The reduction in the Budget deficit is positive news, although the ratings agency Moody's has pointed out:
This achievement was derived partly from a continuing inability to spend a large share of the investment budget, which is detrimental to the economy's growth potential. This inability to spend is perhaps the reason why, as a percentage of the GDP, infrastructure spending for 2012 will actually be lower than what the Minister forecast this time last year. The Minister should tackle skills shortages in the Public Service, the mountain of regulations that delay projects and ANC cadre deployment before raising hopes that we will be able to spend more to tackle our R1,5 trillion infrastructure backlog identified by the Department of Public Enterprises.
The chairperson of the Portfolio Committee on Finance reminds us that 2011 was meant to be "the year of the job". Yet at the end of that year we had 107 000 more unemployed young people in this country than at the beginning of that year. This is primarily because of Cosatu's opposition to reform and resistance to enlightened policies like the youth wage subsidy. The question is: If 2012 is meant to be "the year of infrastructure", how will we get beyond the capacity constraints in government to build this infrastructure?
One obvious solution to improve project management and fill funding gaps is to mobilise private sector capacity, as promised by the Minister in his Budget Speech. But someone will need to tell the Minister of Public Enterprises, Malusi Gigaba, because he poured ice on this proposal when he said two weeks ago that "the debate on port concessioning has not been settled". They should also talk to Mr Brian Molefe, the chief executive officer of Transnet, who said: "There is no role for the private sector in the main channels of rail infrastructure."
Attitudes like these in government perhaps explain why our use of public- private partnerships is among the lowest in the world, at around 4% of infrastructure spending. It may also explain why we persist in bailing out failing parastatals like our state arms manufacturer, Denel, and our state diamond mine, Alexkor, who together get more than R1 billion in this Budget.
We should send Minister Gigaba and Mr Molefe to Brazil. When they get there, they will land at an airport in So Paolo, which last month sold a 51% stake to investors for the equivalent of R70 billion. This is a quarter of the total amount that South Africa is meant to spend on infrastructure this year. We could certainly use this sort of money.
Last week, Moody's also said that Treasury's debt stabilisation programme relied on compressing the growth in the wage bill, something they did not believe would happen. [Interjections.] They are also concerned about future revenue, considering that the Minister this year ratcheted up dividends tax and capital gains tax - probably the last loads he could add to the taxation scales without tipping South Africans from "heavily taxed" to "totally overtaxed".
New tolls and increases in administered prices are already too much for our economy. Imposing carbon tax and a local business tax and VAT, or payroll or income tax increases to pay for the National Health Insurance will push us over the edge and do serious damage to our culture of taxpaying in South Africa. When that happens, you start to look like Greece.
Instead of speculating on what new taxes to impose, this Budget should have boosted potential tax revenue by doing more to drive growth in South Africa. If we accelerate growth from the anaemic 2,7% forecast for this year to the 8% targeted by the DA, we would double the size of our economy and our tax revenue in 10 years. But to start down this path, the Minister should have provided a real growth narrative in this Budget. For example, his counterpart in India, Minister Mukherjee, recently called GDP growth of 6,9% in India "disappointing" and said that his budget would provide "a roadmap for achieving a higher growth trajectory". In Brazil, Finance Minister Mantega said in his budget speech that "Brazil has the ability to grow faster. The budget we are implementing will make vigorous growth in Brazil possible."
Where were these sentiments in our Budget? What we needed was a detailed plan to drive faster growth by building a stakeholder economy - a South Africa where ordinary job seekers, workers and small business owners get a fair stake in our economy and a real shot at making it in a well-regulated market.
In the DA's alternative budget, released just before the Budget Speech, we tabled proposals for tax breaks for small businesses to help with their cash-flow problems. We also tabled more generous tax provisions for employee share-ownership schemes. Most importantly, to help give 3,2 million young job seekers a stake in the labour market, we called on Treasury not to yield to Cosatu on the youth wage subsidy. The President announced this policy two years ago. It had R5 billion allocated to it by the Minister of Finance last year and it had an implementation date of 1 April this year. The fact that Cosatu has managed to block it at the National Economic Development and Labour Council, Nedlac, since May 2011 is a national disgrace.