WENDY ALEXANDER AND ANDREW BATEMAN: Pivoting economy towards growth and job creation

The government of national unity (GNU) has made inclusive economic growth and job creation its priority, but talk of growth must translate into policy changes if we wish to turn priorities into reality.

The key question as we approach the medium-term budget at month’s end is how to attract private sector investment to grow SA businesses and create jobs. 

The GNU has lowered the political risk of investing in SA by reaffirming the constitution, the rule of law and property rights, and by taking steps to reduce government debt, but the government’s message must be consistent. Bills enabling expropriation without compensation, the nationalisation of the Reserve Bank and unfunded National Health Insurance send conflicting signals that damage investment.

Operation Vulindlela has set out to clear large roadblocks to investment, including reforms to water and electricity supply, freight rail and ports, and visas for scarce skills. These critical reforms require measurable outcomes within set time frames.

We must make it easier to do business in SA by cutting red tape, reducing the burden of regulatory compliance and amending labour and BEE laws that act as deterrents to investment and job creation. The fast-growing informal retail economy provides an effective split screen of what is possible.

We must rein in government spending not only to get on top of our national debt — for every R5 government spends, R1 now goes to servicing our growing debt — but also to reduce the relative size of government. Our tax burden is higher than comparable middle-income nations. This erodes savings and business profits, slowing down investment, economic growth and job creation. The slowdown is amplified because global markets compete for the same capital. It is imperative that we turn this to our advantage by making competing for investment our priority.

Bills enabling expropriation without compensation, the nationalisation of the Reserve Bank and unfunded National Health Insurance send conflicting signals that damage investment.

This will require a comprehensive spending review to make sure government delivers value for our taxes. The government incurred R40bn in irregular and fruitless expenditure last year. We need teachers in schools, healthcare workers in hospitals, social grants and police on our streets. We don’t need every million-rand manager, every department or every programme. Rarely do we need blue-light brigades.

Financial discipline must extend to state-owned enterprises (SOEs) too, for which we must end bailouts and require clear, time-bound strategies for SOE reform, private sector participation, improved governance and financial self-sustainability.

Equivalent strategies are required for dysfunctional municipalities, of which only 34 (13%) of 257 received clean audits. Finance ministers have vowed to follow a “tough love” approach to our public finances for years. We have no time to lose.

Consumers are experiencing cost-of-living pressures, particularly in energy, food and transport. Middle-income households spend 79% of income on debt repayments. Since 2021 the DA has called for pragmatic relief measures with measures to increase investment. These include expanding the basket of VAT-free food items and re-evaluating the fuel price formula, which were promised by the president in his opening of parliament address. We expect to see it in this month’s medium-term budget.

If the GNU is serious about pursuing its stated priority of inclusive economic growth and job creation, the budget must focus on clearing the roadblocks to investment and job creation, making it easier to do business, implementing strict financial disciplines on government spending, and targeted cost of living relief.

It is easy to talk about growth, but it will take growth-friendly policies for the GNU to achieve inclusive economic growth, create new jobs and alleviate poverty.

• The authors are DA spokespeople on finance.