STRAIGHT TALK: SONA and Ramaphosa: the night and knight of delusion

Long and well-spun as it was, Ramaphosa’s state of the nation address can be distilled down to a single naked fact: it didn’t deliver the reforms we need to reverse South Africa’s slide into bankruptcy. It didn’t even come close.

“Gradually and then suddenly” was Hemingway’s description of how you go bankrupt. We’re entering the “suddenly” phase, with our credit set to be junked soon after Mboweni delivers his budget speech later this month.

Yet Ramaphosa missed his Rubicon moment to fix the fundamentals.

He failed to administer even the basic CPR required to stabilise the patient. If the DA were in government, this is the shock treatment we would have delivered last night.

  • Solve our energy crisis by committing to 1) break Eskom’s monopoly entirely by opening the energy market to full competition, allowing companies and households to generate and sell electricity unhindered by the state, 2) sell off Eskom’s power stations to pay off its R450 billion debt, 3) free Eskom’s leadership to drive operational efficiencies.
  • Rapidly revive investor confidence by decisively walking away from expropriation without compensation, national health insurance, nationalising the Reserve Bank, and forcing pension funds to invest in state-owned companies.

And Ramaphosa denied our economy the treatment – long prescribed by the DA – that would nurse it to long-term health:

  • Make bold changes to our labour legislation to unleash entrepreneurship and job creation.
  • Stand up to SADTU to end their stranglehold on our basic education system, so that teachers can be properly trained, monitored and incentivised.
  • Do away with cadre deployment and BEE so that the appointments and tenders are on merit and in the best interests of the poor. This would do far more to fix our health system than will NHI.
  • Devolve SAPS powers to the provinces and metros as per international best practice.
  • Commit to reining in the public sector wage bill, by freezing wages for all managers and administrators for three years and reducing the number of such managers earning over a million rand a year by a third.

Though not nearly enough to arrest South Africa’s slide, we welcome the commitment to add additional energy to the grid and to back the DA’s long-fought proposal to allow municipalities to procure their own power from independent producers.

But mostly, we were dished up delusion: a state bank when the post bank is already unable to do its job; a sovereign wealth fund when the government already spends R1000 million more per day than it gets in taxes; a smart city when most municipalities are bankrupt or dysfunctional or both; coding and robotics for kids who can’t read; a capable state with cadre deployment.

It would be funny if it weren’t ruining millions of lives and destroying our future.

Ramaphosa’s problem is that for every major policy decision confronting him, he must choose between his party and his country. Either he goes the route that provides patronage and populist support to his party (NHI, EWC, SADTU etc) or he goes the route that generates inclusive growth for South Africa.

He chooses the ANC over South Africa every time.

It’s time for South Africans to wake up. Cyril is not the knight in shining armour that came to save us. We need to build a new majority for reform in South Africa. The DA will be at the forefront of this charge.

Mantashe is spanner in the works of President’s energy promises

While the Democratic Alliance (DA) welcomes President Cyril Ramaphosa’s announcements in his State of the Nation (SONA) address last night regarding the energy sector, it is worrying that Mineral Resources and Energy Minister Gwede Mantashe does not seem to be on board.

Shortly after Ramaphosa announced during SONA that Independent Power Producers will be able to sell electricity to financially viable municipalities, Mantashe contradicted him in media interviews afterward by saying he is unwilling to commit to opening Bid Window 5. This essentially makes the president’s promise an empty one.

A limited number of IPPs have received licences to provide electricity to the grid, following the opening of four and half bid windows so far. The Integrated Resource Plan calls for more renewables to be added on an annual basis, but Mantashe has to open the next bid window, which will be the fifth one.

He has not done so, and judging by his statements last night he does not intend to do so anytime soon.

Mantashe has also continuously delayed the signing of section 34 notices, and has been slow to act on the amendment of schedule 2 of the Electricity Regulation Act.

Every day of delay of these urgent reforms is another day of rolling blackouts and another day of severe damage to the South African economy.

Minister Mantashe needs to come clean on what his immediate steps will be to implement the President’s promises without any further delays. We will hold him to account, as well as calling on the President to act against Mantashe if he continues to be the spanner in the works.

SONA must focus on jobs, the economy, and safety for all

Tomorrow President Cyril Ramaphosa will deliver the State of the Nation Address (SONA) following the 2019 national and provincial elections just 6 weeks ago. Despite the current fractious position we find ourselves in, there remains a collective sense of expectation that just maybe this SONA will mark a break from the past and charter a new way forward for our nation.

Make no mistake, our country is at the precipice and ready for change. Racial, linguistic and nationalist tensions are worryingly high, the economy is a friend to very few, and the overwhelming majority of South Africans live in fear for their lives and livelihoods. Things are fast approaching boiling point, and the time is ripe for social and economic reform.

As Leader of the Official Opposition, I have been steadfast in my approach towards the President. The DA will not be opposition for opposition’s sake. Mr Ramaphosa will have my full support when he acts in the best interests of South Africa. Similarly, he will face the full might of the official opposition when he acts to the contrary.

Tomorrow the President has a unique opportunity to restore confidence in the country by providing policy certainty that steers our economy towards a path of growth and prosperity. A future in which citizens feel safe, corruption is seriously dealt with, and services such as healthcare and education are delivered in a fair manner to all South Africans.

It is our view that in order to do so, he must make bold, uncompromising decisions despite how unpopular they may be within certain factions of his party. The future of South Africa hangs in the balance, and President Ramaphosa must now show the nation that he indeed is fit to lead.

