Mini budget draws praise and criticism

Cape Town - Finance Minister Pravin Gordhan's mini budget tabled in Parliament on Wednesday was broadly welcomed, but was also criticised in some quarters.

The ANC's Thaba Mufamadi said it was a "very good budget".

"Under a very difficult economic environment, the National Treasury has been able to walk a very tight rope to achieve fiscal consolidation in the next medium-term... at the same time to boost economic growth, drive investor confidence and ensure economic infrastructure and social infrastructure remains a top priority."

Inkatha Freedom Party leader Mangosuthu Buthelezi was worried that the National Development Plan, which was a "golden thread" running through Gordhan's speech, would be done away with in view of Cosatu having "rejected" it.

Austerity measures

He said the austerity measures gave hope in terms of standardising cars and use of hotels, among other things.

Freedom Front Plus leader Pieter Mulder said the mining sector strikes had cost the government and led to "alarm bells going off".

"There's not enough money any more. Now he [Gordhan] comes with all these government discipline measures, which I really think should have been done 20 years ago."

Federation of Unions of SA general secretary Dennis George said the 2.1% growth projection for this year, rising to 3.5% in 2016, was too low to create the number of jobs needed.

Unemployment

"Unemployment is going to remain a problem, even if government implements the incentives announced today."

The belt-tightening measures were "long overdue". Some ministers had been living like kings at the taxpayers' expense, he said.

Democratic Alliance spokesperson Tim Harris said the mini budget was not nearly bold enough in tackling serious economic problems.

Lacklustre economic growth - which had slowed from 3.5% in 2011 to just over two percent this year - meant other developing economies were leaving South Africa behind.

Challenges

"Instead, we have to look at our recent domestic issues, what Treasury calls 'labour disputes, electricity shortages and other supply-side disruptions', which this budget contains no significant new measures to address," he said.

However, the DA welcomed the continuation of the "spending freeze" and the minister's commitment to tackle excessive spending on air travel, car hire, accommodation, catering and entertainment in "cost-containment instructions to be issued with the 2014 budget".

Nick Koornhof of the Congress of the People said the mini budget was almost too good to be true.

Gordhan had no choice but to reinforce the fiscal framework.

Credit rating agencies

"I think he did just enough to get the credit rating agencies off our back. I think he's sending a very strong signal with regard to cutting ministers' expenses. It's small money in the overall budget but it's sending a strong message."

Trade union Solidarity senior economics researcher Piet le Roux said the mini budget fell short of sufficiently curbing the growth of the South African welfare state, of reining in government debt and of giving much-needed relief to battered taxpayers.

"It is disheartening to hear Gordhan outline plans for continued expenditure on the so-called social wage that taxpayers have already realised long ago is wasteful and does not sustainably improve living standards in South Africa," said Le Roux.

The mini budget was broadly welcomed by the SA Communist Party and the SA National Civic Organisation.

Revenue was expected to grow from the 2013/14 estimate of R999.1bn to R1.086tn in 2014/15, R1.184tn in 2015/16, and R1.306tn in 2016/17.

Real GDP growth of 2.1% was expected in 2013, rising to 3.5% in 2016.

The expenditure ceiling set out in the 2013 budget forward estimates would be maintained, and the budget deficit would narrow from 4.2% in the current year to 3% in 2016/17.

Measures to support faster growth included investing in electricity and transport capacity, promoting industrial competitiveness and broad social co-operation to address problems in mining and community development.