No matter what they claim, no other political party could have presented any other budget in SA at this point in time. That is economist JP Landman’s view of Finance Minister Pravin Gordhan’s latest National Budget.
“I call this an impotent budget as SA has reached a stage where macro-economics cannot drive growth anymore,” said Landman. “We now need growth from innovation and greater efficiency.”
He was a guest speaker at a post budget event hosted by Deloitte in Cape Town.
Landman said no matter what other political parties may claim, none of them could have presented any other budget in SA at this point in time.
“SA’s next phase of growth will have to be about dynamism and the agility of the private sector by means of synergies created with government,” said Landman.
“History showed that you need co-operation between the private and public sectors for growth. For that you do not need so much fiscal policy, you need social capital like a common vision.”
Unfortunately, he currently sees a lack of understanding between the public and private sectors in SA (compared to the US, for instance.)
At the same time, he pointed out that “the horrors South Africans are always so quick to expect”, ended up not materialising in the budget.
The prediction by some expert of a 2% increase in VAT did not happen and neither did one commentator’s prediction of an “unbearable” interest rate on the fiscus nor the prediction of a cut in capital spending on infrastructure.
“The budget shows control of expenditure, in contrast to pre-budget allegations that Finance Minister Pravin Gordhan has lost control,” said Landman.
Landman said SA clearly has a serious growth problem and will most likely remain stuck in low growth. The biggest challenge is the catching up that has to be done due to the legacy of not enough jobs having been created between 1970 and 1994 compared to the population growth (which almost doubled) during that period.
Since costs are unlikely to go down, innovation is the only way to create economic growth in SA, said Landman.