Hon Chairperson, the purpose of sensible economic policy is to ensure that our economy grows over time and that government provides services to the people irrespective of where we find ourselves in the business cycle.
As activity in our economy ebbs and flows, the objective is to ensure that tax revenue reductions in the lean years are offset by abundant tax revenue in the more fruitful years.
The Minister referred to the mounting debt mountain where debt servicing cost is the fastest growing expenditure item and now absorbs 15.2% of the main budget revenue per annum. This the result of an unsustainably high budget deficit, now 6.8% of South Africa's Gross Domestic Product. Servicing this ever-widening deficit is already crowding out service delivery and reducing provincial budget allocations. Despite these cuts, the DA government, Western Cape has avoided reductions to service delivery budgets in health, education and social development.
Our focus remains on facilitating job creation and reducing poverty and inequality. The DA has also proposed a Fiscal Responsibility Bill that will prevent a national debt spiral and hold government to account for how it overspends the people's money.
Over the past week, stock markets have crumbled, the oil price has plummeted and the value of our currency has depreciated significantly. This the initial result of panic now sweeping across the world in the wake of the highly contagious new Covid-19 for which there is not yet any cure, that originated from China, our largest trading partner.
We can't yet predict the impact this will have on our already fragile economy. Our economy is unlikely to grow under these conditions and more likely to recede. Our contingency reserve of R5 Billion per year is already hopelessly inadequate and this outbreak may well completely deplete it, leaving us unable to attend to other disasters that will inevitably arise.
The unproductive millionaire managers, beneficiaries of political patronage under a failed cadre deployment system can be removed from the public sector payroll without any impact on service delivery and replaced by front line service personnel in our police service, hospitals and schools. There is just no political appetite.
In the absence of growth and the increase in tax revenue that this would have generated, government has run out of options. That is why it has now turned its attention to raiding the pension funds of hard working South Africans. The intention is not to somehow stimulate our economy and thus provide some future benefit in the form of investment returns. Instead, the intention is to bail out a hopelessly bankrupt South African Airways, SAA, and to throw billions more into the bottomless pit at Eskom, that has consistently demonstrated that it is not capable of correction and unable to provide electricity to millions of hard working South Africans who have already paid for the service, over and over again. Taxpayers should receive a rebate on the installation of solar panels and tax incentives to stimulate small business development and entrepreneurs. This is the sector where any future economic growth and job creation will be generated.
The people of South Africa deserve to be liberated from the zombie State Owned Enterprises. The DA governed Western Cape will lead the way to a future free from the strangle hold of Eskom and the darkness it brings to our lives.
Not satisfied with the pace at which the broken State Owned Enterprises haemorrhage the people's money into the pockets of thieves, the proposed state owned commercial bank will achieve this a lot quicker. In its establishment, government must ask itself how this proposed bank will be any different to the spectacular failure of the corporatisation model upon which the other entities are built.
A sovereign wealth fund can be beneficial only if it is wisely invested and not riddled with corruption. Government has proved that it can't manage the people's money wisely and without sticky fingers. How will this be any different? Wastage and corruption have reached such proportions that the Minister calls for head-on confrontation. There is no confrontation, nor will there ever be under the current government. It cannot survive if it rips out its rotten core.
It also can't end the failed experiment that, under the guise of empowerment, produced billionaires, including the President, while everyone else got left behind. Black economic empowerment was the biggest post- apartheid intervention by government in our economy. It started with the noble ideal of benefits trickling down to everyone and failed spectacularly in implementation.
The vast majority of our people remain in poverty and making the politically connected few even richer will not lead to growth and will continue to drive much needed skills from our economy. Redress does not need to be a zero sum game to the benefit of a few politically connected insiders and to the detriment of everyone else.
To achieve a developmental state, government needs to be competent and not corrupt. To provide a comprehensive social security net for the most vulnerable members of society, government needs to care about what it does with the people's money and punish those who steal it.
Positive sentiment is one of the most powerful economic stimulators and costs nothing. Sentiment towards our economy is poor because nobody believes that government will do anything about corruption or tackle its debt spiral. Moody's holding the last investment grade rating for South Africa expects lower growth than projected in the budget and will decide this month on whether to downgrade us to junk status in line with every other rating agency. That prospect appears likely.
Government knows that the fiscal cliff is fast approaching and the current global environment isn't helping. Economic policy must change. If government doesn't do it voluntarily, its hand will be forced. We do not support the framework.