GOOD Statement by Brett Herron ,
GOOD Secretary-General
19 February 2025
Today’s Budget postponement is a direct result of the Government of National Unity parties not being adequately consulted before the National Treasury presented the proposed budget to the Political Parties Leaders’ Forum. Coalition governing is about seeking consensus.
National Treasury needs to learn that it is not business as usual.
Budgetary disagreements are not abnormal in relatively new coalition governments – they are a key point of leverage. But today’s postponement of the national budget was a result of consensus, not disagreements. A consensus that there was insufficient consultation with GNU parties and a consensus that the GNU would not accept a budget that inflicted a financial burden on South Africans without considering other options.
The GNU has to prioritise BOTH national economic growth AND reducing inequality and widespread poverty and indignity.
It must be guided by its Statement of Intent that binds participating parties to “social justice, redress and equity, and the alleviation of poverty… human dignity and the progressive realisation of socio-economic rights”.
Some parties dishonestly attempted to claim credit for the budget being returned to sender. Now is not the time for scoring petty political goals. The focus needs to be on the citizens.
GOOD is on record that increasing VAT would disproportionately harm the poor.
The only circumstances in which a VAT increase of a maximum of 1% could be considered is as a last resort, and on the provision that it is ring-fenced to fund a Basic Income Grant.
A VAT increase without a BIG would deepen the poverty of millions of people.
Preferably, revenue for a BIG should be collected from the country’s most wealthy citizens. The top 1% of South Africa’s wealthy class own about 55% of the country’s total wealth. Increasing the tax burden on working and middle-class people is not an option, as they’re already struggling.
If South Africa is to achieve its developmental and socio-economic obligations, then a budget that isn’t crafted after having made hard choices to cut wasteful and unimpactful expenditure through long-promised zero-based budgeting would be a dereliction of duty.
The budget must be geared towards targeted investment in removing the blockages to meaningful and transformative economic growth.
The investments that are needed include a stabilised electricity supply, efficient public and freight transportation, access to clean water, functional ports, and infrastructure for dignified and affordable housing.
Structural impediments, like South Africa’s slow progress on addressing our Financial Action Task Force (FATF) greylisting which is behind schedule, need much more urgency if we are serious about the ease of doing business in South Africa and attracting foreign direct investment.
If the country is able to achieve a 3% growth rate over the next 15 years it could create about 7 million jobs. The unemployment rate would be reduced, but we would still have at least 8 million unemployed South Africans who would require a basic income.
The target for economic growth must be higher than the 3% current hope. Economists have suggested we need to achieve at least 5% economic growth over a sustained period of time if we are to meaningfully reduce unemployment.
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