The Durban Chamber of Commerce and Industry welcomes the opportunity to comment on the 2019 Budget Speech delivered by the Honourable Tito Titus Mboweni, Minister of Finance of the Republic of South Africa.
The Honourable Minister’s Budget Speech yesterday showed some positive signs that government is heading in the right direction, but the Durban Chamber believes that we as organised business needs to seek clarity and take a more active position as crucial role players in the economy. As organised business, we need to not only partner with the government but hold the government accountable as a vital stakeholder in the economy as well as approach the government with opportunities that will benefit business and the economy. As leaders in business and the economy, we as organised business needs to look not only at the businesses’ core objectives but to collaborate with the government on the macroeconomic goals it has to achieve at a local, provincial and national level. A growing, sustainable and inclusive economy is good for business and the Country. needs to improve its investment profile destination required to underpin higher inclusive growth and job creation
The Durban Chamber acknowledges governments efforts to strengthen SARS. This is a critical entity for the state, and its ability to collect revenue efficiently and effectively is key in order to close the tax gap. The Durban Chamber is especially pleased with the re-introduction of the Large Business Collection unit which will be formally launched in early April 2019. This unit was a major source of tax collection.
The increase in fuel levies by 29 cents per litre for petrol and 30 cents per litre for diesel is going to put excessive pressure on the KwaZulu-Natal economy as it is extremely reliant on the logistics sector. The KwaZulu-Natal GDP Model is tied to our fuel consumption, and this will surely put downward pressure on the GDP growth of the province, from a fuel consumption perspective as well as price inflation of goods and services across the country.
State-Owned Enterprises (SOEs)
The Durban Chamber applauds the Minister on working to develop and implement a turnaround plan for our State-Owned Enterprises. We need to reform the governance of state-owned entities. These institutions represent critical state infrastructure and cannot be left to operate in disarray and fall into mismanagement under our watch. SOEs need to create added value to the nation and not be a drain on its finances. The Durban Chamber has noted the R23 billion a year set aside for Eskom. Although there are conditions to this fiscal support, the Durban Chamber believes healthy state-owned enterprises will help reduce pressure on the fiscus. The Durban Chamber also notes the appointment of the Chief Reorganisation Officer (CRO) but will await further clarity from the government as to how this role will function within Eskom and other SEOs.
The Durban Chamber notes that Minister Mboweni has referred to “revenues of R1.58 trillion and spending of R 1.83 trillion. That means the government will spend “R243 billion more than it earns”. This ultimately means that South Africa’s fiscal framework is not strong. By continuously bailing out SOEs, especially Eskom, the government is putting pressure on the fiscus, and this will ultimately lead to tax increases which South Africans and businesses have to bear. The Durban Chamber urges Treasury to continue to work on measures to strengthen the fiscus as well as develop and implement an actionable plan to reduce this risk.
The Durban Chamber acknowledges the Minister emphasis on “data costs”, and as a future-focused organisation, the Durban Chamber believes that government needs to quickly address the Spectrum which is crucial if we want to fully embrace the 4th Industrial Revolution and have sustainable and inclusive economic growth. Opening up the spectrum will reduce data costs and increase speeds as well as accessibility which will, in turn, reduce business costs and allow for greater access to digital and technology opportunities.
The Durban Chamber has noted the allocation of an additional R3.5 billion over the next three years to improve non-toll roads. It is imperative that the government provides a safe, secure, reliable, effective, efficient and well-maintained road network which meets the needs of individuals and businesses. Proper infrastructure is the foundation on which the Country’s economy can grow and develop.
The Durban Chamber acknowledges government commitment of R100 billion over the next decade towards the fund. Investment in infrastructure projects through public-private partnerships will unlock economic benefits for the country. This is one such opportunity that the Durban Chamber believes organised business can play a crucial role in partnering with government to stimulate inclusive and sustainable economic growth.
The Durban Chamber acknowledges government’s commitment to combatting crime. There have been numerous scandals which have exposed the high levels of corruption within South Africa and have negatively impacted on our country’s image and profile both internationally and nationally. In the World Corruption Perception Index South Africa’s rank declined from 43rd a decade ago to being 73rd on the international stage. This not only has had a negative impact in terms of foreign investor confidence but can severely impact our citizens’ trust in the Government and their dealings. The Durban Chamber believes that as a country we cannot allow corruption and mismanagement to put pressure on the country’s fiscus and that government in partnership with business and other stakeholders need to actively devise a strategy to positively reposition South Africa’s investment profile so that it is seen as a preferred investment destination. This will stimulate investment which will, in turn, encourage sustainable and inclusive economic growth as well as opportunity and job creation.