Gordhan: Restrictions on filling managerial and administrative vacancies, subject to review of human resource plans and elimination of unnecessary positions;
• Reduced transfers for operating budgets of public entities;
• Capital budgeting reforms to align plans with budget allocations while strengthening maintenance procedures;
• Mandatory use of the new e-tender portal, thereby enforcing procurement transparency and accessible reference prices for a wide range of goods and services;
• A national travel and accommodation policy and instructions on conference costs;
• New guidelines to limit the value of vehicle purchases for political office- bearers;
• Renegotiation of government leasing contracts;
• New centrally negotiated contracts for banking services, ICT infrastructure and services, health technology, school building and learner support materials.
Adam Phillips of Umkhulu Consulting: The Finance Minister has only been speaking for 20 minutes, but the ZAR has fallen 15 cents. There is a lot out on the wire, but I would say that it appears to be a bit of a 'wishy washy' budget and that is why they have put the boot in.
Maybe he will say something that will make the ZAR turn around, but I doubt it. There may be cuts in government spending, but he still wants to borrow a great deal from international debt markets. If we get a rating cut we will all feel more pain. There has been nothing that shows he has been 'ballsy'.
Gordhan: Now we come to the tough part: Fiscal consolidation. We cannot spend money we do not have. Until we can ignite growth and generate more revenue, we have to be tough on ourselves. Spending plans are reduced, a higher revenue target is set and net national debt is projected to stabilise at 46.2 per cent of GDP in 2017/18, and to decline after that.
Gordhan: These are the challenges we hear in South Africa today.
• We are responding to appeals from the business sector for greater certainty in respect of policies that affect investment decisions.
• We are engaging with proposals from organised labour for a minimum wage policy, and for progress on opportunities for young people.
• We are responding to action in communities where services are missing or badly managed.
• We are crafting solutions to the voices of students regarding fees and housing.
Gordhan: Our economy is not growing fast enough to raise employment or improve average incomes. Investment growth must be substantially scaled up.
So we are resolved to restore the momentum of growth, to ensure that it is inclusive and sustainable, and to preserve our economy’s investment-grade status.
Gordhan: In brief, we propose the following:
• Against the background of slow growth, rising debt and higher interest rates, the pace of fiscal consolidation will be accelerated. The budget deficit will be reduced to 2.4 per cent by 2018/19.
• The expenditure ceiling is cut over the next three years by R25 billion, mainly by curtailing personnel spending.
• Tax increases amounting to R18 billion in 2016/17 are proposed, and a further R15 billion a year in 2017/18 and 2018/19.
• An additional R16 billion is allocated to higher education over the next three years, funded through reprioritisation of expenditure plans.
• Taking into account projected increases in the cost of living, R11.5 billion is added to social grant allocations over the next three years.
• Funds have been reprioritised to respond to the impact of the drought on the farming sector and water-stressed communities.
Gordhan: [The NDP] It recognises that improvements in the quality of education are the foundations of broad-based growth, productivity improvement and sustainable growth.
It highlights that partnership between government, business, organised labour and civil society is the key to policy coherence and more rapid development.
Gordhan: Regarding the National Development Plan:
It is a programme for inclusive growth – our social programmes, industrial action plan, promotion of agriculture and rural development, skills and training initiatives, investment in housing and municipal services are aimed at both prosperity and equity, creating opportunities for all and broadening economic participation.