MEDIA STATEMENT
BY THE
INKATHA FREEDOM PARTY
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Inkatha Freedom Party Statement By:
30 October 2007 The IFP welcomes the medium-term budget introduced by Finance Minister, Trevor Manual in Parliament today. My party appreciates that the Minister may not have had the same room for manoeuvre due to rising inflation and lower economic growth than in previous years, but overall government's spending priorities for the next few years appear to be mostly directed at the right things. We are however concerned that taxpayers should get full value for every Rand the Minister committed today. Some of the departments benefiting from today's announcements are simply not performing adequately when it comes to financial management as pointed out by the Auditor-General just last week. General non-compliance with the PFMA and Treasury regulations are creating a crisis for government as the public simply does not know whether it is getting good value from state expenditure. For instance, provincial departments appear to be in a state of audit disarray, yet this medium-term budget shows very strong growth in transfers to municipalities and provinces to improve basic services, education, health and welfare services. Under most circumstances we would agree that increased spending on these areas are necessary, but we are very concerned and must express our doubt about the ability of some municipalities to spend within the prescripts of the PFMA and the MFMA respectively. Our concern is reflected in the approved rollovers of R4 billion arising from unspent balances in 2006 / 07. The IFP is disappointed that the Minister did not see his way clear to ring-fence the budget surplus and revenue collection overruns and to redirect those funds to strategic interventions in crime fighting, education, job creation and, specifically, infrastructure spending on new power generation. We question whether it is necessary for an emerging economy such as ours with a focus on development to maintain a surplus at all. That extra money should be targeted specifically at strategic priorities. Nevertheless, the IFP appreciates the additional appropriations to reduce the court case backlogs and improving the Safety and Security budget. We are however concerned whether Land Affairs has the necessary administrative capacity to manage the additional appropriations for restitution grants. I also want to remind the Minister that focusing on service delivery is all good and well, but service delivery does not mean a road here, a tap there or a few new houses. Service delivery is all about building a comprehensive and conducive environment in which people can flourish; where business can grow; where entrepreneurs can start businesses and create jobs and where whole communities are uplifted. A variety of external and internal factors are currently driving rising inflation. We have no influence over the international oil price which is one of the biggest drivers of inflation due to rising fuel costs. These fuel cost increases have far-reaching knock-on effects, especially for food prices. The IFP is very concerned about food price inflation as it hits the poorest where it hurts the most - in their daily struggle for survival. While it is to be expected that higher fuel costs would hit food prices to some extent, we have to wonder whether food manufacturers are passing the benefits of fuel price decreases to the customer when these do occur or whether they are only interested in maintaining high profit margins. We suggest that government's food pricing committee investigate this aspect of food pricing. Another contributor to inflation is administered prices, such as the cost of electricity. If the regulator agrees to Eskom's request for double-digit increases in electricity tariffs over the next few years, it would have undoubtedly severe inflationary effects and a negative impact on almost all prices thereby further fuelling inflation. The IFP feels that it is time that government take a strategic decision to fund Eskom's expansion programme at least partly and not to pass the funding buck to the customer, the taxpayer, who is already contributing lavishly to the fiscus. It is a great pity that Minister Manuel missed an opportunity today to do so.
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