THE Finance Minister, Pravin Gordhan has tabled a budget which is 8.6% larger than last year’s and perilously close to the R1 trillion mark at R907 billion.
This growth in spending will have to be financed by an economy which is only just stuttering into life after a damaging recession and so the tab is likely to be picked up once more by South Africa’s stressed out tax base.
The big increases in expenditure include the servicing of state debt which is up a massive 23,9 percent to R71 billion. This is alarming as the raison d’être of government’s fiscal policy over the last ten years has been to reduce debt servicing to increase capital spending with the aim of kickstarting growth.
Gordhan’s spending plan appears to have prioritised social spending on grants which is up by 13%, education which is up around 12 percent for schools and universities and “community development” – presumably the improvement of service delivery by local government — which is up by 20%.
There is more spending on the police (up 9.8%), housing (up by 11.2% and hospitals (up by over 11%).
All of this spending appears aimed at ameliorating the effects of our economy’s failure to delivery growth and jobs on a par with other developing nations.
Gordhan pointed out in his speech that South Africa needs to compete with other economies if it is to grow, but his budget seems to prepare us for failure.
Gordhan is confident that government is putting in place an industrial policy that will take us out of this cycle of negativity, but there are no signs that President Jacob Zuma is prepared to make the tough choices needed to go forward by cutting government spending and making investment less onerous.

Related posts:

1. Gordhan ignores the left and follows the Manuel path
2. The budget in one simple graphic that explains it all
3. Budget Speech: The agile politics of Trevor Manuel
4. Budget speech: Pravin Gordhan on corruption
5. Cope to get 8-12 percent of the vote – Success or failure?