It is within this context that we today set out the DA’s expectations for the State of the Nation Address.

Jobs and the Economy

The only way to create jobs, sustainably lift millions out of poverty, and give people the hope of a future of shared prosperity is an economy growing at much higher levels. Developing economies across the world have demonstrated that when sustained growth is achieved, more jobs are created, salaries and wages increase, and the quality of life is objectively better.

The key impediments to growth are the supply and cost of electricity, labour legislation reform, fundamental policy uncertainty, uncertainty around the protection of property rights, and low levels of investment – both domestic and foreign.

1. Electricity cost and supply

President Ramaphosa needs to announce government’s intention to allow major cities to procure electricity from any capable supplier, establishing a competitive market for power generation that lowers costs – especially for the manufacturing sector. This would in turn create much needed power for the under-resourced national grid, staving off the need for rolling power cuts. Secondly, the President should proceed with the breaking up of Eskom into separate entities, one for generation and the other for supply. This is the most sustainable way of protecting the grid while allowing new producers to come on board.

This should be coupled with a decision to not allow any more bailouts for Eskom. Our country cannot be coal dependent for much longer, and there ought to be a concerted effort to pursue alternative, cleaner energy sources including wind, solar and gas.

  1. Labour Legislation Reform

To mitigate the protracted strikes, the President should implement the DA’s strike ballot proposals. This includes:

  • Making it a requirement for ballots to be held before there is a strike action by unions – a key initiative to ensuring all strike action stems from a democratic decision of workers;
  • Holding labour unions accountable for any damage to public or private property as a result of strike action; and
  • Holding labour unions financially accountable to pay damages to individuals who have successfully brought cases of intimidation and/or assault against trade union members during strike action.

In addition to this, an independent committee tasked with reviewing our rigid labour legislation regime and its impact on investment, growth and job creation should be established.

Our labour policy is some of the most archaic in the world and the main inhibitor to job creation. This labour legislation review would need to include reforming the National Minimum Wage with Sectoral Minimum Wage as the ideal alternative.

We need to explore the option of allowing people to exempt themselves from minimum wage legislation which will allow higher access to work for those unemployed South Africans.

  1. Policy uncertainty

One of the primary inhibitors of inclusive economic growth is the guess game many local and foreign investors have to play when it comes to government policy. There exists very little certainty as to government’s “rules of the game”, with doublespeak occurring on a regular basis.

Providing policy certainty is the “cheapest” stimulus that Ramaphosa could announce as it requires no money and would have a profoundly positive effect on business sentiment and confidence.

This begins with the President at once stopping speculation about the role and nationalisation of the Reserve Bank and end the self-defeating discussion on the expropriation of private property without compensation.

There is also uncertainty in the mining sector causing the near-collapse of the industry, which remains a vital export earner and employer in the economy. The dispute over empowerment requirements must be resolved in favour of investment and growth because a greater empowerment share of an ever-shrinking industry is pointless and does not serve anyone’s interests.

In trade, there is a genuine threat that South Africa will suffer as an innocent victim in a trade war between the trade “superpowers.” This is an opportunity to speak with moral authority and make the case for more open global trade based on mutually agreed rules. We should show leadership in this by working to complete the Continental Free Trade Area (CFTA) and Tripartite Free Trade Area (TFTA) urgently.

Such announcements would send a clear signal that South Africa is open for business, which would in turn grow our economy and create much needed jobs.

  1. Public investment

In order to invest in infrastructure, we have to cut costs elsewhere as the public purse has run dry. This requires a fundamental spending review focused on the public wage bill, which is clearly unsustainably inflated in favour of very expensive “head office costs” – with not enough allocated to frontline delivery staff like nurses, doctors, teachers, police officers, social workers, and border patrols.

The President should announce a salary freeze on all nonessential public sector posts, with a view to drastically cutting middle management and redirecting that money to funding much needed infrastructure projects across the country.

5. Additional measures

There is an urgent need for SOE reform across the board and the President needs to announce his intention and table a solid plan for full SOE reform of all SOEs.

A moratorium on bailouts to SAA should be announced, and the airline placed in business rescue before the end of June 2019. This would demonstrate that government will not waste another cent on badly run, corrupt SOEs.

The Carbon Tax should be scrapped immediately. It is nothing but a tax on manufacturing, when we should be looking to lower the costs of doing business for manufacturing companies by all means possible. The cost of this tax will be borne disproportionately by ordinary consumers through higher electricity charges and manufacturing businesses and will have no major benefit in reducing carbon emissions, since the greatest emitter is Eskom.

Safety

In recent months there has been an unprecedented spike in violent crimes affecting rural and gang-ridden communities. This follows promises made by President Ramaphosa before the elections to bring about rural safety and security in South Africa.

It is high time the President acts and reintroduces rural safety units at once.

South Africans deserve safer communities and an honest and professional police service that actually serves them. However, provinces remain severely under-resourced, under-trained, under-equipped and under-staffed. President Ramaphosa should therefore also announce his intention to devolve the South African Police Service (SAPS) powers to capable provinces so that the SAPS can ensure more efficient and effective planning and responsiveness closer to the ground.

Corruption

For the past two decades, corruption has seeped into every organ of the state. From the Arms Deal to Nkandla, rooting out corruption requires bold leadership from the very front.

For the past seven months, President Ramaphosa has been embroiled in a corruption scandal relating to Bosasa, a company that has questionable ties to the ANC for over 20 years. The President – and his son, Andile – have allegedly benefitted to the tune of millions from a company well known for bribing government officials. This is now subject to a Public Protector investigation following a complaint I laid.

