We are in deep economic trouble

26 November 2015

The following speech was delivered in Parliament today by the DA’s Shadow Minister of Finance, David Maynier MP, during the debate on the Medium-Term Budget Policy Debate and the amendment of the budget.

Thirty-two days ago the Minister of Finance, Nhlanhla Nene, delivered the Medium-Term Budget Policy Statement in this Parliament. 

The Minister stumbled through his speech while students rampaged and stun grenades exploded as the “FeesMustFall” campaign raged outside Parliament. 

This was a powerful symbol of the anger, and the desperation, and the alienation experienced by young people in South Africa. 

They seem to have lost faith, not only in government, but also in the settlement, reached twenty-one years ago, which promised them a better future. 

There are 8.4 million people, many of whom are young people, who do not have jobs, or have given up looking for jobs, in South Africa. 

They live without hope, without dignity, without independence, and without freedom, in South Africa. 

What we needed therefore was an ambitious Medium-Term Budget Policy Statement, which would have given hope to the 8.4 million people who do not have jobs, or have given up looking for jobs, in South Africa.

But, what we got was a business-as-usual Medium-Term Budget Policy Statement, which shattered the hopes of the 8.4 million people who do not have jobs, or have given up looking for jobs, in South Africa.

The rampaging students and stun grenades were a powerful symbol of the anger and desperation experienced by young people in South Africa.  

But, they were also a distraction from the full economic horror confronting South Africa. 

Because, make no mistake, we are in very deep economic trouble. 

We expect the economy to grow at 1.5% in 2015. But, that is below the 2% projected in the main budget in 2015.

We expect to collect R1.22 trillion in 2015/16. But, that is R7,6 billion less than projected in the main budget in 2015. 

We expect to spend R1.37 trillion in 2015/16. But, that is R27,7 billion more than projected in the main budget in 2015.

And, we have blown the R5 billion unallocated reserve, provided for in the main budget in 2015.

This, is largely as a result of a public sector wage agreement, which will cost R65,6 billion between 2015/16 and 2017/18.

With expenditure, exceeding revenue, we expect a budget deficit of R157.9 billion, in 2015/16. 

We expect the gross national debt to increase from a staggering R1.98 trillion to R2.0 trillion in 2015/16. 

And we expect the gross national debt to increase by R600 billion – not R600 million - from R2.0 trillion in 2015/16 to R2.59 trillion in 2018/19. 

We sometimes forget that, under President Jacob Zuma, gross national debt has increased by R1.35 trillion, from R650 billion in 2008/09 to R2.0 trillion in 2015/16.

Debt service costs are the fastest growing expenditure item on the budget and are projected to be R127,9 billion in 2015/16.  

Debt service costs this year have consumed R62.65 billion, which, to put debt service costs in perspective, is more than the R44.6 billion defence budget for 2015/16. 

The situation is so bad that the repayment of debt is set to breach the “affordability level” in 2016/17, requiring a “bond switch programme”, to reduce the amount of debt maturing in the next five years.

And, that is not to mention the major fiscal risks, which include the nuclear build programme and our very own “Zombie SOE’s”, including South African Airways. 

The fact is the Minister has been “henpecked” by Her Excellency Dudu Myeni, and seems powerless to act against, this one-women wrecking ball, who seems hell-bent on destroying South African Airways. 

We now know that South African Airways requires a further R5 billion guarantee. 

And worse, we have recently learned that South African Airways, is in acute financial distress, with a confidential memorandum, revealing that: 

“Any further trading under current circumstances constitutes reckless trading”.

In the end, we are in very deep economic trouble, on the brink of recession, staring at a fiscal cliff, and at serious risk of a sovereign ratings downgrade.

That is why is it astounding that a Minister, who is drowning in red ink, and who is supposed to be waging a war-on-waste, would introduce an adjusted budget dripping in waste. 

When you dig down into the adjusted budget, you soon see we have a ruling party, which prioritises Ministers’ needs, rather than the peoples needs.

Because, there is no money for students. But, there is R720 million for the “impact of the depreciation of the Rand on foreign currency denominated expenditure for foreign missions”.  

There is no money for students. But, there is R7.48 million allocated for “increased financial support to political parties”.

There is no money for students. But, there is R1.25 million allocated for “vehicles for the Minister and Deputy Minister”.

There is no money for students. But, there is R540 000 allocated for “purchase of bulls for reproductive purposes”.

There is no money for students. But, there is R11.14 million allocated for “guarding services rendered to defence headquarters”.

There is no money for students. But, there is R200 000 allocated for “annual national beef cattle improvement awards”. 

There is no money for students. But, there is R26.5 million allocated for “office furniture and critical security equipment for members of VIP protection”.

There is no money for students. But, there is R7.5 million allocated for “establishment of a South African Network for Women in Transport Summit”.

There is no money for students. But, there is R1.5 million allocated for “operational subsidy to the Moral Regeneration Movement”. 

There is no money for students. But there is R245 000 allocated for the “refurbishment of Ministers’ offices”.

That is why, for the first time, in twenty-one years, we have taken a hardline, and put the minister on notice that never again, will a budget, be rubber stamped by this Parliament. 

The adjusted budget process has been an absolute shambles with:

- bills being considered which had not been referred to committees;

- final mandates being adopted without conferral by legislatures; and

- reports being adopted without being properly passed by committees.

That is because at the end of the day the adjusted budget has been rammed through Parliament.

I have said it before, and I will say it again to National Treasury: we will not be your “galley slaves”, rubber stamping your budgets, and rubber stamping your bills, in Parliament.

That is why we proposed twenty-six amendments to the adjusted budget, aimed at shifting R904 million, in wasteful expenditure, to the Department of Higher Education and Training, to fund students in need in South Africa.

But, the amendments were rejected by the ruling party because, when it comes to a choice between the needs of the people, and the needs of ministers, the ruling party always chooses the needs of the Ministers.

So, when the ruling party votes to support the Adjustments Appropriation Bill today remember this:

- you voted against our proposed amendments to shift R904 million in wasteful expenditure to fund the students fees shortfall; and

- by doing so you will be giving a collective middle finger to poor students who are struggling to pay their fees in South Africa.

In the end, we are in very deep economic trouble facing a low growth, high unemployment death spiral in South Africa.

That is why we needed an ambitious medium-term budget policy statement, with bold changes to economic policy, which would boost private sector investment, and give hope to the 8.4 million people who do not have jobs, or have given up looking for jobs, in South Africa.

The minister reminded us that “without economic growth, revenue will not increase. Without revenue growth, expenditure cannot increase”. 

And the Minister pleaded with us to vigorously implement the National Development Plan. 

But, that is not going to happen because the “root cause” of the economic problem is politics, rather than economics, in South Africa. 

Because, you see the people we call “investors”, Blade Nzimande calls “imperialists”.

And, because the people we call “tourists”, Malusi Gigaba calls “child traffickers”.

Because, the people we call “investors”, Ebrahim Patel calls “counter-revolutionaries”.

And, in the end that is why more-and-more people, who want jobs but cannot find jobs, understand that:

- they don’t have a job because President Zuma does have a job; and

- that as long as President Zuma has a job, they won’t have a job. 

And, that is why more-and-more young people, who want jobs but cannot find jobs, are choosing to vote for “freedom, fairness and opportunity” in South Africa.

Issued by David Maynier, Shadow Minister of Finance, DA, 26 November 2015