Things can come right – if government rallies behind Mboweni

‘I was tempted to ask one of the members of the house how many zeroes there are in a trillion’: Finance Minister Tito Mboweni.
Tito Mboweni arriving at parliament on Wednesday. Image: GCIS

Finance Minister Tito Mboweni’s trusty aloe has probably died.

Dragged to parliament on budget day every year, and mini-budget day last year, Mboweni praised his aloe ferox plant for its perseverance in difficult times, promising that SA would flourish under difficult circumstances like his hardy little succulent.

It looks like even the hardy aloe has its limits and, after years of suffering under increasingly tougher economic conditions, it is apparently no longer with us. Mboweni pitched up at the (largely virtual) sitting of parliament to table the 2021/2022 national budget a few minutes to 14h00 without his usual sidekick.

Mboweni’s aloe in a patched-up pot in February 2019, a black pot in February 2020, and a green pot in October 2020. Images: GCIS

But Mboweni still delivered a positive message, urging South Africans to look past the current difficulties and to work for a better future.

He preached responsibility in public finances to build a better future

“We must leave this earth much better than we found it so that future generations can enjoy a better world.

“Today I want to outline how we can leave his economy in a better shape for those who come after us.

“We have crafted a fiscal framework that extends support to the economy and public health services in the short term, while ensuring the sustainability of our public finances in the medium term,” said Mboweni.

Once again, Mboweni succeeded in making a difficult task seem easy.

He announced no special wealth or health tax, didn’t increase Vat, announced income tax relief to middle-income taxpayers and reduced company tax to spur economic growth.

Still, the numbers are growing. Budgeted revenue is projected to increase to R1.53 trillion in 2021, with Mboweni apparently taking a snipe at his fellow members of parliament to realise the value of money.

“When I was writing these numbers, mister President, R1.53 trillion, I was tempted to ask one of the members of the house how many zeroes are in a trillion, but I thought not to do that,” joked Mboweni.

It’s a lot of zeroes …

For the record, it is a lot of money. R1.53 trillion is R1 530 billion, or R1 530 000 000 000.

A quick exercise puts it into perspective, while apologising for not remembering the source: If anyone would be so kind to give me R1 every second of the day, 24 hours a day, I will have R1 million by around noon on day 12. That would be Tuesday the week after next.

My bank balance will hit R1 billion only 32 years later, and R1.53 trillion around the time I celebrate my 49 247th birthday, give or take a few decades to compensate for leap years.

While not announcing sharp tax increases, Mboweni didn’t announce severe cuts in state spending either, saying that government should aim to keep its spending from increasing from current levels. “There has been a significant improvement in the fiscal framework,” he said.

His plan could allow government debt to stabilise at levels lower than previously predicted – if Mboweni gets the backing from state departments and state-owned companies.

In short, the plan to self-correct government finances over time will only work if theft, corruption and inefficiencies correct as well.

He explained that high government debt levels increase the cost of borrowing across the economy. “The rising debt leads to higher future taxation and uncertainty. Servicing this rising debt takes away resources that could have been invested in infrastructure and frays our social solidarity.”

Mboweni cautioned that an “incorrect notion” has taken hold that government is “swimming in cash”.

“Certainly, compared to last October, we are in a better place. But our assessment from the Supplementary Budget in June last year still stands: our public finances are dangerously overstretched.

“Our borrowing requirement will remain well above R500 billion in each year of the medium term despite the modest improvements in our fiscal position. Consequently, gross loan debt will increase from R3.95 trillion in the current fiscal year to R5.2 trillion in 2023/24,” he said.

No to austerity

Mboweni pointed out that the majority of government expenditure goes towards social services.

“When we talk about austerity this and austerity that, you can’t,” he said.

“This is not supported by empirical evidence.”

Deviating from his written speech, Mboweni urged his fellow ministers: “Getting our fiscal house in order is the biggest contribution we can make to get our house in order.”

Referring to difficult decisions, he added: “On this we are resolute. We remain adament that fiscal prudence is the best way forward. We cannot allow our economy to have feet of clay.”

He repeated that higher borrowings increase the cost of interest and take away resources that could have been invested in infrastructure, referring to SA’s good roads and rail network that drives economic activity, conceding that it needs better maintenance.

