Mixed response from opposition to Gordhan’s budget

BY CHARL BOSCH - FEBRUARY 25, 2016

Opposition parties have shown mixed reactions to Finance Minister Pravin Gordhan’s budget speech in Parliament on Wednesday, with the majority commending him for taking “a brave step”.

Speaking in a statement, African Christian Democratic Party (ACDP) MP Steve Swart said Gordhan had managed to stick to a “strict fiscal consolidation path”, in spite of looming fears that the country’s economy might be downgraded to junk status.

“Minister Gordhan, in our view, succeeded to a large degree with a very difficult balancing act given various political pressures from within the ruling alliance,” Swart said.

“Given the slow economic growth rate and decreasing government revenue, the ACDP welcomes Gordhan’s further measures to cut government expenditure by R25-billionn, mainly by curtailing personnel spending”.

He however stated that while the party welcomes the interaction between government and businesses, the increase in personal tax is likely to have a further negative impact on already cash strapped consumers.

“We have long-argued that law enforcement agencies such as the South African Police Service, Hawks, National Prosecuting Authority, Special Investigative Unit and Asset Forfeiture Unit should be given additional resources to collect the estimated R30-billion lost annually through corrupt and irregular state procurement practices,” he said.

“The true test now will be whether investors and the ratings agencies are similarly satisfied [and] whether [Minister Gordhan] will have the necessary political support to implement his proposals, given its austerity nature, and that this is an election year”.

Congress of the People (Cope) spokesperson Dennis Bloem said Gordhan acted “pragmatically, rationally and bravely” in attempt to win back the confidence of investors, and that his party supports the budget.

“The proof of how good the budget is will be in the eating. In our view, acting tough is better than talking tough,” Bloem said.

He stated that Cope, although in favour of the much talked about sugar tax, implementation of the National Development Plan (NDP) and keeping of VAT unchanged, remains worried about the limited mentions of measures to combat the persistent drought, and size of cabinet.

“We needed to hear much more on how government was going to assist communities and farmers severely affected by drought,” Bloem added.

“Cope reiterates that when a government is too big and bloated, the danger of falling over a fiscal cliff becomes a question of when rather than if. We challenge the ruling party as a whole to show leadership and demand that government downsizes immediately”.

In comparison, Democratic Alliance (DA) Shadow Minister of Finance David Maynier said the party believes Gordhan had not done enough to save the country’s economy from an imminent downgrade.

“The Minister announced no significant new measures to boost economic growth and create jobs and was more or less left pleading with his cabinet colleagues to implement the National Development Plan,” Maynier said.

He added that the party were “shocked” with the Minister’s failure to identify ways in combating the drought, and were also disappointed with the amounts allocated to poor households.

Agreeing with Bloem, Maynier said the DA was also dissatisfied with the Minister’s failure to call for a reduction in cabinet size, but welcomed his allocation of more funds to education and implementation of the Presidential Review Committee on State Owned Entities”.

“To get the economics right, the minister had to get the politics right, [but] his capacity to do things differently was limited by the political space available inside the ANC / SACP / COSATU alliance,” Maynier said.

“With both hands more-or-less tied behind his back we think that, in the end, the minister was not able to do enough to avoid a ratings downgrade in South Africa”.

 

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