on experts’ opinions on public sector corruption, the index indicates that in the past year: the SAPS was perceived to be the most corrupt institution in South Africa, with 83 percent of respondents citing it as a problem; 74 percent perceived public officials and civil servants to be extremely corrupt; 70 percent perceived the legislature to be corrupt; 55 percent perceived that medical and health services were extremely corrupt; while 54 percent perceived that business was corrupt.

The DA said yesterday that “the extremely high public perception of corruption in South Africa is directly linked to the increase in public sector financial mismanagement in South Africa since Zuma’s cabinet assumed office”.

Between 2009/10 and 2011/12, financial mismanagement in the public sector had “increased exponentially”, the official opposition said. Irregular expenditure in national departments had doubled from R11 billion in 2009/10 to R22.1bn in 2010/11 and R28.3bn in 2011/12. Audited fruitless and wasteful expenditure tripled from R437 million in 2009 to R1.5bn in 2010/11 and R1.8bn in the 2011/12 financial year.

The DA said it would call on standing committee on public accounts chairman Themba Godi to request that the latest corruption index findings were tabled in Parliament. It said Godi should put forward a request for a debate on the extent of corruption in the government. That should frighten the pants off the corrupted.

Numsa and SACP

Many wondered at the beginning of the week what had prompted the outburst of Blade Nzimande, the general secretary of the SACP, when he called on members of the National Union of Metalworkers of SA (Numsa) to call their leaders to account for their financial status.

Nzimande, who doubles as the Higher Education Minister, called for independent lifestyle audits to be conducted on Irvin Jim, the general secretary of Numsa, and his deputy, Karl Cloete.

Reading the political report to the upcoming special Numsa congress, one realises that the tensions between the SACP and Numsa have long been simmering. The report says the relationship has basically degenerated to the lowest level in the history of the union.

“In our September 1, 2012, central committee statement, in the aftermath of the SACP 13th congress, we reflected very frankly about the consistent negative political posture of the SACP against Numsa as an organisation and in particular its leadership. We stated our extreme annoyance with certain opportunistic stances taken by the leadership of the SACP, in particular Nzimande,” the report says.

It says Nzimande came to Numsa’s ninth congress and called on the union not to raise in public the issue of the deployment of SACP cadres in government.

“The Numsa central committee rejected these double standards from leaders of the SACP who speak in forked tongues and accuse Numsa of being populists who like to grandstand in front of the media and television. When the SACP launched its un-Marxist attack on Numsa, it was in full view of the media,” the report says.

It says the report presented at the SACP’s 13th congress showed very clearly that the party had a good relationship with all Cosatu unions except Numsa, which was presented as a problem.

Edited by Peter DeIonno. With contributions from Donwald Pressly and Wiseman Khuzwayo.


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