I have today written to the Speaker of the National Assembly, Thandi Modise, calling for the establishment of an Ad Hoc Committee on the Public Protector’s imminent Bosasa report to interrogate the Bosasa scandal – which includes President Ramaphosa’s dealings.

If the President is truly serious about rooting out corruption, he should have no qualms in publicly supporting my call and subjecting himself to the Ad Hoc committee.

Service Delivery

It is high time the President takes a decisive stand against the South African Democratic Teachers’ Union (SADTU) which continues to hold South Africa and its children to ransom. The union has fought against all accountability for teachers, placing the interests of millions of children second to the interests of union bosses.  The implementation of teacher competency tests and principal performance agreements that SADTU has been blocking for half a decade would be a welcome show of independence from the unions by President Ramaphosa, and he should introduce these tomorrow.

To add to the list of dangerous policies that needs to be scrapped must surely be the National Health Insurance (NHI) which is unsustainable and unfeasible. The President needs to announce that that the NHI will be scrapped.

Conclusion

The question that should be on the President’s mind as he addresses the nation tomorrow is where the country is going and how we are going to get there. If his answers to these questions are in the best interests of the people of South Africa, he will have my full support going forward.

Mr Ramaphosa needs to be bold, brave and uncompromising. He ought to place the nation’s interests ahead of the ANCs interest. Only then will we begin to move our country forward.

Expropriation without compensation still a big part of the ANC’s election campaign

President Ramaphosa seems more determined than ever to rush through land expropriation without compensation for political gain in the upcoming elections.

In his State of the Nation Address (SONA) President Cyril Ramaphosa announced that Deputy President David Mabuza will lead the Inter-Ministerial Committee on Land Reform that will work alongside the Constitutional Review Process. We also note the establishment of the advisory panel of experts that will advise government on its land reform programme. It is due to report back by the end of March 2019.

We have been unambiguously clear about our commitment to redressing the violent history of land dispossession in this country and have always viewed land reform as a social justice imperative which all South African must rally around. Conversely, the DA holds the view that the Constitutional Review Committee’s report that recommends the amendment of Section 25 of the Constitution to allow for land expropriation without compensation is flawed.

It is for this reason the DA will challenge the legality of the Constitutional Review process should this procedurally flawed report be passed. We maintain, the Constitution is not a barrier to land reform. The barriers are rather corruption, constrained budgets and a lack of political will by the failing ANC.

The ANC had 24 years to address this injustice and they failed. Changing the Constitution is simply an attempt by the ANC to buy itself time, so that it can continue its looting while citizens of this country languish in abject poverty.

We do not oppose land reform, we oppose the ANC’s attempts to use expropriation as ‘get out of jail free’ card. Their failure to take land reform seriously must not be awarded with another term in office.

Unemployed not included in discussions over National Minimum Wage

The DA is concerned that the voices of South Africa’s 9.2 million unemployed are not being heard in the ongoing discussions over national minimum wage.

On 26 March, Minister of Labour, Mildred Oliphant, admitted that government’s bid to ram through the National Minimum Wage Bill (NMWB) before the 1 May deadline set by President Cyril Ramaphosa during this year’s State of the Nation Address (SONA) was unachievable. Significantly, the minister conceded that the adoption of the proposed labour legislation is up to Parliament, not the Executive.

The Portfolio Committee on Labour was recently briefed by the Department on public submissions received for the Labour Relations Amendment Bill, The NMWB Bill and the Basic Conditions of Employment Amendment Bill.

It was during these briefings that the process of public participation was called into question. Indeed, the committee has not heard from the poor, young and unemployed South Africans who will be most significantly impacted by the proposed changes.

The DA is concerned that those who struggle most to gain access to the job market have been ignored during the public participation process and we reiterate our call for the portfolio committee to be allowed the necessary time and opportunity to consider the proposed bill, free from political interference.

Ramaphosa’s SONA school promise already broken

The DA is shocked to learn that President Cyril Ramaphosa’s SONA promise on school infrastructure has already been broken.
It is utterly disappointing that, instead of completing outstanding Accelerated Schools Infrastructure Delivery Initiative (ASIDI) projects next year, they will only be completed in 2021.
The further delay of this project, which is aimed to replace mud schools and other inappropriate education structures, and restore the dignity of learners and teachers, is an insult to children who are relegated to inferior conditions of learning by the ANC government.
This clearly shows how detached the ANC government has been from the plight of our children, especially those in impoverished and rural communities.
President Ramaphosa stated during his SONA speech that they will “complete all outstanding projects by the end of the next financial year”.
However, the Department of Basic Education (DBE) has now said that what he meant to say, was that just the basic services projects will be finished next year and not the school construction. The DBE spokesperson was quoted in media saying: “The distinction may have been lost in the final speech edit.” The school construction will only be completed in 2021.
But even if it is a just a promise for the service commitment, we have absolutely no confidence in the capacity of the ANC government to deliver – given their recent abysmal track record.
ASIDI has performed appallingly in the past year – according to the DBE annual report for 2016/17, they missed all their targets by a shocking margin:

  • Schools to be built: target 59, achieved 16;
  • Schools provided with sanitation: target 265, achieved 9;
  • Schools connected to water: target 280, achieved 10; and
  • Schools connected to electricity: target 620, achieved ZERO.

