25 October 2012

South Africa: Finance Minister Brave - Parties

Photo: The Presidency of the Republic of South Africa
Minister Pravin Gordhan after delivering his 2012 Budget Speech at Parliament, Cape Town.

Cape Town — Finance Minister Pravin Gordhan's Medium Term Budget proposals were broadly welcomed by political parties on Thursday, although some questioned the Treasury's influence on the government to implement the policy.

Democratic Alliance MP Tim Harris said the highlight of the speech was the minister's unwavering support for the National Development Plan (NDP), the country's blueprint for growth up to the year 2030.

"Overall, it was big vote of confidence in the National Development Plan. He mentioned the plan 14 times in the budget statement," said Harris.

In contrast, he made only passing reference to the New Growth Path, led by Economic Development Minister Ebrahim Patel.

"I think it's a big blow to Ebrahim Patel... clearly the market-related approach of the NDP is something that will start to solve South Africa's problems, whereas the state intervention inherent in the growth path is going to take us backwards."

Harris said it remained to be seen whether the government would actually adopt Gordhan's policies.

"The youth wage subsidy is a major tragedy, because when a policy proposal is adopted by Treasury and blocked by [the Congress of SA Trade Unions] Cosatu it seriously undermines Treasury's influence, and that's a problem."

The chairman of Parliament's standing committee on finance, ANC MP Thaba Mufamadi, was more upbeat.

"If there's any doubt that there's leadership in terms of where the country is going, this budget dispels that myth."

Mufamadi said despite pressures resulting from international economic difficulties, he believed the country was still on track due to the Treasury's fiscal discipline.

"There's no sacrifices on infrastructure and social spending and the economy will continue to be robust.... It's just a matter of time before we turn the corner again."

Congress of the People MP Nick Koornhof said Gordhan was brave for maintaining fiscal discipline.

"I think it was time to hit the brakes [on spending] and that's exactly what he did.

"We now hope to see government departments, his Cabinet colleagues and the president come out with guns blazing to support him."

Inkatha Freedom Party MP Mario Oriani-Ambrosini said Gordhan was doing his best within a "paradigm in which he is locked" -- where the government did not cut expenses and where growth depended solely on the government.

"This is a formula for disaster unless we address the issues of productivity, developing a sustainable economic growth and industrial basis, which does not depend on government subsidies to exist," he said.

Oriani-Ambrosini believed the middle class would suffer the most.

"We're going to pay much higher prices in terms of indirect taxation, whether it's for high food prices, for electricity, for almost anything."

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