MEDIUM TERM BUDGET POLICY STATEMENT – PARLIAMENT 2016

Publication Date: 21/02/2017

South Africans urged to help expedite the change and growth that the country needs, writes Penny Haw.

South Africans need to collectively make the right choices to expedite the change and growth the country needs.  it was the overriding message of National Treasury’s 2016 Medium Term Budget Policy Statement (MTBPS).

Tabling the MTBPS in Parliament in October, Finance Minister Pravin Gordhan said National Treasury had tailored it for an economy that is “a challenging one, but not an impossible one”. South Africa, he continued, is undergoing a di? cult economic transition, with the trend rate of growth having fallen from 4% a decade ago to 2%.  The result? Tax increases and spending cuts are in the offering next year as Treasury contends with sluggish economic growth, lower revenue collection and various other challenges –some of which were more palpable on the day than others.

Education funding gets a boost
Minutes before beginning his presentation, Gordhan addressed hundreds of students protesting at the gates of parliament under the #FeesMustFall banner.  their voices could be heard as the minister spoke. It was fitting then that, early in his statement, Gordhan addressed the issue of higher education.

Although government has significantly expanded funding of education during the past two decades, basic education has been the largest benefactor. Current policy framework, said Gordhan, calls for the progressive expansion of post-school education within available resources.

As such, the MTBPS specified that subsidies to universities would grow at 10.9% each
year, and transfers to the National Student Financial Aid Scheme would increase at18.5%. Universities and students will receive an additional R17-billion over the medium term.

Government departments asked to cut back on spending
The policy statement also pointed to belt-tightening measures for government departments, which will be called onto cut back on spending, particularly on employees. Moreover, looking for more revenue to compensate for lower tax revenue – there will be a R23-billionrevenue shortfall this year – the treasury is planning additional tax increases of R13-billion in 2017/18. This is in on top of the R15-billion announced in the February budget, bringing total tax increases next year to R28-billion, with another R15-billion anticipated for 2018/19.Indeed, the road ahead is challenging, but not impossible – provided South Africans pull together.

“Our current challenges place an extraordinary responsibility on all of us, “said Gordhan. “This is a turning point in which, if we make the right choices, wean achieve faster, more inclusive growth. It is a moment in which we need action –economic, social and political. But it is also a time in which we must reflect carefully: we need to confront long-standing inequalities and forms of domination without creating new ones; we need to widen opportunities without capitulating to opportunism.”

`Finding a lasting solution to the funding of higher
education, boosting economic growth, creating
employment, reducing poverty and addressing
inequality (while keeping public finances under control)
are priorities addressed by the MTBPS.’

Others comment
“We welcome the 2016 MTBPS,” says managing director of the Banking Association South Africa, Cas Coovadia.

“In particular, we welcome the various proposals aimed at promoting inclusive economic growth and social transformation.  the minister reiterated the call he made in the budget delivered in February 2016, inviting all sectors of South Africa to work together to tackle some of the pressing socioeconomic challenges. “The statement demonstrates a firm commitment to follow through on the priorities and objectives set out in the 2016 budget, aimed at restoring public and investor confidence in our economy, igniting economic growth, and strengthening and securing South Africa’s fiscal position and public finances.”

`Courage, hard work and
systematic organising are
the ingredients we need
to meet all the challenges
we face.’

Finding a lasting solution to the funding of higher education, boosting economic growth, creating employment, reducing poverty and addressing inequality (while keeping public finances under control) are, he says, priorities addressed by the MTBPS.  they’re also goals supported and bolstered by The Banking Association. “the association,” says Coovadia, “encourages its members to continue to go beyond their day-to-day banking activities and work strategically with other stakeholders to find lasting solutions to the challenges set out by the Treasury. Activities in this regard include those aligned with the association’s CEO initiative, which focuses on measures to avert a credit-rating downgrade, increase infrastructure investment, establish a fund for small and medium enterprises, and help address employment by creating one-million internship opportunities funded by the private sector over the next three years.”

The importance of co-operation as a primary theme of the MTBPS was also apparent to partner and head of tax at Grant Thornton, Eugene du Plessis, who sums it up as follows:
“The minister’s underlying theme of collective responsibility, including his
‘limping buffalo/lion’ quotes, effectively tie together that we need to stop the infighting, that moving forward is everybody’s responsibility. I think that this ‘collective responsibility’ phrase underlies the whole theme of the budget.”

But Gordhan’s words, as he concluded the 2016 MTBPS, express it most effectively: “Courage, hard work and systematic organising are the ingredients we need to meet all the challenges we face … global trends and our national realities must be recognised frankly and transparently, so that we can assess both the opportunities and risks that present themselves in our historic journey of transformation, inclusive growth and social justice.”