Statement on Pravin Gordhan's 2011 National Budget Speech

Helen Suzman Foundation | Feb 13, 2011
Minister Gordhan’s second Budget confirms his status as a pragmatic realist. The Budget contains no major shocks, but there are some surprises. It is a prudent budget insofar as there is full recognition that the effects of the Great Recession are still with us. There is also a recognition that the global economy is changing and that South Africa needs to align its national interests to these changes.

Minister Gordhan acknowledges that unemployment is the greatest challenge facing South African society, and that young people, especially, are most at risk. We therefore commend the youth employment subsidy as a step in the direction of addressing this larger social challenge. We continue to endorse an expanded public works programme, but again call for clearer management of these infrastructural and social development initiatives. Yet these initiatives inevitably raise questions concerning the structure of our labour markets. There is clearly something dysfunctional here which, fortunately for Mr Gordhan is not his brief to fix. But it must invariably become a Treasury concern when job creation is our greatest social challenge.

The steps to introduce a youth employment subsidy is unfortunately offset by the continued recognition and support of the National Youth Development Agency, given the notoriety already attached to this Agency. Similarly we are concerned that the SETAs, in general, should continue to be recognised as contributing to our overall development when their ongoing mismanagement and inefficiencies render them incapable of fulfilling their mandate.

Our overriding concern with the welfare disbursements is not the size of the allocations but whether these allocations will be managed efficiently and effectively. Education, Health and the disbursement of social grants desperately require better management by the state and must be subject to far greater accountability. On the welfare budget, our concern is one of  sustainability. We are confident that Minister Gordhan will continue to keep a watchful brief on behalf of the nation and ensure that welfare disbursements will not spiral out of control. The introduction of a National Health Insurance (NHI) and its funding is premature. The budget allocation of R8bn over three years to lay the foundations of an NHI scheme will satisfy neither proponents nor opponents of the Scheme, and the suggested imposition of further direct or indirect taxes is not welcomed. Far better would be to fix up the existing management chaos in the public health sector.

We fully support the Minister’s call to root out corruption, especially in the area of public procurement. He rightly declares that corruption compromises “the integrity of governance and frustrates the rate of service delivery”. His call on citizens to blow the whistle on corruption is to be welcomed, and should be extended to the private sector as well. We look forward to effective protective legislation in this regard.

We commend Minister Gordhan’s stance on fiscal and monetary policy which is both realistic and defensible.

February 2011