Budget Speech 2022: Prudent, Relaxed, Short

by Admin · February 24, 2022

By Mike Pothier: Enoch Godongwana’s budget speech was “a good debut” for the new finance minister, according to a Catholic political analyst.

“Prudent. Relaxed. Short. This Budget Speech was all three of these, and all-round a good debut,” Mike Pothier of the Catholic Parliamentary Liaison Office (CPLO) said in a briefing paper.

“For the first time in many years, the country is enjoying a slice of economic good luck – the demand for some of the raw materials that we have in abundance has been high for a prolonged period, and this has resulted in greatly increased taxable earnings by commodity firms. Allied to a resurgence in SARS’s tax collection capacity, this has delivered revenue to the fiscus that exceeds predictions by R182 billion,” Pothier noted.

“This has allowed the government to extend the social relief of distress grant for another 12 months, and to top up provincial departments of education and health, among other things. It has also created room for slight downward adjustments to income tax to combat bracket creep, and – a very popular move – for no increases in fuel taxes, which have become a major consumer headache in recent years,” he said.

Godongwana’s speech underscored President Cyril Ramaphosa’s commitment to “consolidate” or dispose of underperforming or obsolete state-owned enterprises by declining to provide SAA with further funding, and by making the Treasury’s support of Eskom dependent on cost-cutting and the sale of certain assets. “All of this, according to Godongwana, constitutes ‘tough love’,” Pothier said.

“Like the president, [the finance minister] seems to harbour a different kind of love for the private sector,” Pothier said, noting the 3,6% reduction in company tax rates. “Hopefully, the corporate sector will have the sense to use this unexpected windfall to invest and undertake the job creation that Mr Ramaphosa spoke of glowingly in the SONA. His remarks then, and Mr Godongwana’s largesse now, signify an important and quite surprising shift in government thinking,” Pothier said.

“We also heard more about ‘catalytic infrastructure’, a term that refers to the kind of infrastructure that can unlock further development – roads, rail transport links, water provision and the like. Here, too, it seems, government sees itself primarily as a facilitator, and expects the private sector to mobilise capital and partner with it in these projects.”

Pothier noted that social grants increases will be only inflation, but, he said, most recipients face price hikes – on food, transport, medicines, etc. – that are much higher than the official inflation rate.

“It is both a source of pride and a cause for concern that 46% of the population receive one or other social grant. Without this, the country would surely have descended into anarchy long ago; but with it, we are falling ever deeper into debt and – arguably at least – neglecting to give sufficient attention to long-term measures to create jobs and give people an outlet for their energies and ambitions,” Pothier said.

He concluded that “we are doing better on balance than we were 12 months ago. Not a spectacular achievement by any means, but probably a more solid one than most people would have expected this time last year.”

Read the full text at www.cplo.org.za/response-the-2022-budget-by-mike-pothier/