The passage of time seems to be such a fractured thing right now and it isn’t going to stop being so any time soon. It feels like we have been stuck in this time warp for such a long time that we cannot even tell how many days we have been under lockdown. Nothing is as it was, or ever will be again, yet every day seems to bleed into the next, without clear boundaries; beginnings and endings.
Whilst few of us can now speak Spanish or do a hundred push-ups without breaking a sweat, others have grown voices. We seem angry a lot – just look at Facebook, watch the news. In some parts of the world, what has been festering under the surface for many years are erupting into conflict and protest. Some suffer in silence. Some rise up. Some choose to do the extraordinary. Some do nothing. A day like no other (in the last 90 years).
In the midst of all of this we have just lived through yet another unusual and unexpected day in history. The South African Minister of Finance, Tito Mboweni, have had to do what has not been done in 90 years. He has had to call for a Supplementary Budget. Usually the budget is presented in February and then reviewed in October.
The unknown, novel Corona virus struck. In fact, it keeps striking and nobody really knows how this is all going to end. We had to throw the expected budget out. Moneys had to be appropriated, moved from one line item to another. It all happened so fast that our dear President couldn’t get everybody’s permissions. The ordinary processes in Parliament could not be followed and now, through this extraordinary move, Parliament gets to say its say.
If only we could live within our means
So on the momentous day of the 24th of June 2020, Tito said debt is our weakness. It is so much more than that, though! Debt from the past now threatens our ability to deal with the present. We did not have enough money to start with and now we have even less, yet we have to borrow more, because the current situation is going to get a lot worse before it gets better. As a country, we are bracing ourselves for the cresting of the Corona wave.
Let us be clear about what we are looking at:
- For every R 10 000 the government earns, R2 100 is used to pay interest on debt. A disproportionate chunk of the remaining R7 900 goes to paying civil service salaries. There is therefore no money available to pay back the original debt.
- As we know, tax is the chief driver of income for any Government. The South African Revenue Service (SARS) will show a projected shortfall at the end of year of R300 bn. It did state that R70 bn of this is due to tax breaks in response to the COVID-19 crisis.
- The Government is going to borrow $ 7 bn from international funders, such as the International Monetary Fund. This, incidentally, is not necessary a bad thing. There are strong measures in place to ensure the money goes where it should and not into installing fire pools at presidential palaces.
- Our woes – the biggest South African income collapse in 90 years – is mirrored and amplified by the world economy. The world has experienced the biggest drop since 1870.
So what has the South African Government done to deal with the immediate crisis?
- We have spent R 21.5 mil on health care related expenses with regard to COVID-19 already. R 12.6 bn was spent on frontline care to cover unexpected costs such as Personal Protective Equipment (PPE) and the like. Country-wide there are now 27 000 beds earmarked for COVID-19 use. This sounds good, but remember that these are beds that would have been used for patients with other illnesses, like diabetes, or who suffer from cancer or require surgeries. 50 000 community workers have been commandeered to go door-to-door in an effort to train, to screen, to refer for testing. We now have 400 quarantine sites, not counting health care facilities.
It is important to note that the Finance Minister did say that it is the responsibility of citizens to keep their provinces and cities accountable for how they spend their budgets. Please do! Those who live in Port Elizabeth, ask your premier if it is considered ‘equitable compensation’, for a contractor to buy new scooter ambulances for less than R2 mil and then sell these at a profit of R 7 mil to the Regional Department of Health?
- The Reserve bank dropped its prime lending rate by 2.75%. As previously explained in another blog, this means that for every million South African Rand that you are in debt, your repayments have dropped by R27 500 per annum. This does not help the poorest of the poor, but assists those who are wealthier and more likely to employ those who are not. Other measures, chiefly through the Unemployment Insurance Fund and the Solidarity Fund has been put in place to assist employers to keep more people employed. The South African Social Security Authority (SASSA) has received cash injections so that social grants could be improved.
- Banks provided payment holidays for those with house bonds, car loans and credit cards for three months, which will now be extended. This provided relief to South African citizens to the tune of about R30 bn.
- The Education Department have set aside and additional R5 bn to address the crisis in Education to help schools prepare and reopen safely. There is a major concern to be noted though – as one of the remedies, 100 000 TV sets are to be distributed to Matriculants. Is this, given the high incidence of crime and lack of infrastructure the best way to address the issue? What will happen if the parents can afford electricity or a family member sells the TV? I really would like the Minister to respond to this!
- In the face of the unacceptably high levels of Gender Based Violence (GBV) in the country and the disproportionate level of social difficulties especially children and women are burdened with in our country, a couple of thousand additional social workers have been employed.
The future can be found in a Zero
Jimmy Carter, an American President in the 1950s, introduced the concept of a zero-based budget. Tito wants us to follow suit. This means that, as a government, you can only spend that which you gathered in as income within a given year. Not only does that mean cutting down on increasing debt, but also that we need to end up with a positive cashflow balance every year.
The demise of pet projects and the futures of others
Special projects will have to be cut by R230 bn within the next 2 years. This means that SAA most likely will not be getting the R10 or R30 bn it was asking for. The National Health Initiative may also well be one such an example. Some other major expenditure projects may also be cut, if not completely, then down to what is affordable. The Landbank will be an exception – it will receive R2 bn as it holds about a third of all bank loans to farmers and we all need to eat.
Eskom has to be fixed. Tito said that this is a non-negotiable. The negotiations have been done. Plans must now be put in motion. It needs to be unbundled into three units and at least one of these needs to be privately owned.
Shoulder to the wheel for the rest of us
We know that the news that may be the hardest for all to bear is the fact that an additional R40 bn needs to be milked from tax payers over the next four years. We do not know what this will look like. Yet.
It is easy to fall into inertia when faced with such overwhelming circumstances. No wonder we stress eat. We are all trying to do what we must to survive. It is also easy for our eyes to glaze over when these super-sized numbers are flashed all over the media. It is beyond our scope of understanding. It is outside of the average person’s frame of reference.
You may think, what is the point of arguing? It isn’t as if we have much of a choice in the matter. You may feel very little. Everything may seem surreal. You may also feel rather hard done by. Angry. The corruption that has caused much of the mess we find ourselves in was not your doing, you may say. Yet, we want to know that we will have access to the ventilators, should our time come. We want to know that if we are really hungry, there will be someone to provide relief. We want to see our wives and sisters and children protected and assisted when they are vulnerable. We all want to feel safe.
Tito Mboweni said that we should hold our Provinces and cities accountable for how they spend their money. Maybe it is time for you to find your voice. To step out of your comfort zone and participate in the messiness of sorting out this mess that is our social, political and economic environments. Some will suffer in silence. Some will rise up. Some will choose to do the extraordinary. Some will do nothing. What will you do?