SAVING SA FROM ITS BROADENING SLIPPERY SLOPE
DISCOVERY chief executive Adrian Gore mentioned at the recent Leadership Summit that there is an element of “declinism” – a pessimism about the state of one’s country – in South Africa, and that it did not accurately represent the situation facing our country.
While Gore might be correct that some things are improving, it cannot be denied that we are on a downward slope, and that if we continue to follow our current trajectory there won’t be anything left to transform.
Speaking at the Free Market Foundation on October 31, economist Dawie Roodt laid bare South Africa’s current fiscal situation and pointed out that, according to the Treasury, our gross domestic product is expected to grow by only about 1.7 percent in 2019. Compared to emerging economies which invest an average 23 percent of GDP, South Africa’s fixed investment percentage is only 19 percent.
As a percentage of total GDP, the government spends 29 percent. Political vanity projects for which we simply do not have the fiscal room – the National Health Insurance being one example – are planned and all they ever result in is increased bureaucracy, increased government size and ultimately lower growth.
According to economist Njabulo Mhlambi, the public sector wage bill is R328 000 per civil servant per year on average. This R587 billion per year for over 2 million bureaucrats and officials represents almost a third of the budget.
It was thus heartening that during his election campaign within the ANC, President Cyril Ramaphosa promised to cut back on the size of the government.
Finance Minister Tito Mboweni also recently alluded to the idea of reducing the size of the Cabinet from an astonishing 70 ministers down to 25 or ideally 20.
But at the Jobs Summit held on October 4 and 5, Ramaphosa announced a moratorium on public sector job losses. If the president intends to stick to this moratorium, it will be a grave mistake.
How do we resolve this situation? The government must start by unbundling and privatising, or liquidating and closing down, all our major state-owned enterprises, such as South African Airways and Eskom.
The next thing the government must do is repeal draconian provisions in our labour law. Third, there must be a wholesale and comprehensive review and repeal of regulations. Last, the government must allow people to save money.
Chris Hattingh and Martin van Staden are researchers at the Free Market Foundation