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Friday, March 4, 2016

Budget Doesn't Incentivise Small Business, Active Citizens. Letter in Cape Times on 2nd March 2016

Quotes represent what Finance Minister Pravin Gordhan said in his Budget speech, although I may have paraphrased or shorted some of the text in these quotes.

“We are strong enough, resilient enough and creative enough to manage and overcome our economic challenges.” One wonders who Mr Gordhan meant by “we”. Government? He and the government want to do everything in this economy. But they are still dependent on taxation and so we need to find out how Mr Gordhan intends helping business, especially small business, where red tape is increasing every year and the ability of small business to continue in business is getting more and more difficult.

“There must be job opportunities, especially for the youth.” As we know only too well, job opportunities are not jobs, but short-term contracts, which are actually making the poor poorer and changing poor people into destitute people, dependent on the State!

“There must be fiscal consolidation, and the budget deficit must be reduced.” This implies that their must be a Budget deficit. Why doesn’t South Africa plan for a budget surplus by getting the economy moving?

“Investment in our cities is being accelerated.” But what of getting people moving back to rural areas and helping people in rural areas to stay in rural areas, a policy that has been happening in India for many years.

“Regulatory challenges that affect mining investment and employment are being addressed.” Read relaxed! What happens to the environment? Will there still be clean air and clean water and clean land in a few years’ time?

“Policy uncertainty must be removed.” How can this happen when government has a 1 million solar water heater programme, which it stops after 100 000 solar water heaters are installed, forcing local businesses out of business, and then six months later government realises its “mistake” and creates a new incentive, but then solar water heaters have to be imported because the local entrepreneurs’ money has been wasted. [Note that I found out on 3rd March 2016 that the new programme is a 300 000 solar water heater programme.]

“We must address institutional and regulatory barriers to business investment and growth.” Our government targets big business and itself. What about small business? What if rules are relaxed and the environment suffers?

“South Africa’s response to global climate change has been prepared.” South Africa aims to do this with increasing fossil fuel use taxes and by building nuclear power stations.

At the same time as this no real benefits are being given to private people who invest in making themselves more efficient and even in making their own electricity or collecting their own water. There are more and more incentives for business, but not for private people! And how can it be seen that nuclear power stations will prevent global warming, especially considering the huge pollution inherent in their build.

“The gas IPP program is being prioritised.” This essentially means importing gas and in fracking our Karoo.

“There is an R870 billion public infrastructure program over the next three years.” Judging by the waste and time overruns at Medupi and Kusile coal power plants, the South African taxpayer can expect at least half of this R870bn to be wasted!

How much better it would be if taxation was relaxed and incentives put in place for the private sector and homeowners to be able to invest in infrastructure projects before tax and before VAT, and with the ability to get the same benefits as big business.

“Taxation increases will include a new sugar tax on sugar-sweetened beverages, to come into effect on 1st April 2017.” Why not tax all items containing sugar, including bread, muesli and yoghurt? Research shows that many diseases are caused by an overload of sugar.

“Our policy commitment is to achieve universal health coverage.” But as we have seen this is to the detriment of the alternative health industry, where many products have already been removed from the shelves or made to be only available with a prescription, and where healers such as sangomas, shamans and witchdoctors are being declared illegal.

“Water.” Nothing has been said about support to prevent acid mine drainage and other sources of pollution of South Africa’s scarce water resources.

“There must be higher land use density.” But what of areas such as the PHA (Philippi Horticultural Area), a farming area and important source of water for the Cape aquifer, which is being mined as a new housing area? And why does every area need to be densified?

What of inner city areas such as District Six in Cape Town, where there is a huge opportunity to move displaced people back home and to increase densification right next to the CBD?

“We are resilient. We are committed. We are resourceful.” This has been said many times in this speech. I agree. But only if active citizens, which Mr Gordhan referred to in his 2012 speech and in this 2016 speech are included.


Thank you for reading this. Please engage with me for more out of the box thinking and to help you move your investments in the right direction, for you.


  1. Excellent, thanx David for making sense of the empty statements by govt voices and turning it onto practical suggestions.Let's do it people!

  2. "And how can it be seen that nuclear power stations will prevent global warming, especially considering the huge pollution inherent in their build."

    Hi David, was wondering if you have any facts and figures to back this up? Sure there will be pollution in any power station build, but the build is only a relatively short part compared to the useful operating life of the power station (My guess is say 8 years to build a NPS with a life of maybe 60 years?)