We have seen South Africa’s financial future in yesterday’s Medium-term budget and the bad news is that it does not work.
The picture revealed is one of rising costs, especially for the Public Service, increasing debt and continuing losses on virtually all the State-owned enterprises. This leaves us to ask where the money will come from for some of the ambitious plans for nuclear power stations and a National Health Service?
The usual source was taxes on the private sector but business was under threat from legislation threatening property rights, it was starved of electricity, world commodity prices were down and there was little or no economic growth.
There is no getting away from the fact that there have been massive management failures in the businesses run by the State. The obvious answer is for the Government to be less involved and to withdraw from the failing enterprises, but their plans seem to be exactly the opposite with more interference promised in the private sector.
The plan recently confirmed to make farmers give up half their land to new and largely inexperienced farmers would reduce investment in the sector, decrease productivity, threaten food security and hurt the downstream food processing industries and the many thousands of jobs it sustained. Now a new and inexperienced Minerals and Resources Minister wanted to buy up failing mines, but where would the money come from?
It is time to put all these fancy plans on ice and deal with the realities in South Africa today. That means cutting costs in the public sector and allowing the private sector to take over some of the failing State enterprises. If anybody has doubts about this approach they should compare the brilliant success of the renewable energy project, funded and managed by the private sector, with the on-going Eskom disaster.
The saddest thing about the whole situation is that the money wasted on the like of SAA and the SABC could have solved the more important problem of university and student funding.
President of the Cape Chamber