Infrastructure

In another deviation of his prepared statement, he referred to the need of users to pay for services and the need to look after infrastructure.

“All the efforts are wasted if the end user does not pay the cost of a cost-reflective tariff for use. Efficient fee for the use. The principle of user pays is very important.” He repeated this to drive the message home.

“The other thing is the tendency among us, or some of us, to destroy infrastructure. We build a police station, they burn it. Tomorrow they demonstrate that they need a police station. It doesn’t make sense,” said Mboweni.

“We cannot do this anymore. We need to confront the destruction of our infrastructure.”

He numbered several points of hope, from economic recovery to a quick resolution of the Covid-19 pandemic.

The central theme is that SA can survive and prosper, if everybody does their best.

Maybe the little aloe is well after all and Mboweni just forgot it at home.

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It would take at least 20 years to built South Africa into the nation it could be , but without the commie burden of the ANC , EFF and without the usual polit gangsters. Will they go away ? Big NO ! Here is your answer.

The ANC will never rally behind Tito. Conflicted, he is trying to preach austerity in an ANC that practices party above the nation or its people.

“Things can come right – IF government rallies behind Mboweni”

“In short, the plan to self-correct government finances over time will only work IF theft, corruption and inefficiencies correct as well.

IF…a small word with a big meaning.

The only change we have is IF my aunty had a $ she would become my uncle…
Do not think that electing a new party would wave a magic wand and correct every thing either.

The destruction and corruption which has been so heavily embedded into government workers and connected business people will take years to correct.

The largest problem is not tier 1 government nor tier 2 provincial government but rather the 3rd tier local government, this is were all the problems of poor service delivery; corruption and criminals operate.

The ANC has proven that they cannot run a single municipality well, how on earth can people even think of voting for them to run the country… Thankfully small towns across SA are winning this battle and taking the ANC to Court whilst reclaiming their own towns.

The next municipal election is in the last quarter of this year, i just hope the change will come.

Dictators take and dont give, they only care about the man in the mirror , drink tea in their castles and cry on tv. The moment the paupers run amok they implement loadshedding and curfews.

‘I was tempted to ask one of the members of the house how many zeroes there are in a trillion’: Finance Minister Tito Mboweni.

Ask Zuma, a trillion for nuclear energy a trillion for the Gupta’s, no problem.

South Africa could correct itself once it hits rock bottom

That has not happened as yet as the government does not believe the countries finances are in a mess

When the “incontinence” back benches of the ANC epiphanise on this the country should correct its compass

The problem is that the Budget is structured and devised by the the back office comprised of technically competent and intelligent individuals( so it looks good ) and then implemented by the corrupt and hopelessly incompetent( so it totally fails).

At what point will the public realize that ANC leaders have no interest in self correction nor the future. This is a make hay while the sun shines scenario, after that, well we deal with that later. Content people are not desperate voters, the type the ANC need for staying in power. Hungry people cannot think rationally.

“We must leave this earth much better than we found it so that future generations can enjoy a better world.”

There are not too many places in postcolonial Africa that can say they have.

“The other thing is the tendency among us, or some of us, to destroy infrastructure. We build a police station, they burn it. Tomorrow they demonstrate that they need a police station. It doesn’t make sense[.]”

“We cannot do this anymore. We need to confront the destruction of our infrastructure.”

Both paragraphs are important. Two observations:
– who are the ‘us’, ‘we’, ‘they’ and ‘our’ he refers to. Needs to be spelled out in all 11 official languages and the languages of some of our neighbours too, for good measure.
– No need to confront anything. If these are found to be criminal acts, simply lay charges and follow through.

Personally this budget will bring some tax relief regarding PIT so cannot complain about that. Though if I were finance minister my budget would have looked somewhat different. Firstly the idea that because corruption is wrong and must be eradicated we also do not have to budget for it is wrong in my opinion. Just as companies budget and have to provide for possible bad debt the government should make provision for corruption. This is not to condone corruption but in essence to accept the reality of corruption and that it won’t just disappear overnight.

