Debate On The Consideration Of Fiscal Framework & Revenue Proposals
By Dr Mario GR Oriani-Ambrosini MP



National Assembly, 8th March 2011


We have a welfare state and from it we share the dream of creating a developmental state. Yet, the industrial policy financed by this budget merely extends welfare to industry, so to maintain the viability of industries which would not be viable but for the huge amount of direct and indirect subsidies, tariff and import protection and cartel protection they receive.  There is no real program to create industries which can survive only on the strength of their products or services being internationally competitive and sought after.


A welfare state is comforting and benign but has a few drawbacks: it does not work, is not sustainable, creates dependency and generates more of that which it subsides, including not viable and parasitical industries.  Plus it takes more money from the less rich to be financed, as in the end it relies on indirect and hidden taxation, such as our cars costing twice their international market price.


The extension of the welfare state into the industrial sector has an additional perversion. We are imposing a broad range of social responsibility obligations of companies across the board. These are handled by companies as a cost of doing business which is passed onto consumers without affecting profit margins. It therefore operates as an indirect, regressive tax which the poor pays more than the rich when purchasing basic goods such as telecommunications at inflated prices as compared to international prices.


Last year we told you that the Minister was not realistic in his deficit and national debt projections.  We have been proven right.  They are both out of control.  By 2015 we are going to have 1.5 trillion Rand worth of debt, which is about R 300 000 per taxpayer, with not even the hint of a plan for its repayment. On the contrary the Minister tells us that the debt will increase steadily thereafter. Behind it all, there is a huge hidden skyrocketing municipal debt the Minster dares not to speak of or quantify and this Parliament continues to ignore as if it will be paid off by Santa Claus. 


It does not help to carry State debt as a percentage of GDP. It would be like my carrying my personal debt as a percentage of Anglo American's gross turnover. GDP belongs to the country not the State, and its income is burned by its own composite industrial, company and family debt as well as an asset basis which is much thinner than that of developed countries where wealth has been accumulated over centuries. The long term outlook is that of downward spiral.


South Africans would have liked less taxes, especially the many indirect and regressive forms, which penalize the poor more than the rich. It is unconscionable to increase the fuel levy when common sense commands that it be abolished completely. It does not help blaming the recent increases of price at the pump on the madness of the Butcher of Tripoli. It is our own madness which sucks economic life out of the most vulnerable segments of our economically active population. If the citizen is now to pay taxes on his gambling wins, should he not be entitled to deduct his gambling losses? Have we not scraped the bottom of the barrel in getting the last drop out of the taxpayer?


There is plenty of money in the budget, but it is allocated wrongly and unproductively. We have moved forward with the Regulatory Impact Analysis to enable Cabinet to assess the fiscal, social and administrative impact of the legislation it proposes. We have yet to develop a fiscal impact analysis to assess the difference the money we spend makes to the pursuance of the objectives of our Government.


Only once every Department conducts its own fiscal impact analysis as a matter of course, will it become clear that most money within this budget is in fact wasted and serves a bloated Government ridden with incompetence and inefficiency, which spends money merely to run itself, and allocates the majority of what it spends there where it is the least efficient and productive of benefit for the citizens, such as in the Ministers' offices and in the highest echelons of Government. 


We must direct expenditure towards the end point of service delivery, correcting the present budgetary imbalance where most of the money is spent at the top, or just by Government to run itself, with very little translating into actual services and goods enjoyed by the people. The R10 child grant increase is ridiculous. If we are not serious about our children we are not serious about anything. Instead of cutting extensive government waste, the Minister is again rewarding constantly failing public companies and institutions.


We are in favour of all the safety nets, but they all require restructuring the way the State operates both the administratively and financially. Plunged in the present administration and financial framework national health insurance, which we support in principle, will not succeed.


I asked an important lady why the Minister has not abolished the Exchange Control Act or chiselled away one more piece of it, as it has done for the past 16 years. She told me that I should shout to the Minister to abolish the Act. It gives me pleasure to shout to the Minister to get rid of the Exchange Control Act.


Contact: Dr Mario Oriani-Ambrosini MP, 082 556 0240.