“We cannot spend money we do not have. We cannot borrow beyond our ability to repay.
Until we can ignite growth and generate more revenue, we have to be tough on ourselves; this is the language setting the tone for years ahead in Finance Minister's Pravin Gordhan's Budget speech.
This will also ignite sharp criticism from the ultra-leftist in Parliament and tripartite alliance expecting more in social spending and also calling for free education at tertiary level.
Gordhan’s language and tone is far from anything for free but he is also leading by example in financial prudence and tightening spending.
After the State of the Nation Address in Cape Town recently, Gordhan was spotted in the economy class flying back to Pretoria. He probably was the only cabinet minister to fly economy now he plans to tighten the national purse to make sure everyone contributes a fair share.
[Read S.A Finance Minister Pravin Gordhan's 2016 Budget Speech here:
Gordhan says, to ensure the country is on the right footing, the expenditure ceiling is cut over the next three years by R25 billion, mainly by curtailing personnel spending.
Some of the budget elements:
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.
Energy investment amounts to R70 billion this year and will be over R180 billion over the next three years, as construction of the Medupi, Kusile and Ingula power plants is completed.
Transport and logistics infrastructure accounts for nearly R292 billion over the next three years.
R62 billion is allocated for the housing subsidy programmes of Minister Sisulu’s department, and R34 billion for bulk infrastructure and residential services in metropolitan municipalities.
R28 billion will be spent over the MTEF on improving health facilities and R54 billion on education infrastructures.
These numbers have chance of seeing the rand firming against the greenback but could be the ruling African National Congress’s undoing in the forthcoming local government elections.
It is also unlikely that Minister’ Blade Nzimande and his communist colleague in the cabinet Jeremy Cronin will go down without a fight especially for more social spending and free education.
Gordhan’s budget speech’s deliberate silence on free education could also see an "Arab Spring" style of protests re-emerging soon after budget, during winter or summer seasons.