The DBE was full of excuses when they presented to SCOPA last week, saying it was just completion certificates outstanding. This cannot be allowed to stand. How could they have failed to secure certificates for so many years? And the DBE has admitted in a Parliamentary reply to the DA that the performance is due to “non-performing contractors and Implementing Agents (IAs)”.
The DA will now write to the Chairperson of the Basic Education Portfolio Committee, Nomalungelo Gina, to urgently request a comprehensive list of all planned and current ASIDI projects, stating when they started, who the contractor is, the cost, what the reason for the delay is and what the department is doing to fix the problem.

Minister Motsoaledi has no answers or update on world's largest Listeriosis outbreak

Today in Parliament’s Portfolio Committee on Health, Minister Aaron Motsoaledi, said that he cannot release the latest statistics on Listeria-related cases or deaths because he has not yet met with stakeholders due to “events in government and Parliament”.
The DA has repeatedly asked for an update on this crisis and has been met with silence. It clear that the reason for his silence is that he has no answers.
The Minister confirmed that these vital meetings on the outbreak were postponed due to “events in government and Parliament” in the run-up to SONA and former President Zuma’s refusal to step down.
Essentially the Minister was playing politics while our country is in the grips of the world’s largest Listeriosis outbreak.
Currently, there are 872 reported cases of Listeriosis across the country, and more than 160 people have lost their lives. According to reports, 57 people lost their lives last week alone.
Time is running out and Minister Motsoaledi must immediately address the nation and present the public with crucial information regarding Listeriosis. To date we still do not know the source of the deadly Listeria bacteria, nor do we have any clarity on the Department’s plans to combat the outbreak and inform citizens on preventative measures.
This outbreak has far-reaching consequences across various sectors, including the food and agriculture sectors. It is simply not good enough to sit by and wait for this crisis to solve itself.
We need strong and decisive leadership from the Minster. Services to our people cannot come to a halt purely because of political uncertainty in certain parties.

Minister Motsoaledi has no answers or update on world’s largest Listeriosis outbreak

Today in Parliament’s Portfolio Committee on Health, Minister Aaron Motsoaledi, said that he cannot release the latest statistics on Listeria-related cases or deaths because he has not yet met with stakeholders due to “events in government and Parliament”.

The DA has repeatedly asked for an update on this crisis and has been met with silence. It clear that the reason for his silence is that he has no answers.

The Minister confirmed that these vital meetings on the outbreak were postponed due to “events in government and Parliament” in the run-up to SONA and former President Zuma’s refusal to step down.

Essentially the Minister was playing politics while our country is in the grips of the world’s largest Listeriosis outbreak.

Currently, there are 872 reported cases of Listeriosis across the country, and more than 160 people have lost their lives. According to reports, 57 people lost their lives last week alone.

Time is running out and Minister Motsoaledi must immediately address the nation and present the public with crucial information regarding Listeriosis. To date we still do not know the source of the deadly Listeria bacteria, nor do we have any clarity on the Department’s plans to combat the outbreak and inform citizens on preventative measures.

This outbreak has far-reaching consequences across various sectors, including the food and agriculture sectors. It is simply not good enough to sit by and wait for this crisis to solve itself.

We need strong and decisive leadership from the Minster. Services to our people cannot come to a halt purely because of political uncertainty in certain parties.

Budget 2018: Gigaba can avoid tax increases and make R112 billion available

The following was presented today by the DA Leader, Mmusi Maimane MP, and DA Shadow Deputy Minister of Finance, Alf Lees MP, ahead of the Main Budget 2018, tomorrow. Please find the Main Budget Preview here.
Introduction
The fact is that no government can tax itself to prosperity. Tomorrow, Finance Minister, Malusi Gigaba, will deliver the 2018 National Budget Speech, effectively detailing the blueprint as to how President Cyril Ramaphosa’s “new dawn” will take effect.
As with the President’s maiden State of the Nation Address (SONA) last week, we join South Africans who are optimistic about the potential change in direction national government will take under its new President. The budget provides the first real opportunity to demonstrate such change.
As a result of a near decade of mismanagement of the country and the economy under Jacob Zuma, our nation finds itself in a very precarious financial situation. With almost 10 million unemployed South Africans – most of which are young people – and over half the nation living in poverty, it cannot and mustn’t be “business as usual” in this budget.
A “new dawn” requires a “new direction” in the economy. In our view, this means there needs to be total change to policy direction and spending patterns in order to (a) grow our economy at a rapid rate that will create jobs and bring in new tax revenue, and (b) introduce big, deep, and lasting spending cuts to all the waste and excess in government. This will ensure that we can direct public funds to deliver basic services and support to the poor, and means that we don’t need to hurt the poor through more tax.
The budget will no doubt have implications for the most vulnerable in our nation. With inflation on the rise, and the cost of living increasing, we are faced with tough choices, and these tough choices must favour the poor and the jobless. We cannot attempt to balance the budget on the backs of the poor.
We have identified a “six pack” of challenges, which must be addressed in tomorrow’s budget. These include a broken budget process, weak economic growth, ballooning national debt, dysfunctional institutions, zombie state-owned enterprises and long-term fiscal risks.
We need to cut spending and expenditure in the right areas. The cuts ought to focus on superfluous government departments, zombie SOEs, and vanity projects such as the New Development Bank. If the budget does this, we will support it. However, if the budget cuts basic services such as health, education, social grants and infrastructure that facilities growth – we will reject it.
The budget must also carefully consider funding of pro-poor and opportunity creating items such as funding of higher education, and the internship programmes for young people announced in the SONA last week.
At present, we sit with massive revenue shortfalls projected over the medium term, including R50.8 billion this year, R69.3 billion next year, and R89.4 billion in the 2019/20 financial year. If we address the “six pack” of challenges in tomorrow’s budget, there will be no need for government to raid the pockets of citizens, whether by a regressive anti-poor VAT increase, or a further increase in personal income tax.
Therefore, any tax increase tomorrow will be rejected by the DA, including the likely removal of zero rating on fuel. We specifically reject any talk of a VAT increase, which will hit the poorest hardest.
Budget 2018
What the Minister last year called an “honest view” of the state of the economy, revealed weak economic growth, a breach of the expenditure ceiling, bailouts of zombie state-owned enterprises, forced selling of non-core state assets, a blow-out in the budget deficit and ballooning national debt.
The Minister’s “decision not to make any decisions” was a disaster, causing the major rating agencies to snap.
In tomorrow’s Budget the Minister will have to tackle a “six pack” of challenges as follows:

