I would like to thank you for the budget in what we all acknowledge to be challenging circumstances: our province, the country and indeed the global economy remains hampered by low growth rates with forecasts of continued economic depression. Twenty one years into democracy, we still have unacceptably high unemployment rates, underperforming health and education departments and mammoth social challenges.
It is perhaps not surprising, then, that the overall impression that you get when reading the 2016/2017 KZN budget is of a person hanging on for dear life. It is not a budget of hope; it is a budget of desperation. Yet it need not be like that.
The budget is full of empty promises with no call to action. Promises are made that money will go to areas that need it; overspending will be curbed; expenses will be cut. We have heard these promises before. The budget assumes that if we simply hang on, and focus on basic services, the growth will come. But how can it do so without solid policies and strategies in place to stimulate growth?
Nowhere in the speech is anything actually said about how the Province intends to stimulate growth, or how the private sector will be supported and encouraged to support economic growth. And what will happen if there is no growth or even a decline? The budget is silent.
Spending on basic services, while important, is not enough to run an economy. Without growth to support such spending, and to encourage people to move towards self-sufficiency and away from dependence on the state, South Africa cannot hope to prosper.
The Nobel prize winner economist Milton Friedman said :“If you put the federal (read a “social” government) in charge of the Sahara desert in 3 years there will be a shortage of sand.” This budget indicates that we are rapidly using up our sand.
Notwithstanding several warnings by the IFP in the past, the government is swiftly running out of money. The ANC has forgotten that to be able to spend there must be growth. Without economic growth government cannot spend.
And what has the MEC in this budget speech done to fight the downturn? Very little if anything. Listening to the MEC debate it feels like deja vu. As in every budget speech since 2009/2010 the blame is once again placed on external factors such as :
- International economic downturn
- Economic pressure on emerging markets and a declining market growth patterns
- Lack of demand for commodities
Thus in a nutshell we are told once again that we are battling to grow economically because of issues that are not within our control. Nowhere in her speech does the MEC indicate that she has applied her mind to the question whether KZN’s own economic policies are in fact supporting growth? Of course there is no silver bullet solution, but as I will show, there are a range of possible interventions which are workable and necessary:
Let’s start at the beginning:
- The IFP applauds the promises (once again) to cut unnecessary expenses. This is, of course, an important starting point – there should be no wasteful expenditure. However, we are also told that the Province has been saving on goods and services from 2009. Already then we were told that serious cuts will be made. What makes 2016 different? Why will we now suddenly cut what we haven’t already cut from 2009?
- What is absent from the budget is the other side of the coin: where will the economic growth come from? Industry? Mining? Commerce? Retail? Agriculture? All of these seem unlikely under the current budget. Where is the capital expenditure which will enable development and, most importantly, human capital development? For when we empower and skill our people then the growth will happen automatically through innovation, entrepreneurship and competition.
The reality is that civil servant salaries go up and up always unbudgeted for, placing massive pressure on the provincial fiscus. The “contingency fund” was once again used last year to absorb the “wage shortfall” and the question arises whether this is actually a contingency fund or whether it will be once again absorbed by salaries? The IFP has looked at the economic policies underlying this budget speech and would be willing to take a bet with the honourable MEC that the so-called “contingency fund” will again be needed to pay wages. Perhaps we should rename the contingency fund the “13th cheque” fund for this is where the money will be needed to pay bonuses to many thousands of underperforming civil servants.
The country cannot sustain this level of public servant salaries. If cuts are to be made, this is where we should start. But the honourable MEC needs to remain popular with her party and cutting salaries would certainly not be a popular move…
The contingency fund should be just that – an emergency fund to be used to provide relief for unforeseen and critical events.
We have a prime example on our doorstep. KwaZulu-Natal is in the midst of the worst drought in 100 years. Yet the drought relief that is being proposed in the budget is laughable and will not provide any real solutions to the farmers whose livelihoods are being destroyed. There is no provision made for any assistance to farmers in terms of financing or grants for purposes of replenishing the livestock they have lost during the drought. For every farmer that goes under, unemployment increases and food security is threatened. Yet the Provincial Government can do nothing because the contingency fund has already been used up for salaries.
So, is the provincial government really serious about saving money? What does the ordinary citizen see?
- We spend outrageous sums of money advertising our own provincial services. The Department of COGTA alone spend some R22 MILLION on “advertising” its own Department in the 2015/2016 financial year (even though only R9,5 million had been budgeted). One only has to drive around to see that on almost every billboard in the province there is a face of an MEC (interesting that it is so during an election year). And again next year, now R12 MILLION is budgeted for “advertising” for this one Department. I can see no reason why this Department would need to spend this amount on billboards in the familiar green yellow and black colours – it is not as if the Department has any competitors or is trying to win customers. The only thing it may be trying to win is votes for the ANC. So too, the Education Department takes out expensive radio advertisements to wish learners a Happy Easter vacation. This is blatant abuse of taxpayer’s money. The total Provincial advertising budget, amounting to some R50 million is greater than the total amount which the Province spends on supporting arts and culture entities, including the flagship KZN Philharmonic Orchestra, numerous festivals, museums, concerts, youth development etc. Let’s stop this wasteful advertising and double the spending on stimulating creativity and supporting culture in our province.
- We tender for commonwealth games, but we have no money! Was this done purely to show off? We should never have supported EThekwini in this regard if we could not fund it.
- Then, despite the calls for expense cuts and the fact that there is no money for the Commonwealth Games, which can at least hope to bring some international attention and revenue to our Province, the Provincial government wastes money on conference such as the Premier Injobo – battle of ideas conference with the theme “Harvesting intellectual wisdom through debate and discussion and preserving it for posterity. What does this even mean? And more importantly, where is the benefit to the people of KwaZulu-Natal.
- We send more and more medical students to Cuba knowing that it is a very expensive program with a high failure rate. Why not concentrate on supporting South African doctors in South African medical schools? How about spending the money we use to fly the students back and forward to Cuba to upgrading some of the facilities at our local training hospitals so that more doctors are encouraged to remain in the public health sector?
- There are reports that KwaZulu-Natal spent more than R5 BILLION last years on “Consultants” and in fact the Department of Health alone spent R1.8 BILLION on consultants. Where is the follow-up on this outrageous expenditure and, most importantly, where is the benefit to the people of KZN? What steps if any are being taken in the supply chain of hospital products such as medicine and linen (and the outsourcing of laundry and maintenance) to ensure that products are not purchased at inflated rates and that value for money is received?
The one thing we can all agree on in this House is that the economic outlook for 2016/2017 is bleak – projected at less than 1%. This in turn implies job losses, and projected rising inflation will lead to increased pressure on consumer spending, and lower revenue collection.
The only thing that is bleaker than these economic forecasts is the budget speech itself. The MEC does not tell us how the budget will help to improve local conditions or maximise local potential to boost our economy and create jobs thereby reducing poverty.
The MEC states that there are “no more ‘holy cows’” in her repriorisation of the budget. Soon there will be no more fat to cut and then we will have to kill the cow.
Mr Lourens De Klerk
082 557 1579