Madam Deputy Speaker, it cannot be easy to be a Minister of Finance in these testing times. In South Africa we are better off than our major trading partners in Europe because of the sound conservative fiscal policies introduced by the former President Mbeki and the hon Trevor Manuel. It created room for the Treasury to adopt a countercyclical stance and to opt for an expansionary fiscal policy when it was necessary.
Unfortunately, during this time we allowed the state wage bill to spiral out of control. Add a few other factors and the perception was created that Treasury's grip on public finance is slipping.
Add to that Moody's wisdom to warn us that we are in for a downgrade mainly because of political arguments and further take cognisance of what Business Day wrote in an editorial, and I quote:
The ruling party and its alliance partners are just not on the same page economically, an ideological division that reaches right to the heart of the Cabinet.
To add to that, government is reluctant to take difficult decisions. Maybe we should pause and rethink. The Moody's announcement is a warning; let's not run away from it but deal with it.
The Minister of Finance and Treasury cannot do their job if the President and the whole of the Cabinet are not supporting him. The perception is that too many Ministers simply do not bother to take care or realise that we need a different stance or don't make it their business to understand how the economy works or they don't tell their departments.
Some of them create a perception that they worry more about business class, motor cars and luxury residences - let alone costly jets. Do they really worry about the trajectory of our rising State Wage Bill or the fact that the deficit should come down? Do they really worry what is going on in Europe, which is still our major trading partner by far?
It's time to be conservative at all levels. President Zuma can set an example by trimming the Cabinet to 24 Ministers and not more than 12 Deputy Ministers. Is it really necessary to have a bigger Cabinet than the United Kingdom, Australia, Norway, Italy, the USA, Japan and Holland?
We do not need 68 Ministers and Deputy Ministers making us the third largest Cabinet in the world. No bronze medal for this achievement. Imagine the signal the President will send to the nation when he is trimming down. It's time to be serious about savings. The fall of the Berlin Wall was unthinkable, a breakup of the eurozone previously unthinkable, but it is now being mentioned. Are we ready for this?
Are we ready for a higher inflation era? Are we ready for a volatile season of the exchange rate posing an upside risk for inflation creating food security problems?
The inability for advanced economies to generate a sustainable higher growth and the fact that a credit crunch is a possibility at a time Europe is heading for another recession, as well as the fiscal tightening in Europe are signs that we, together with them, are in for difficult times.
It's now time to admit any mistakes we have made in the past three years and to restore fiscal discipline at all costs. It is time now to take difficult decisions. It is up to us to prove Moody's wrong. There is no doubt that the Treasury and the Minister are doing their best. If you read the policy statement it is all there. Hon Minister, you must stop being polite, stop talking in coded language and stop the perception that Sars will bail us out next year and that we shall grow more than expected. It is not a hopeless situation, but it is time to show our concern and beat the drum of economic conservatism. Cope supports the statement.