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DA’s budget 2015/16: Increasing job opportunities and growth, not tax

The DA has presented its alternative budget, ahead of Minister of Finance Nhlanhla Nene's National Budget, in the National Assembly, on Wednesday, February 25.

Dr Dion George MP, DA Shadow Minister of Finance, said the DA has proposed that the budget should be focused on creating jobs and opportunities for all South Africans. 
“Without jobs and decent work, millions of South Africans remain trapped in poverty, with little prospect of a better life,” said George. 
“South Africa’s economy is currently at its lowest ebb since Jacob Zuma assumed office in 2009. 
”Over the last six years, the country has witnessed the unrelenting deterioration of our economic and fiscal realities, as the Zuma administration floundered in its efforts to achieve stability, never mind economic growth and job creation.
“Since President Zuma’s term began in 2009, more than 1.6 million South Africans have joined the ranks of the unemployed. Every day 730 more people become unemployed in South Africa.
“Our national unemployment crisis persists – at over 35 per cent – and needs to be addressed urgently. Of those unemployed, 67.5 per cent are youths.
“The debt to GDP ratio has also ballooned under the current government administration, from 27.8 per cent in 2009, to 46.1 per cent in 2014. 
“This led to the announcement by Finance Minister Nhlanhla Nene, in his Medium Term Budget Policy Statement (MTBPS), last October, that a tax increase would be inevitable in this year’s budget.
“Minister Nene indicated that an additional R12-billion in revenue will be required for the 2015/16 financial year. 
“Rather than cutting wasteful expenditure, annual losses due to corruption, running into the billions and a bloated government bureaucracy, this administration’s instincts are toward passing off South Africa’s growing budget deficits to over-burdened taxpayers.
“The DA’s response to this is simple – a tax increase is both an unnecessary and unjustifiable burden on everyday South Africans.
“There is both a short term and a long term solution to avoid a tax increase. 
“In the short term, the DA would cut the immense cost of corruption and maladministration and reduce the public sector wage bill through key interventions, such as avoiding above inflation rate salary increases, cutting back on salaries to superfluous departments, and linking salaries to performance. 
“This would free up over R14-b, which is well in excess of the R12-b required.
“In the long term, the DA would create an environment that stimulates the economy and creates jobs. 
”In doing this, more people become employed and the tax base widens – resulting in government receiving more revenue without raising any tax percentage.
“The government’s economic philosophy, which positions the State at the centre of economic activity, is simply unsustainable and does not work.
“The DA has long held that the State should not be the primary job creator, but should rather preoccupy itself with creating an enabling environment that stimulates the economy and creates jobs.
“To achieve economic growth rates that enable job creation, the DA’s alternative budget focuses on accelerating small business, addressing youth unemployment and boosting trade and infrastructure development.
“The DA believes that the South African economy should be growing at a rate comparable to our contemporaries in the developing world.
“GDP growth has faltered since 2009. 
”Economic growth in 2014 was estimated at 1.4 per cent, slashed from a projected 2.7 per cent, and was shamefully far off government’s target of five per cent. 
“While the government is relentless in its attempt to blame the international economic downturn – it is clear from our counterparts in other emerging markets that this argument does not hold water. 
“As South Africa struggles to avoid recession, Sub-Saharan Africa is projected to grow at five per cent in 2015. The fact is, economic growth remains a result of good policy decisions and active economic leadership.”
The DA’s alternative budget includes several key reforms amongst its proposals:
* Injecting R9.3-b to stimulate and empower small businesses through small business incubators, Red Tape Reduction Units across the country and a National Venture Capital Fund. 
* Investing 10 per cent of GDP to build and maintain infrastructure including road maintenance, water infrastructure and freight and commuter rail corridors.
* Keeping the budget tax neutral, to not further pressure overburdened taxpayers. 
*Gradually increasing the funding for the National Student Financial Aid Scheme (NSFAS) to R16-b, so that no student is denied further education because they cannot afford it. 
* Reducing the public sector wage bill by R4.3-b through key interventions such as avoiding above inflation rate salary increases, cutting back on salaries to superfluous departments and linking salaries to performance.
* Saving R11.1-b by disbanding the National Youth Development Agency (NYDA) and Seta.
* Slashing the size of the R1-b Cabinet by R355-m. This will be done by doing away with all deputy ministers.
* Spending an additional R100-m on improving education by implementing performance incentives for school managers and teachers, based on learner outcomes.
“To return South Africa to a sustainable fiscal footing, the DA’s alternative budget places further emphasis on addressing the multiple crises at state-owned enterprises (SOEs), notably Eskom and South African Airways (SAA),” said George.
“Our fragile economy cannot afford to bail out another SOE; drastic reforms are needed to address the ailments at Eskom and SAA.
“It is unsustainable for 95 per cent of our electricity to come from Eskom, a state-owned entity characterized by mismanagement. Our economy cannot grow without a stable power supply.
“It is estimated that 10 per cent of potential economic growth, totaling R300-b, has been lost since 2008, due to electricity supply constraints.”

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Riaan Engelbrecht

Chief Sub Editor at Caxton Media

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