Budget should be 'surprise free'

Johannesburg - In his budget speech, Finance Minister Pravin Gordhan must clarify the government's position on key economic policy discussions currently underway in the public domain, organised business said on Monday.

This included inflation targeting and exchange rate management, Business Unity SA (Busa) said in a statement.

"Policy certainty and predictability remain important considerations in investment decisions. This means that the budget should largely be 'surprise free' and not contain policy or tax shocks."

It expected the budget speech would continue along the established path - as encapsulated in the Medium Term Expenditure Framework - in identifying expenditure priorities for the 2010-2011 budget cycles.

It was expected the country would run a budget deficit in the medium term as part of its economic recovery package. Busa expected the minister to make "strong pronouncements" on improving the efficiency of government spending and monitoring.

Government expenditure had to be channelled to ensure maximum impact on economic growth and development, to achieve the objectives of halving unemployment and poverty.

Conerns about climate change

Busa said it would like to see the 2010 budget include energy funding, following the establishment of an Independent Systems Operator, as outlined by President Jacob Zuma last week.

The budget should contain incentives to support private sector development. These could include finance for economic transformation, further research and development funding and tax incentives.

Busa welcomed the continuation of government's infrastructure expenditure programme. The quality of the country's road, rail and port networks had to be improved to enhance competitiveness.

Busa recognised climate change as one of the greatest issues facing the country's sustainability, and expressed concern about the government's approach in dealing with it.

The body remained concerned that outcomes from investment in human capital remained low. The skills bottleneck required urgent joint action by both the public and private sectors. It urged the government to finalise the appointment of the human resources development council.

On social security, Busa said retirement fund reform and the National Health Insurance were significant areas requiring appropriate resourcing.

State-owned enterprises and their capitalisation was also a worry.

"We are concerned that the issue of SOE capitalisation remains unresolved. We believe that it is appropriate for the minister of finance, in consultation with his Cabinet colleagues to evaluate the impact of SOEs on the fiscus and government's approach to making them financially viable."

- Sapa