We congratulate the Minister and Deputy Minister on their appointments and look forward to robust and constructive interactions with them.

 

The National Treasury is the custodian of the people’s money and has oversight over more than a trillion rand in government expenditure. It borrows from investors and collects revenue from tax payers to pay for programmes as set out under government policy priorities. There will never be enough money in the Treasury to satisfy all of our needs, so difficult choices must be made and available funds spent as efficiently and effectively as possible.

 

One of the most important choices that government makes is when to increase its spending and when to restrain it. When our economy slows down, government spends to stimulate activity and cuts back its spending when our economy recovers. When times are good it builds reserves to spend when times get bad.

 

The Global Financial Crisis, followed by the Great Recession after 2008 impacted on economies across the globe, including our own, and our subsequent economic slowdown was inevitable. The Treasury did spend, our debt did rise, our growth did decline, as would be expected. 

 

Unlike other economies that have started to recover, ours hasn’t because government had incoherent economic policies that were slowing our economy before the storm began and it still hasn’t done anything to restore confidence in our economic policy direction after the storm. 

 

The so-called Developmental State model prescribes a central role for government in our economy. It is based on an assumption that government can drive economic growth. Yes, government can do this under the right circumstances. If government did not waste over R30 billion per annum and did not have a monument to corruption at Nkandla then it could be trusted to serve as a catalyst in the engine room of economic growth. In the Western Cape, we have demonstrated that this is possible. Growth and job creation in the automotive, business service, tourism, wholesale, retail, catering and accommodation sectors is accelerating and investor confidence especially in the key financial and manufacturing sectors remains high. 

 

In its presentation to the Committee, the National Treasury said that it is committed to the National Development Plan, the Industrial Policy Action Plan and the New Growth Path. The New Growth Path and the National Development Plan (the NDP) are not compatible and it now seems that the NDP is the policy of choice, but without any signs of commitment to its implementation. When the NDP diagnostic was first tabled in the National Assembly, the DA welcomed the candid outcome. The Minister at the time put the possible future scenario that if we continue our economic growth without social equity we are heading for disaster. We agreed that we needed to grow our economy and broaden social equity at the same time. When the plan was released we agreed with many of its findings and proposed solutions and we still do. That was two and a half years ago.

 

The Minister should set out steps on how the National Treasury will contribute to ensuring that the NDP is rolled into action.

 

The Minister should also tell us what National Treasury is doing to ensure that the people’s money is properly managed by the ever expanding number of departments and state owned enterprises that the people’s money bankrolls. SCOPA has reported year after year that departments and entities have wastefully and irregularly spent billions of rands of the people’s money. Over time, these hundreds of billions could have been better spent on delivering services that government keeps promising it will and never does.

 

We will be watching the establishment of the Office of the Chief Procurement Officer with interest for signs of improvement in the broken and corrupted procurement process that has leaked relentlessly, spawned extremely wealthy tenderpreneurs and even fractured off a new political party. Let’s never forget where it came from.

 

The Minister should explain what steps will be taken to hold the State Owned Enterprises to account for the never ending bail outs and draw a line under the amount of people’s money that will get thrown as bonuses into the pockets of the crony executives who mismanage them. 

 

The Development Bank of South Africa is now seeking an additional R15 billion underwrite from government so that it can expand its mandate. The people apparently need to fund a share of the new Brics bank at 10 billion US dollars. Minister, will the DBSA rival the Brics Bank in what seems to be an overlapping mandate?       

 

Minister, it is your job to protect the most vulnerable members of our society by ensuring that money that could create an environment where individuals can climb out of poverty, inequality and unemployment isn’t funding the opulent lifestyles of politically connected cronies who do nothing but feed the anger of those who have been left behind and have nothing to lose if our economy fails.

 

The Minister should clarify what is going on at the Financial Services Board.  Its’ CFO got caught with his fingers in someone’s cash register, curators and their fees are out of control and not submitting reports as they should, yet progress on financial regulation dithers. Where is the progress on the Twin Peaks regulatory framework? Minister, we seem to be falling behind the curve in the financial regulatory environment. Retirement Reform has been on the table for over 10 years, yet fees on annuity products remain unacceptably high and the majority of South Africans face bleak financial circumstances in old age. We need clarity on the state of governance at the Government Employees’ Pension Fund and an explanation of why the CEO of the Public Investment Corporation suddenly stepped down – was he unhappy with investments that he was being pressured to make?

 

The Minister should explain why the SARS Commissioner post has been vacant for a year. SARS is a vital component of our public financial system and its effective operation must not be neglected. We welcomed the Davis Tax Review Committee when it was announced a year ago and we look forward to its recommendations. It is clear that the National Treasury and SARS have worked on closing loopholes in the taxation laws that permit wealthy individuals and multinational corporations to pay less than their appropriate share. In this process, care must be taken to ensure that our taxation framework is attractive enough to local and international participants in our economy. 

 

In her announcement last week, the Governor of the Reserve Bank warned of deteriorating local economic growth conditions. The Minister told the Committee that our economy is performing below expectations. The Medium Term Budget policy statement is due in October. We expect the Minister to offer a realistic assessment of our economic growth prospects, the tax revenue that this can generate and the levels of debt that can be sustained. The more government borrows for consumption expenditure, the more it crowds out wealth creating expenditure on longer term human capital and infrastructure investments. The National Treasury says that a stable and enabling macroeconomic platform is required to action sustainable growth and employment creation. We agree.

 

South African households know that their expenditure can exceed their income if they incur debt and they also know that the party stops when there is no more borrowing space as interest payments start to bite and crowd out other items on the shopping list. Government must keep this lesson in mind. Debt servicing costs are amongst the highest growing expenditure items on the budget and R5 billion more than projected.

 

We agree that government must do something and do it now. It needs to activate the so-called radical transformation that it claims our economy needs. It doesn’t act, however, because it is stuck. It is struck in a mindset that was discredited a long time ago. That mindset ignored the fundamental principle that human beings are individuals and, given an opportunity to become everything that they are capable of being, they will and in that process they will generate economic activity beyond the wildest dreams of any government bureaucracy. The role of government is to intervene where the market fails and to provide the basic services that lead individuals out of poverty and onto a pathway to prosperity.

 

Our government is stuck between a policy that could work, the NDP, and the internal vested interests of cronies who seek to exercise power over the people by ensuring their dependence on the state. Individuals in pursuit of their dreams are not likely to elect a government that seeks to crush them under its heavy hand. Government can radically transform our economy by opening the space for entrepreneurs, small business and investors with capital to participate in our economy. This will strengthen the tax base, enable less borrowing and return our economy to the fiscal health that the people, who entrust their money to government, expect.

 

Government must never forget that it doesn’t have any money of its own. It all belongs to the people and perceptions do matter. Government mis-management of the people’s money erodes the culture of tax compliance and offers a justification to those who seek to evade it.

 

In conclusion, Chairperson, no matter how much money is poured into a broken system, it remains broken. Urgent action is needed to liberate our economy from a stranglehold of incoherent economic policy. Our economy must generate jobs. 

 

The clock is ticking.

 

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