Gordhan under jobs pressure

Finance Minister Pravin Gordhan unveils his budget today under pressure to put what’s in the state’s coffers where the ANC’s mouth is.

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Finance Minister Pravin Gordhan unveils his budget today under pressure to put what’s in the state’s coffers where the ANC’s mouth is – jobs, its number one priority.

It emerged yesterday that the DA – like Cosatu – is calling for a more expansionary budget, although President Jacob Zuma has said the budget deficit is to shrink faster than envisaged before, to less than 4 percent in 2013.

Despite the austerity move, Zuma pledged billions for job creation in his State of the Nation address, including a R9 billion jobs fund, details of which Gordhan will provide today.

Pumping money into job creation and infrastructure spending while trying to reduce the debt poses a challenge for Gordhan, and economists suspect that social spending will have to be cut or taxes increased.

Gordhan’s Budget speech comes just months before local government elections and amid renewed protests sparked by service delivery issues and political in-fighting.

Statistics SA reported yesterday that GDP growth had increased in the last quarter of last year to 4.4 percent, compared with 2.7 percent in the previous quarter – an indication that revenue collection may grow at a faster pace.

In a surprise move, the DA has announced its “most expansionary” budget wish list yet, saying it is needed for “jump-starting job creation and growth at a rapid pace”.

The DA’s spokesman on finance, Dion George, said the party’s policy turnabout was a “fresh” approach.

The country had “comparatively little debt”, and so had “some space” to extend spending in the short term.

The DA had developed more than 50 targeted interventions to “blow strong winds in the sails of our economy’s recovery” to allow for the 7 percent growth the government had indicated would make significant job creation possible.

Its proposals include abolishing the “degrading” means test for old age pensions, a subsidy for first-time home-buyers, and a R1.43bn tax rebate for on-the-job training by companies.

The DA also suggests spending R18bn over three years on a wage subsidy for first-time job entrants, a proposal Gordhan mooted in his Budget speech last year, but which was shot down by Cosatu.

Cosatu has consistently pushed for more expansionary spending to fight poverty and unemployment.

George said the DA’s proposal differed from Cosatu’s as it involved increased spending not on civil servants, but on specific interventions to enhance investment in the productive sector of the economy, as well as savings.

Unlike Cosatu, the DA – and most other opposition parties – wants fiscal policy to remain unchanged and for Gordhan to bring “coherence” to the ANC’s economic policy.

Freedom Front Plus leader Pieter Mulder said Gordhan would have to include “very specific incentive bonuses” in his plans to spend the R9bn jobs fund to compensate for the “restrictive” legislative amendments on labour.

During the debate last week on the State of the Nation speech, it was highlighted that Gordhan would also provide details of other interventions, such as money to lay the groundwork for a greener economy, an unusual amount of money for disaster relief in the wake of the floods, and the government’s proposed National Health Insurance scheme, to be phased in with a pilot project next year.

Trevor Manuel, Minister in the Presidency in charge of the National Planning Commission, said yesterday that Gordhan would also provide details of the cost of large-scale intervention to stop acid mine drainage threatening communities and mines on the Witwatersrand.

Cope and the African Christian Democratic Party called for faster reduction of the deficit – now more than 6 percent – to 3 percent. They echoed the DA, however, in calling for a reduction in the state’s salaries bill.

The United Democratic Movement wants the Treasury to put the brakes on the new Gautrain-style speed train connections mooted, in favour of expanding infrastructure in rural areas. - Political Bureau

Source: http://www.iol.co.za/gordhan-under-jobs-pressure-1.1030741

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