STATEMENT BY BRETT HERRON, GOOD SECRETARY-GENERAL AND MEMBER OF WESTERN CAPE PROVINCIAL PARLIAMENT
24 JUNE 2020
SPECIAL ADJUSTMENT BUDGET: BATTEN DOWN THE HATCHES
FISCAL SUSTAINABILITY COMMITMENTS WELCOME.
BASIC INCOME MUST BE PART OF THE “NEW ECONOMY”
The Finance Minister’s special adjustment budget speech made it absolutely clear that our country’s finances are in dire-straights.
Tax revenue projections are down. Debt is up. Debt will be all-consuming, and overwhelming, if we don’t stick to the extraordinarily narrow path that can lead to financial sustainability and a budget surplus.
If this government can implement the structural changes identified in the “Economic Strategy for South Africa”, adopted last year, then we will weather this storm – eventually.
It will be a tough and narrow path we have to traverse and government will have to demonstrate its real commitment to reviving our economy if it expects the people of South Africa to keep the faith.
The government’s commitment to stabilising debt, improving spending patterns and pursuing economic revival is necessary.
There are a number of commitments and policy statements that we welcome:
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Stabilisation of debt at no more than 87.4% of GDP in 2023/24;
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The target of a primary surplus by 2023/24 is the light at the end of the dark tunnel;
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That we will pursue an infrastructure-led economic growth plan – investment in infrastructure will stimulate the economy, create jobs and address the infrastructure backlog. There is historical precedence for an infrastructure focus – USA President Roosevelt’s “New Deal” helped the USA recover from the great depression of the 1930’s and put millions of Americans to work.
The government’s economic and social response to the Covid-19 is testing the limits of our fiscal envelope.
The expansion of the business loan guarantee scheme, referred to today as a “Business Restart Programme”, is welcome. It is necessary to stabilise and save the economy, business and employment we already have. State support and intervention is critical for this.
The allocation to the Social Development Department – for social relief – is also welcome.
However, if the objective is to forge a new economy in a new global reality then we cannot abandon jobless South Africans, stuck in poverty, in October by withdrawing the social grant.
Those who are unemployed and do not qualify for any financial support must be included in our “new economy”. No South African should be expected to live with zero access to any income. Poverty alleviation through a Basic Income Grant must be part of the “new economy”. A Basic Income Grant must be part of the restructured South African economy.
Ends…