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There is national consensus on the country's priorities and we welcome
that this year's budget spends more money in achieving them. In this
sense it is an improvement on last year's.

However, the budget does not break away from a fiscal paradigm which
cannot work in the long run. South Africa is a welfare state which
dreams of becoming a developmental state. This is a legitimate dream
but the budget doesn't yet concretize this into plan. Conversely it
continues to extend the welfare state to industries. Instead of
stimulating the creation of viable industries which generate
sustainable jobs, the government is spending money to keep existing
industries viable. This is done both with subsidies and with many
forms of indirect taxation which we all pay for in the form of higher
prices for goods and services we consume. This is not sustainable.

In its aggregate government expenditure remains ineffective.
Government is spending too much money merely to run and sustain itself
with only a small portion translating into goods and services
delivered to the nation. The doubling of government's payroll puts at
40%, of the entire expenditure, the cost of administering the State
against a private sector's standard of 12%. This does not include the
plethora of consultants necessary to rectify ineptitude. None of this
is sustainable.

Against this background one must doubt the success of sweeping new
policies, which the IFP endorses in principle. We are in favour of the
National Health Insurance, compulsory retirement funds and national
social security. But it is an easy predication that programs of this
nature administered by a state apparatus, which is both dysfunctional
and corrupt, will be a disaster. We need radical measures to reform
the State before their implementation. In addition, such reforms
should be implemented not through the State but through the private
sector so that their actual delivery can rely on private companies,
private hospitals and private services which the State should make
accessible to all citizens by means of vouchers and indirect payments.

The social safety nets are still insufficient. Nobody can raise a
child on R270 per month and a R10 increase of the child grant is
lesser than an adjustment to inflation. For food price increases have
been higher in percentage than the increases of prices of other
products in the inflation basket. The money allocated to HIV/Aids is
still insufficient even though one praises the expenditure increase.
We also praise the Minister for having found R30 billion worth of
government waste, which is still a drop in the bucket of savings that
one could bring about by cutting fat and waste in government. Yet one
would have expected this R30 billion to go straight into increasing
the allocations for social safety nets.