  • a broken budget process;
  • weak economic growth;
  • a budget blowout;
  • state capture;
  • “zombie” state-owned enterprises; and
  • long-term fiscal risks
  1. Broken budget process:

The budget process is supposed to promote transparency, accountability and effective financial management.
However, the budget process is broken with:

  • decision-making on budget priorities being centralised under the Minister of Planning, Monitoring and Evaluation, Jeff Radebe, who is now responsible for producing a “Mandate Paper”, setting out long-term budget priorities in terms of a new budget prioritisation framework; and
  • decision-making on resolving competing budget priorities being centralised in a new “pop-up shop” called the Presidential Fiscal Committee.

We need to restore the integrity of the budget process and ensure that it is geared towards promoting transparency, accountability and effective financial management by restoring control of the budget process to National Treasury.

  1. Economic Growth

The average economic growth rate over the medium term is expected to be about 1.6%, which is well below the 3% required to begin increasing employment, decreasing poverty and stabilising national debt.
To boost economic growth and create jobs requires a fundamental change in economic policy in South Africa.
What we need is a “policy shock” to boost economic growth and create jobs in our country.
That is why we believe the Minister should announce a package of structural reforms designed to boost investor confidence, and consumer confidence, and therefore private sector investment, including:

  • withdrawing the current version of the Mining Charter and the Mineral and Petroleum Resources Development Amendment Bill;
  • exempting small businesses employing fewer than 250 employees from complying with restrictive labour legislation, other than the basic conditions of employment;
  • removing the extension of collective bargaining agreements to non-parties, who cannot carry the cost of wage agreements imposed on them;
  • auctioning off the high-demand spectrum and using the proceeds to facilitate access to mobile internet and roll out fibre fixed-lines to support competitive technologies; and
  • privatise, or part-privatise, “zombie state-owned enterprises such as South African Airways and Eskom.
  1. Budget Blowout

MTBPS revealed a budget deficit of R193.1 billion in the 2018/19 financial year, and ballooning national debt over the medium term, blowing out to a staggering R3.4 trillion, or 59.7% of GDP, by 2020/21.
To stabilise national debt will require “fiscal effort” in the amount of at least R39 billion, or 0.8% of GDP, in 2018/19.
This excludes the level of additional “fiscal effort” that may be required to fund free higher education, the public-sector wage bill, and further “bailouts” to “zombie” state-owned enterprises in South Africa.
We expect the Minister to try to solve the “fiscal equation” on the revenue side, rather than the expenditure side, and to announce significant tax increases in 2018/19. The possibility of a 2% increase in VAT will be disastrous for the poor who will be hit hardest should this increase be implemented.
So, whether you are rich, and taxed directly, or poor, and taxed indirectly, the Minister is going to reach into your back pocket and help himself to more of your money in 2018/19.
However, there options other than tax increases.
These include:

  • reducing the size of the cabinet by at least five ministries, which could save an estimated 122 million in 2018/19;
  • the implementation of a 6% per year “haircut” on all mandatory cost containment items in national government, which would save an estimated R2.3 billion in 2018/19; and
  • the implementation of a 6% per year “haircut” on all mandatory cost containment items in provincial government, which would save an estimated R3 billion in 2018/19.

However, if we are going to get serious about cutting spending we will have to confront the ballooning cost of “compensation of employees”, which is projected to be R587 billion in 2018/19.
We believe the Minister should consider implementing a “wage freeze”, for the period of one year, across the public service, including salary freezes for:

  • public service office bearers, which would save an estimated R547 million in 2018/19;
  • performance bonuses in general government, which would save an estimated R2.2 billion in 2018/19;
  • salaries of all employees in local government, which could save an estimated R4.4 billion in 2018/19; and
  • salaries of all employees in general government, which could save an estimated R54.9 billion in 2018/19.

However, in addition to austerity measures, we believe the Minister should implement a comprehensive spending review, aimed at identifying sustainable savings, over the medium term, between 2018/19 and 2020/21, including:

  • reducing the size of the executive, to about 15 ministries, which could save R13.8 billion over the medium term;
  • reducing the number of foreign missions by 69, which could save an estimated R3.9 billion over the medium term;
  • running the provincial legislatures more efficiently, which could save an estimated R R5.8 billion over the medium term; and
  • withdrawing from the New Development Bank, which would save an estimated R17.2 billion over the medium term.

A comprehensive spending review would also be geared towards selling off state assets, including:

  • selling assets by privatising, or part-privatising, some of the 223 “public entities”. After It should be noted that many of these entities run at massive losses;
  • selling, or leasing, “underutilised land parcels”, not well located for housing development, valued at about R12.6 billion, and which cost about R42 million in rates, taxes and maintenance in 2016/17; and
  • selling government’s remaining shares in Telkom, which would raise an estimated R7 billion in 2018/19.

