DA urges Mboweni to consider deep spending cuts to help stabilise national debt
Johannesburg - The official opposition on Monday urged Finance Minister Tito Mboweni to present a credible plan to prevent a blow-out of the deficit and to stabilise the national debt.
Briefing the media in Parliament before Mboweni’s mini-budget on Wednesday, DA MP Geordie Hill-Lewis said such a plan would require deep spending cuts.
“This must be the primary goal of the speech if the government is to retain (and hopefully, reclaim) creditworthiness and the global credibility that is so central to attracting investment. Equally important, this must be the goal of the speech if the government is to save essential public services from collapse,” Hill-Lewis said.
He said his party had a plan to stabilise the deficit and the national debt over the next three years, including R168 billion in cuts to the public wage bill. According to Hill-Lewis, the DA expects growth projections to be revised downwards again.
“This also means that revenue targets will be missed, as VAT and corporate receipts collapse.” He said growth could get South Africa out of the vicious fiscal cycle it was now in.
“If we are to save the public services that the poor and the public-at-large depend on, the minister and the president must realise that they can no longer continue putting off the difficult decisions needed to turn around the economy.”
Hill-Lewis maintained that the delays in implementing real economic reforms to get the economy growing meant the government faced a stark choice. “Either it can save basic services, or it can save public sector jobs. It is no longer possible to do both.”
Hill-Lewis said the government had avoided a difficult discussion with public sector unions about the cost and composition of the public wage bill. The DA has proposed a R168bn cut to the public wage bill over the next three years, a three-year freeze on all non-occupation specific dispensation wages, saving R138.6bn.
The party also proposes reducing the number of the most highly paid head office management staff in the public service by about 9 200 posts, saving R29.4bn over three years.
Hill-Lewis said their plan minimised the cuts by proposing further revenue-raising mechanisms and cuts to other superfluous programmes. These, he said, entailed auctioning digital spectrum, selling Telkom shares, selling Sentech and other additional cuts over MTEF period such as eliminating New Development Bank and the National Health Insurance funding.
He said it was morally indefensible to cut public jobs, basic services, infrastructure investment and support for the poor, just so that the government continue to bail out failing state-owned entities (SOEs).
“This government must now clarify its policy on continued state ownership which is manifestly not working. The minister should announce that SAA will be placed under business rescue and that SA Express be shut down forthwith,” he said.
Meanwhile, civil society organisation, SECTION27, has called on Mboweni to implement measures that will aid departments to perform and execute their mandates a lot better.
“Austerity will only limit access to healthcare and critical social services further, and put the quality and pace of education, transport, water, energy and other reforms at risk,” its budget analyst David McLaren said.
He added that Cabinet must instead find a way to invest in the financial and human capacity of departments to work with greater efficiency and effectiveness. His comments come as SECTION27 has asked President Cyril Ramaphosa and the nine provincial premiers to act against ministers and provincial MECs whose departments have recorded irregular and wasteful expenditures.