Figures and statistics are of the utmost importance. They represent facts: cold, hard, measurable facts. Decision-makers in SA know the figures. Or they should.
And the figures show that SA has been on a downward path for a long time, maybe as long as ten years. Some people would say as long as 20 years.
On Wednesday, Finance Minister Tito Mboweni looked beyond the figures when tabling no less than six bills – all full of figures – for ratification by Parliament. These include adjustments to the original budget for the current fiscal year, taxation, division of revenue and adjusted estimates of national expenditure. Each of these bills contains detailed figures of the state of the country’s finances, to be analysed, criticised and commented on by experts from different fields.
However, it was Mboweni’s speech to members of Parliament that was impressive.
Mboweni, not known for calling a spade a shovelling implement, told SA citizens that we are in trouble. “Our people became poorer,” he declared within 60 seconds of taking the podium. “Some lost their jobs. The food cupboards are almost bare.”
But we are “shuffling around in old and comfortable brown shoes”, he said, indicating that we are way too complacent about the way things are going.
“Our expenditure continues to exceed our revenue. Our national debt is increasing at an unsustainable pace. The economy is not performing well.”
‘Hope is good, but it is not a strategy’
Mboweni referred to one of the most important sectors in our economy, saying that any farmer will tell you that if you want a bumper harvest, you must be prepared to work hard at the end of winter and in early spring.
“Now is the time,” he said. “We cannot wait any longer.”
And he is correct, with rating agencies watching our every step, a shortfall of more than R50 billion in tax collections, government debt set to exceed 70% of the GDP and state-owned enterprises (SOEs) endangering SA’s delicate fiscal balance.
Mboweni indicated that far-reaching structural reforms are necessary, referring to the successes of countries that have implemented reforms, such as China and India.
“The average person in China is seven times richer today than 25 years ago. The average person in India has become three-and-a-half times richer over the same period.”
Meanwhile, the average South African is only 1.3 times better off. Admittedly, growth in emerging markets is lower, partly due to lower growth in the global economy, but also due to policy missteps.
Mboweni quoted from the preamble of the Constitution, saying that we are all responsible for improving the quality of life of all citizens and freeing the potential of each person. “The growth outlook is far too low to support this vision,” he said.
Having set the scene, Mboweni hit Parliament with a few sobering figures and some forceful decisions that might make him even more unpopular among some politicians that he already is. “After adjusting for inflation, the average government wage has risen 66% in the last ten years,” he said.
“We will need to deal with the challenges of the wage bill, state-owned companies, executive remuneration and benefits and fiscal leakages. We are all in this together.”
His strict actions include:
- Salaries of cabinet members, premiers and MECs will be frozen at current levels and are likely to be reduced.
- Cost of official cars will be capped at R700 000, including Vat.
- Policies with regards to cellular telephones will be adjusted to cap payments of cellular bills by government.
- All domestic travel will be limited to economy class.
- No subsistence allowance for domestic or international trips.
In addition, he invited members of Parliament to think about how they can further contain their compensation and benefits.
SOEs, notably SAA
Mboweni has often stated his views on the dire situation of SOEs. On Wednesday he said bluntly: “Eskom is a business and should be run that way.”
And on South African Airways: “SAA is unlikely to ever generate enough cash flow to sustain operations in its current configuration. Which begs the question: How long are we going to be on this flight path? Forever?
“I think not,” he said.
On other SOEs that are performing badly, his opinion is that managers and their teams should not receive bonuses or salary increases when they fail to meet financial targets and, in fact, should take a pay cut or be fired. In addition, businesses with outdated business models should be closed.
Mboweni’s basic message is that SA needs to do things differently. One can only hope that members of Parliament, politicians, trade unions, government employees, citizens and taxpayers take his pleas to heart before it’s too late.
We also hope that he and his tough attitude survive in the political world, to herald in the necessary changes.