The savings identified as a result of a comprehensive spending review should be allocated:

  • to fund investment in infrastructure and skills development to support economic growth; and
  • to cut the fiscal deficit in order to reduce national debt and debt service costs over the medium term between 2018/19 and 2020/21.
  1. State Capture

We need to act decisively to restore public trust in the South African Revenue Service by:

  • firing the Commissioner of the South African Revenue Service, Tom Moyane, and appointing an Acting Commissioner of the South African Revenue Service, in terms Section 7 of the South African Revenue Service Act (No. 34 of 1997);
  • implementing the recommendations on tax administration made by the Davis Tax Committee; and
  • scrapping the proposed Commission of Inquiry into the South African Revenue Service announced by the Minister on 07 November 2017.
  1. “Zombie” State-Owned Enterprises

The fact is that Eskom is “too big to fail” and a default on its R347 billion debt mountain, much of which is backed up by government guarantees, would be a systemic risk to South Africa.
We believe the Minister must act to reduce the “systemic risk” of “zombie” state-owned enterprise, Eskom, by:

  • providing a further R20 billion “bailout” to deal with the “liquidity crisis”;
  • unbundling the utility and ensuring that assets, such as power stations, are privatized; and
  • making it clear that the R350 billion government guarantee currently in place is a hard ceiling at Eskom.

What we do not need is a “fake privatisation” that puts pensioners savings at risk at Eskom.
We expect the “liquidity crisis” at Eskom to draw most of the “oxygen” when it comes to “zombie” state-owned enterprises, but there are others, including Denel (R3 billion), South African Airways (R4.8 billion) and the South African Broadcasting Corporation (R3 billion), that may require some sort of financial support between 2018/19 and 2020/21.

  1. Long-term Fiscal Risks

During the MTBPS, the Minister reiterated the view that:
With regard to nuclear energy, we reiterate that the programme will be implemented at a pace and scale that the country can afford.”
And President Cyril Ramaphosa did not mention a word about the proposed nuclear build programme during his State of the Nation Address on 16 February 2018 in Parliament.
There is still lingering uncertainty about whether the proposed nuclear build programme will be implemented in South Africa. However, the reality is that there is no pace or scale at which the country can afford this programme.
That is why we believe the Minister should, once and for all, announce the termination of the nuclear build programme in South Africa.
Conclusion
We believe that the minister could deal decisively with the “six pack” of challenges during the main budget by:

  • restoring the integrity of the budget process by announcing the return of control of the budget process to National Treasury;
  • boosting economic growth by announcing a package of structural reforms to build investor confidence and stimulate private sector investment;
  • stabilising public finances by announcing a package of austerity measures and a comprehensive spending review;
  • restoring the integrity of institutions in the “finance family” by firing South African Revenue Service Commissioner Tom Moyane;
  • reforming “zombie” state-owned enterprises by privatising, or part privatising, Eskom; and
  • mitigating long-term fiscal risks by terminating the nuclear build programme.

We believe this would go a long way to giving hope to the 9.2 million people who do not have jobs or have given up looking for jobs, in South Africa.
It is now time for this government, and its new President, to show that they are truly committed to total change that will fix our national debt problem, create new jobs through a growing economy, and alleviate the stranglehold of high taxes faced by all South Africans – but disproportionately affecting the poor and jobless.
Tomorrow’s budget is the first real test for Mr Ramaphosa and his government. It cannot be “business as usual”. It must be a budget of touch, bold choices that favour the poor and the jobless.

