Budget South Africa 2016

Budget 2016

Minister Pravin Gordhan demonstrated clearly today that he is not the saviour of the South African economy that the citizens had been hoping for.  Although his Budget speech made mention of the possibility of a merger of the disastrous South African Airways with its more profitable subsidiary and of a possible part disposal of the merged company, it went a long way to reassure the top members of the ANC, including the Communists and the Trade Unions, that there would be no substantial deviation from the policies of the Government that have contributed so much to the crisis now facing the economy, and that socialism reigns supreme, even at the cost of a downgrading of South African securities from their precarious position verging on junk status.  It achieved nothing in persuading a critical observer that a genuine effort was being made to correct the economic malaise that threatens to bring the country to the same level of the examples of its close friends, Russia, Cuba, Brazil, Venezuela and Zimbabwe.  It was a speech full of platitudes and the same empty promises to ensure good governance and fight corruption that have been made over the past twenty years of economic mismanagement and exploitation of the economy for the benefit of the favoured few.

There was a promise to exercise fiscal restraint, made so often in the past without any follow-through by Government.  There was a promise to cut corruption and exercise control of the mismanagement of public funds, as President Jacob Zuma has promised in the past, while he and his cronies went about their business of misappropriating Government funds in breach of the Constitution and their Oaths of Office, without any mention of the recovery of a quarter billion Rands from the President.  There were no positive measures to ensure that these worthy objectives would be achieved, other than a pious hope that the crooks and incompetents who manage the municipalities would ‘scrutinise’ procurement contracts, even though 80% of the municipalities have suffered ‘impaired audits’, the loss of public funds to inefficiencies and outright corruption being estimated at R26 billion per year.  This would have been an ideal opportunity to announce the establishment of a specialised unit within the Auditor General’s department to investigate the cases of the loss of funds and bring criminal charges – not the gentle slap on the wrist handed out to those few whose actions have been too blatant for even the ANC to cover up – of all involved or permitting the criminal abuse of trust.  Although numerous examples of horrendous fraud have been reported, many involving the ANC, not one case has been brought to a criminal Court, except where the person involved has fallen out of favour or has taken the fall to protect those higher up the chain of command, being rewarded with a short sentence, early parole and, in many cases, the giving of a senior well-paid sinecure at public expense.  Indeed, a large number of autonomous municipalities will be incorporated into the large metros that the ANC so favours, in accordance with their Russian economic brainwashing, and carefully removing oversight of their activities from the citizens.  The pious hope that the public activities would become more honest and efficient has no hope of realisation in the absence of a new ethic permeating them, disseminated by professional and competent managers, most of whom have already left the country in despair.

There was no mention of any plan to reduce the bloated Cabinet (numbering 39 Minister, with Deputy Minister taking that number to 78), a reduction of which to 15 Ministers, more than the United State and Germany combined(!) has been calculated to reduce the cost of this underperforming Government by R4,9 billion p.a.

There was no attempt to increase tax revenue, as to do this would possibly lose votes for the ANC in the upcoming elections.  Apparently, holding on in office (and continuing to enjoy the chances to plunder the public purse) is more important to the ANC than ensuring the recovery of the economy and the generation of the jobs that the eighteen million recipients of social grants would much rather have than the miserable R1500 per month hand-out they will get.

The tiny concessions to infrastructural improvement, in the form of ensuring water supply (a measure that is too tiny to have any meaning and two years too late to close the stable door before the horse has bolted) and R1,6 billion to the development of a broadband network (somewhat less than Google has spent in just one US city), are meaningless in the context of the crisis of infrastructure the ANC has brought.  The Minister proudly referred to the improved passenger rail facilities, supposedly brought by the purchase of Belgian locomotives, bought at a high cost that provided for the necessary bribe amounts, but which are too big for the rail system, and the Chinese rail trucks, of lower quality than the 3000 rail trucks sold as scrap metal to the Chinese in order to gain a commission on the sale.

There were no detailed or positive measures announced to generate industrial development or to attract foreign direct investment, presently collapsing to the tune of R70 billion per year under the influence of the emulation of Zimbabwe’s indigenisation policies and the promise to prevent any foreigner owning land.  There was a promise to develop small-scale farms, an area that has proved to be valueless in creating jobs or producing food for the country, while it has been disastrous in depriving efficient commercial farmers of the land they needed, and has soaked up billions in funding that could have been applied much more fruitfully in supporting local industry and industrial development.

There was a promise to the trade unions to invite them to invest in any public-private ventures, an invitation that is a dire threat to the viability of those ventures in the light of the demonstrated belief of both the ANC and the trade unions that profit does not play any role in a business – only high wages and control to the workers has any meaning.  A wonderful way to buy votes at the expense of service to the public!  There was an explicit undertaking that there will be no privatisation of State Owned Entities, such as SAA (another R5 billion guarantee and about R500 million p.a. required), SA Post Office (about R1,2 billion subsidy required to make it solvent, never mind bringing it to the capability to serve the public before the ANC vultures sank their claws into it), Eskom (probably requiring funding or guarantees of at least R60 billion before it gets back on its feet, in time to expend the $1,11 trillion to establish a Russian-controlled nuclear power industry) and the numerous other entities that serve the funding needs of the ANC.  The undertaking to dispose of these loss-making entities to private enterprise which has the capability to manage them efficiently and at the lowest cost would have been one of the signs needed by the ratings agencies that South Africa really wants to avoid junk status.  There was no hint of that.  An undertaking to steer the ship of State out of the stormy waters of trade union activism and socialist policies which are not and cannot be funded by the country was noticeably absent.  A plan to conduct lifestyle audits and intensive, in-depth evaluation of the sources of the wealth of the top ANC (and other) politicians was totally lacking.  An undertaking to roll back the huge increases in employment of people by the Government (49% of the annual budget goes in payroll, without the addition of the tens of thousands employed in parasitic companies like Eskom, Sanral and others of their ilk) would have been a welcome sign that the Minister of Finance enjoys both the support of the Governmental leadership and the mental equipment to understand how a modern, non-communist, economy works, but that was totally absent.  Even a simple undertaking within a half-year to implement a ‘no free car for civil servants policy’ would have been a welcome sign, but that also, alas, was lacking.

The Budget speech, coming so close on the heels of the proud announcement by Jacob Zuma that the Parliamentarians had accepted a 4,8% salary increase (when realism regarding the state of the economy and humility for his role in bringing that state about would have dictated at least a 10% cut, and evaluation of their worth to the country would have demanded a reduction of 90%) was a clear indication that the ANC has decided to carry on, on the same course, even though the rocks are clearly visible to all the unhappy passengers.

The possibility of a ratings downgrade for the country, which many hoped would not become a probability, has now become a certainty.  The drop of the Rand:Dollar rate from R15.30 to R15.60 during Gordhan’s speech says it all.  The only question is how long the diehard taxpayers and businesspeople will permit this situation to continue before they take matters into their own hands.