Note to editors: The following is an extract from a speech delivered in Cape Town today by Dr Dion George MP, DA Shadow Minister of Finance. 

In February this year, the Democratic Alliance said that we would not support the fiscal framework and revenue proposals as set out in the national budget. We do not support the economic policies underlying the numbers because they do not address the problems of unemployment and poverty that prevent our people from reaching their full potential to become everything that they are capable of being.

Our position on fiscal policy is clear: Government must intervene when economic circumstances require its intervention and the intervention must focus on stimulating job-creating economic activity. When economic circumstances improve, government should remain ready to cushion our economy if difficult times arise again in future. Our alternative budget applied this principle of counter cyclicality and relaxed the deficit to 5.99% of GDP that we consider to be nearing the outer limit at this point in our economic development. Our alternative set out increased government spending on the productive side of our economy.

We were hoping for bold action from the national government to demonstrate its political will to tackle the jobs haemorrhage. It could do this by implementing the promised wage subsidy; offering meaningful incentives to entrepreneurs and small and medium businesses, the net job creators in our economy; encouraging domestic savings through improved tax relief on interest on savings; improving the efficiency of the state owned enterprises to reduce their drain on the people's money; and, crucially, ensuring that confidence in our economy remains intact and is strengthened.

We welcomed the Ministers' focus on job creation and his sincere determination to attend to the leakage from the public financial system that is nothing other than shameful theft from the most vulnerable members of our society who will never walk along a pathway out of poverty while national government remains disinterested in its construction.

The Medium Term Budget Policy Statement highlights our deteriorating macroeconomic circumstances. Revenue estimates are down on the back of declining corporate activity and the deficit is increased from 5.3% to 5.5% of GDP. The only significant upward trend is in the public sector wage bill that reflects government's position as the largest so-called job creator in our economy.

The Democratic Alliance sees absolutely no problem in offering appropriate compensation to members of the public service who add value to our people through their service delivery efforts at our schools, hospitals, police stations and other delivery sites, but we are vigorously opposed to the people's money being wasted on grossly overpaid deployed cadres in a bloated bureaucracy that adds no value to the upliftment of our people and only serves the self-interests of the national governing party. Million rand plus salaries for National Youth Development Agency cadres is only one example.

Before the Medium Term Budget Policy Statement was tabled, the Democratic Alliance set out our expectations for government to cut unnecessary expenditure by disbanding pointless state entities, cutting indulgent expenditure on Ministers and officials and improving financial management. The medium term budget policy statement presented an opportunity for government to signal its budget priorities for 2012 on measures to stimulate job creation, future-focused investments in education, health, infrastructure and growth-enabling projects, support for entrepreneurs and small business, incentives for manufacturing, clarification of the implications of national health insurance and bold action to eliminate leakage from the public financial system.

In the debate on Thursday last week, the Minister said that I am in the habit of getting things wrong. I speak on behalf of the Democratic Alliance and we never claimed that R30 billion rand is stolen from the people each year through massive leakage in the public financial system, it was the Special Investigations Unit. We never claimed that fruitless and wasteful expenditure is increasing, it was the Auditor General. We never claimed that South Africa's recovery from the Great Recession is markedly slower than in other comparable countries, it was the IMF.

They presented to the Standing Committee on Finance last week, I was there. They concluded that South Africa's current predicament is partly on account of the severity of exogenous shocks, but that the inefficiency of product and labour markets has likely also exacerbated the impact of these shocks. Simply put, government economic policy is impeding our growth. The IMF revised their estimate of our GDP growth downward to 3% for this year and 3% for 2012, point 1 and point 4 percentage points lower than the macroeconomic projections from the National Treasury.

When parliament enacted the Money Bills Amendment and Related Matters Act in 2009, it made provision for the establishment of a Budget Office as a resource to Committees and Members of Parliament in their process to amend the national and adjustments budget.

No progress has been made on this and, in the meanwhile, our work must go on. The numbers on the fiscal framework reflect governments low growth policy regime and a Budget Office would likely confirm this conclusion.

National government failure to silence what it knows to be a reckless, economy crushing debate on nationalisation and expropriation without compensation; failure to contain the massive leakage from the public financial system and failure to present a workable plan on how public financial expenditure patterns will be changed from excessive current consumptive expenditure to enduring productive spending signals the incoherence and lack of political will in economic policy direction that drives potential investors into the arms of more attractive destinations, erodes the confidence of local participants and ensures a low growth path that drains the hope and dreams of our people.

We agree with the Minister that our relatively small open economy is one of the innocent bystanders in a global economic crisis that was not of our making. But we cannot crawl around on our knees to be kicked around by circumstances beyond our control. We must up our game. 

The Democratic Alliance is not opposing for the sake of opposition, we're opposing a low growth path to nowhere. Show us the policies, show us the jobs, show us the actual result on the fiscal framework, show us the improvement in the lives of the unemployed and people currently trapped in poverty and we will be extremely happy to have been wrong.

Issued by Dr Dion George MP, DA Shadow Minister of Finance, November 22 2011

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