We Can Fix South Africa

The following speech was delivered by DA Leader, Mmusi Maimane, during today’s debate in Parliament on the State of the Nation Address (SONA).
On Friday night, we all stood up to applaud the President after his State of the Nation Address.
And I’ll be honest with you. It felt good.
It felt good to be a member of this august House, with its dignity restored.
It felt good to be a member of the opposition, knowing that our efforts over the last decade have not been in vain.
Most of all, it felt good to be a South African.
It felt good to be a citizen of this beautiful, exciting country with all of its challenges, with all of its hope in the face of adversity.
https://www.youtube.com/watch?v=mjlDN6Opx5U&t
When I looked up to the gallery and I saw President Mbeki, I was reminded of his timeless words when we signed our Constitution into law. We are all Africans – every single one of us.
And when I saw former Deputy President FW de Klerk, I recalled the spirit of reconciliation that still runs deep in our veins as we celebrate Madiba’s 100th year.
Nelson Mandela’s generosity of spirit, and his extraordinary leadership when faced with tough choices, inspired so many of us to take up the fight for a free, fair and prosperous society.
We may sit on different sides of the House, but I hope that all of us are here because we want to build a South Africa we can hand over to our children.
Fellow South Africans,
We are presented today with a unique window of opportunity.
We have removed a corrupt and broken President from office. Our task now is to fix the broken country he left behind.
President Ramaphosa has promised the people of South Africa a ‘new dawn’.
I really believe that this is what he wants for South Africa. It is certainly what we want for South Africa.
And I want to pledge my support, and the support of my party towards the realisation of this goal.
We live in a democracy. A democracy is a contest of ideas for a better society.
Democracy carries with it the implicit acknowledgement that humans make mistakes, that we are fallible and that nobody has a monopoly on truth.
Democracy is not war.
It is not a fight to the death between people who look different or think differently.
We are not enemies; we are opponents.
When we differ, we must say so. And we must be robust in our disagreements if necessary.
The time has come to fix South Africa, together.
President Ramaphosa faces a difficult task and he needs our help.
We need to do everything we can to make sure that his ‘new dawn’ is not a false dawn.
Our President has inherited an education system in which militant union interests are placed before the interests of our children.
He has inherited an economy where millions of young people cannot find work and have given up looking for work.
He has inherited a broken and corrupt state that has been captured to serve the interests of a few at the expense of the many.
And he has inherited a governing party that is deeply divided, severely limiting his room to move.
We understand these constraints. And we understand why he was unable to present a meaningful agenda for reform on Friday night.
Summits, workshops and conferences may be enough to buy the President some time, but they are not enough to fix South Africa.
To fix what is broken, we need to move from talk to action as quickly as possible.
We need to move beyond the policy paralysis that has held our nation hostage.
We need our President to make the tough choices that can put us back on the right path again.
This starts with education.
We have to acknowledge that our school system is in crisis. It is not possible to read the latest global test results without having a sinking feeling.
Four out of five of our boys and girls cannot read with meaning by the end of Grade 3.
The message is loud and clear: we have failed to set our children up for the future they deserve.
Learners in our poorest schools cannot compete with their peers in the richest schools. This is only reinforcing inequality.
There is no single reason for the failure of our school system. But, if we were honest, we would acknowledge the role of SADTU in it.
Minister Motshekga’s Ministerial Task Team found that six out of nine provincial education departments have been captured by SADTU bosses, and that education is failing in these provinces because of SADTU’s toxic influence.
And so your first tough decision, Mr President, is to end state capture by SADTU – the same powerful and militant union that helped you rise to the Presidency of the ANC.
Honourable Members,
When students leave school, they need to find work. But half of all our young people under the age of 35 are unemployed.
We support the President’s call for more internships and apprenticeships. On-the-job training is a powerful means to up-skill our young people and prepare them for the world of work.
But the fact remains that we need to create meaningful work for them to do. And this means growing the economy at the rate required to absorb young people into the labour market.
How do we do this?
We start by making it easier for young people to access jobs by confronting the nepotism, bribery and corruption that stands in their way.
A year of national civilian service in public sectors like education, healthcare and policing could help thousands of school leavers gain crucial work experience, and possibly kick-start their careers.
We also have to carefully monitor the impact of a national minimum wage on the employment prospects of young people.
And to make sure that young jobseekers are not left behind, we need to consider wider exemptions for small businesses from minimum wage legislation, and even exempting new, young entrants in the labour market.
Speaker,
The President re-committed government to the National Health Insurance in his address.
Now, we share the goal of affordable, quality healthcare for all.
But the question is whether we can afford to double healthcare expenditure at a time when our budget deficit has ballooned to 4.3% of GDP.
Sometimes the toughest choice of all is to abandon something that you have invested a lot of time and effort in.
The truth is that the NHI undermines our excellent, world-class healthcare sector.
It will cause an exodus of South Africa’s brilliant nurses and doctors who are in high demand the world over, and it is entirely unaffordable even for nations far wealthier than us.
Mr President, we cannot discuss healthcare without confronting the deep pain and sorrow of the Esidimeni tragedy.
I am the uncle of a disabled niece who lives in our family home in Gauteng. She could easily have ended up in one of those facilities. When I think of that possibility, I can only thank God it did not happen.
What happened to those people has rightly been described by Minister Motsoaledi as a crime reminiscent of Apartheid.
I hope, sir, that we can work together to ensure that every single official and politician involved is held to the fullest account.
One of the reasons such a tragedy could happen is the disconnect between what some officials earn, and what they know about their own departments.
Many officials, like those culpable in the Esidimeni tragedy, earn big salaries but refuse to take any responsibility for their failures.
We need public sector salaries that reward accountability and delivering good services.
At R587 billion this year, public sector wages are more than half our entire budget, and way above other emerging economies. This is simply not sustainable.
The President has to resist the pressure from the public sector unions and curb this wage bill.
Honourable Members,
I also welcome the President’s commitment to reduce the size of his Cabinet.
At 35 ministries, each with a deputy minister, ours one of the most bloated governments in the world.
We have already done the homework on this.
It is entirely possible to cut our Executive down to 15 ministries, with spending priorities that promote economic growth and job creation.
This would save us around R4.7bn each year.
Now I know this is difficult because there is patronage to dish out. But let me make this easier for you, Mr President. Why don’t you start with all the Ministers who have proven themselves to be compromised?
