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Simply put, the government has run out of money, says critic

Opposition parties slam 'immoral' SAA bailout in Tito Mboweni's mini-budget

Broadsides came thick and fast as opposition parties opened fire on finance minister

Paul Ash Senior reporter
Finance minister Tito Mboweni has promised bankrupt SAA a R10.5bn bailout on top of R6.5bn granted in February.
Finance minister Tito Mboweni has promised bankrupt SAA a R10.5bn bailout on top of R6.5bn granted in February.
Image: REUTERS/Sumaya Hisham

Broadsides came thick and fast as opposition parties opened fire on finance minister Tito Mboweni's medium term budget speech on Wednesday.

And from a new bailout for bankrupt SAA to SA's rapidly ballooning debt, Mboweni's critics had much to fire upon.

Giving  SAA another bailout was “wrong and immoral”, DA shadow finance minister Geordin Hill-Lewis said outside parliament on Wednesday. The R10.5bn bailout was confirmed in Mboweni's speech.

“This is an indefensible, immoral choice,” said Hill-Lewis. “It amounts to throwing South Africans ‘under the plane’ to pay for SAA.”

The bailout is the airline's second this year after a R6.4bn lifeline it was promised in February's main budget. The DA claimed the bailout would be funded by a R1.2bn budget cut to the police, courts and prosecuting authorities, and a R1.4bn cut to the education budget, among others.

Finance minister Tito Mboweni tabled his medium-term budget policy statement (MTBPS) on October 28 2020. Many called this particular one a 'balancing act' in light of SA's having to rebuild its economy due to the Covid-19 pandemic. Government spending and debt, SAA rescue plan and the State Capture Commission of Inquiry were just some of the topics covered in his address.

It amounts to throwing South Africans ‘under the plane’ to pay for SAA.
Democratic Alliance (DA) shadow finance minister Geordin Hill-Lewis

Hill-Lewis slammed the government for “choosing SAA over fighting crime, SAA over education, SAA over SA”, and said Mboweni should “reconsider his position” in government.

Freedom Front Plus leader Pieter Groenewald said no more money should be given to SAA.

“The airline is an unaffordable luxury and should be privatised, or simply given away,” he said. “More money must not be wasted on it.”

Pointing to SA's growing budget deficit, now R770bn, the finance minister's medium term budget was “nothing more than rearranging the deck chairs on the Titanic”, said Groenewald, adding that the government's total debt burden amounted to R3.9 trillion.

The service fees on the debt amount alone ... are expected to increase to R355bn a year by 2023/24,” he said. “Simply put, the country has run out of money.”

The DA criticised Mboweni for abandoning the target to stabilise government debt at 87% of GDP by 2023. The end of the so-called “active scenario” will now see government debt surge to 95% of GDP by 2025/26, said Hill-Lewis, adding that SA would spend R271bn on paying interest on its debt over the next year.

“We will now spend 21 cents in every rand of tax revenue on paying interest,” he said.

Cosatu said while there some “positive” policy proposals, such as the Eskom Social Compact and workers being allowed to tap into their retirement savings, the federation did not believe the policy would put the economy back on a growth path.

“We remain dismayed by the Treasury’s reckless obsession with weakening the public sector,” said Cosatu parliamentary co-ordinator Matthew Parks. Its rash cutting of expenditure in pursuit of a budget surplus by 2025 will not help the 12 million workers to find jobs nor will it rebuild a collapsed state.”

The federation was also concerned that there was “no plan” to fight the corruption and wasteful expenditure that accounts for around R150bn of SA's annual budget.

Simply put, the country has run out of money
Freedom Front Plus leader Pieter Groenewald

It urged the government to adopt its proposal to ban “politically exposed people” and their families from doing business with the state and implement a transparent, online public state procurement system.

While the Eskom Social Compact, which aims to provide reliable and affordable electricity to cash-strapped South Africans, had been adopted, government needed to implement it “with speed”, said Parks.

African Christian Democratic Party (ACDP) MP Steve Swart said the party was deeply concerned about the recession, high unemployment and SA's “dismal” fiscal outlook.

The dire state of the economy and public finances had worsened during the lockdown, costing an estimated 2 million jobs.

“The ACDP believes that lives and livelihoods must be saved, and that the hard lockdown should have been lifted much earlier,” Swart said.

While calling for rapid implementation of the Economic Recovery and Reconstruction Plan, the party said it was unacceptable that the SAA bailout would be funded by budget cuts to national departments and provincial and local government conditional grants.

“This will directly affect service delivery,” Swart said.

The IFP said Mboweni's budget showed the consequences of poor economic and  financial management.

“Our country would not find itself knee-deep in debt, with a debt to GDP ratio of 81.8%, if we had adequately prepared during the past few years, sans the difficulties of Covid-19,” said party deputy president and finance spokesperson Mzamo Buthelezi.

Raising borrowing levels did not bode well for SA, he said.

“We run the risk of a debt trap which will compromise our sovereignty as a state as we would be willing to sell off our country to the highest bidder.”

SAA is an agency of value added economic activity for the country.
ANC chief whip Pemmy Majodina

Bucking the trend, the ANC parliamentary caucus welcomed the budget's focus on President Cyril Ramaphosa's reconstruction and recovery plan, and said the government was focusing on desperately needed structural reforms.

The caucus said the government's “responsible interventions” would prevent SA from falling into a debt trap.

The caucus also backed the SAA bailout.

“SAA is an agency of value-added economic activity for the country,” said ANC chief whip Pemmy Majodina. “A restructured SAA operating efficiently and on commercial principles will also positively contribute to the economic recovery of the country.”


 LISTEN | Dissecting Mboweni's MTBPS with Investec's Annabel Bishop

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