Further I would have left the PIT tables unchanged (controversial I know) in effect increasing taxes. Also I would have increased VAT by 1% each year over the next 5 years to get to 20%. These increases in tax of course would have to go hand in hand with actually starting to tackle corruption, SOEs, infrastructure decline, labour laws, unions, deregulating the economy, etc.

Then once significant progress have been made to fix the above issues and state debt had maybe stabilized around the 50% to GDP levels then tax relief could be implemented to catch up PIT tables with inflation and reduce VAT again by 1% each year.

I’m not in favour of big government and high tax despite my above comment. My opinion is that the move from big government and high taxes to small government and low taxes is not a adjustment that can be made in a couple of years. And coupling this with our high debt levels and corruption such a process might take a couple of decades to fully implement, while in the medium term we need to urgently address the rising debt levels and budget deficits.

Mr Kruger. Did you actually look at the numbers?

There is no insight in this article at all except some ramblings about aloes.

20% of the budget goes towards paying INTEREST on loans…

Social grants increased by 1% – in an environment where the poor people reliant on these grants arde exposed to inflation much higher than this. What do you think the impact of this will be on on the social compact that has kept SA from bursting into flames? Many MW readers will not like this statement but these payments are what have kept the masses at bay and have enabled us to live our lives in relative comfort…

And yet the portion spent on our bloated civil service just keeps on ballooning despite numerous promisises to the contrary. This combined with the rising interest bill is crowding out any potential capital investment, not that the state has the capacity do make any sensible capital investment decisions.

If you want to come with this naive sunshine journalism at least provide some factual support. This is a financial publication after all.

Other than Tito, the current selection of Ramaphosa’s ministers then I have no confidence. If these are the best CR can find then I dunno.

The minister is a smart man – don’t ask a question you don’t want to know the answer to…
” I was tempted to ask one of the members of the house how many zeroes are in a trillion, but I thought not to do that”

”If at first, you don’t succeed……give up”
Bennie Green English Writer (1927-98)

I agree with DA shadow minister for finance Geordin Hill-Lewis’s comments that ”It’s an extraordinary budget, it kicks poor South Africans when they are down.”

The minimum grant should at least be equal to that of a fulltime domestic workers’ minimum wage, which converts to R3700 a month.

The radical ANC members will not support Tito and methinks its only a matter of time before the ”fun and games” will start again!

SOE’s is allowed to drain the public purse. SOE’s like the Airports Company, Landbank, Eskom, RAF, Sanral and SAA has become a bottom-less put – no wonder Cosatu last proposed using money from the Government Employee Pension Fund to slash ESKOM’s R 450 billion debt!

Any commentary on Social Grants should refer to the sheer numbers of people relying on them, which is a direct result of rampant procreation among those who have little economic means. A key part of the budget speech should be devoted to urgent education and incentives for family planning as that liability needs to managed as much as our debt burden. Poor people having too many kids should not be a taboo topic – along with corruption its the heaviest burden this country carries.

Ag please moderator – what are you ”reading” in my comment that is such a problem?

You’re not PC enough I’m afraid. get with the program and brainwash yourself with the common narrative

‘I was tempted to ask one of the members of the house how many zeroes there are in a trillion’……the JOKE is actually on you and your cadres. You should be shamefull!

Rumours that Tito on his way out getting louder by the day.

First of all most of the cabinet should be replaced due to corruption and incompetence.Why that hasn’t been done is beyond me. What is Mantashe still doing there? He should be on pension not dithering like an old fart regarding Eskom.
These people still use words like comrade,deployment and cadre. Outdated commie nonsense.
PE and King Williams Town have just been renamed. That costs millions and a total waste when you dont have money. How did Tito allow this wasteful expenditure? Who cares what these places are called?

The stupidity and lack of urgency know no bounds. Social services spend is the biggest expense. Its just ridiculous. Every new born costs the tax payer another R 350 per month. Stop having children!!We cant afford it!
But heck without that, 18 million votes would be lost for the ANC.

The Zondo commission has become a joke, a playground for lawyers and a scene of lack of political will. No one is in jail yet after years of hearings. The world is laughing at us. SA has become worse than a banana republic. Because there you have one dictator who steals, in SA there are 1000’s.

End of comments.

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