Show South Africa you are really serious about fighting corruption in your party and fire Bathabile Dlamini, Faith Muthambi, Mosebenzi Zwane, Malusi Gigaba, Des van Rooyen, David Mahlobo, Lynne Brown and Bongani Bongo.
Speaker,
If we want to undo the damage of the state capture project, then we must acknowledge what led us there in the first place.
It is easy to write off our crisis as the evil work of one man in cahoots with foreign benefactors. But the truth is more uncomfortable.
State capture would not have happened without the ANC’s policy of deploying cadres to state institutions.
It was deployed cadres who hollowed out our State Owned Enterprises to enrich a few individuals close to the former President.
And it was cadres deployed to the commanding heights of the criminal justice system – the NPA, the Hawks and SARS – who looked the other way.
This corrupt system is not the work of one man, nor is the removal of one man enough to destroy it.
If you want to destroy it, you must put an end to the ANC policy of cadre deployment.
That means confronting the perpetrators of this corrupt system that still sit in this House, and who occupy senior office at Luthuli House, some of whom were also responsible for the Vrede dairy farm theft.
It also means removing from office those cadres deployed to serve the interests of this corrupt system – cadres like Busisiwe Mkhwebane and Shaun Abrahams.
Honourable Members,
It was encouraging to hear the President cast doubt on the nuclear deal at the recent World Economic Forum. And I was hoping he would slam the door shut on it in his SONA speech.
It is vital that we make our position on the future of nuclear deal very clear. We don’t need a new nuclear build project, and we don’t have the R1,2 trillion it will cost.
This may seem obvious, but it’s another tough choice for the President. Too many powerful people have a vested interest in securing a nuclear deal. And so the pressure will be on to forge ahead.
Be strong, President Ramaphosa. Reject the nuclear deal and put your weight behind the neglected renewables project so we can move forward into an era of clean, affordable energy.
Mr President,
You are one of the few people who can proudly claim co-authorship of our Constitution.
All of us in this House pledge our allegiance to it, and we owe it our eternal protection.
On Friday, you reaffirmed the soaring words of its opening pages: that South Africa belongs to all who live in it.
Bold leadership requires that you resist the pressures in your party to undo the rights enshrined in our Constitution, including property rights.
These same property rights underpin the entire economy, as you well know from your own successful business career.
The dispossession of land through the 1913 Native Land Act was Apartheid’s original sin. Its consequences are still felt in our society today and, make no mistake, must be addressed.
We can correct this injustice in a way that respects the rule of law and in which the rights of current and future land owners are protected.
We can speed up land reform by rooting out corruption and inefficiency.
And we must trust emerging black farmers with real land ownership, and not just as permanent tenants of the state. Let those who work the land, own the land.
Like the 77 year old Mr David Rakgase, a farmer from Northam in Limpopo whom I went to meet in October last year. Mr Rakgase has been leasing land from the government for over 20 years.
His short-term leases mean he can’t get any money to invest in the land he lives on, and government will not let him own it.
Mr Rakgase is ageing and frail, and he’s losing hope that he will ever own his farm. The way he has been treated by the government shows the sham of land reform policy.
This doesn’t need a constitutional change to fix. It just needs political will to implement.
We can have a thriving, growing, diverse agricultural sector whose wonderful produce fills the shelves all over the world.
But we absolutely cannot have this if farmers do not know if or when their land will be taken from them without any compensation.
Expropriation of land without compensation is incompatible with a growing, flourishing economy. You can have one or the other, but never both.
That is why our neighbours in Zimbabwe who pursued such disastrous and destructive policies in the past are now reversing those and rebuilding their economies.
This is a hard choice you must make, Mr President, and I hope you will stand up for the integrity of our nation’s founding document which you had such a pivotal role in writing.
Honourable Members,
As the President may well know from his time in the previous government, nothing threatens our public finances more than badly-run State Owned Enterprises.
The greatest applause during his speech on Friday was when he promised to end cadre deployment on the boards of SOEs, and committed to appointing competent, experienced people.
I applaud him again for this commitment.
But while that is great progress, it is not enough to fix our SOEs. Boards don’t shield you from corruption, as we’ve seen recently in various private sector scandals.
The governing party has been dogmatically committed to the state retaining control over every SOE, no matter their performance.
Bold leadership requires that the President confront this dogma and acknowledge that there is no benefit for the public to keep paying for failing companies.
What is of benefit to the public is the better products and services at lower costs that open competition can deliver with the right safeguards.
We must be willing to part ways with SAA. It should be broken up and sold, as has been done countless times around the world successfully.
And we must end the Eskom monopoly on the generation of power, and boldly embrace independent power producers and renewable energy sources.
Honourable Members
Last week we lost a dear friend, a fellow opposition leader, a Prime Minister, an activist, a husband and a father – Mr Morgan Tsvangirai.
We mourn his passing, and I personally will miss him dearly.
He offered wise counsel and support to me, and I regret that with all that happened last week, I was not able to speak to him one last time.
Morgan was beaten nearly to death many times for his political activism, and never once wavered in his commitment to his fight.
I recall Morgan’s words on the night of the rigged 2002 Zimbabwe election when he said to voters:
“What the people of Zimbabwe now deserve is a celebration… But the forces of darkness may yet try to block your path to victory. As I address you, it is sad that this regime still seems intent on defying your will. Whatever may happen, I as your loyal servant am with you all the way. They may want to arrest me and at worst kill me, but they will never destroy the spirit of the people to reclaim their power.”
Here in South Africa, we deserve our own celebration. A corrupt and broken leader has fallen.
But our joy is tempered by the knowledge that a corrupt and broken system remains.
Our job now is to fix what is broken, to uplift the spirit of the people of this country.
This will require soul-searching from all of us, but especially those on the ANC benches.
Mr Zuma did not rise to power and stay in power by himself. He was aided and abetted by many of you here.
And so the question is: Under President Ramaphosa, can the ANC reform itself?
Time will tell.
Mr Ramphosa, you are not just the President of a particular party. You are our President, and I am proud to call you that.
We will support you when you do what is right, when you make the tough choices required to improve the lives of our people.
But, when you make mistakes – as surely you will – we will fulfill our patriotic duty and hold you to account.
And we will continue to govern to the best of our ability where we are in power, and to offer South Africa an alternative national government of the future.
Our fight will always be for those left out – the unemployed and the poor.
May we enter into a new era of mutual respect, robust debate and shared loyalty to all the people of this beautiful land.
I thank you.