OPINION

Budget 2022: What’s missing is most interesting

William Saunderson-Meyer |

24 February 2022

William Saunderson-Meyer writes on what Enoch Godongwana did and did not choose to fund

JAUNDICED EYE

The political clouds have lifted. It’s all broad uplands and sunny skies in South Africa at present. 

The recent gales of 2021 — insurrection, violence and arson — are forgotten. The lassitude that left President Cyril Ramaphosa’a administration becalmed for four years is confidently predicted to be lifting.

Last week, President Cyril Ramaphosa’s annual State of the Nation Address (SONA) was widely welcomed by prognosticators as a reassuring commitment to a private-sector driven economy, rather than the state-driven “developmental” model that the African National Congress has been trying to implement with scant success. This week, Finance Minister Enoch Godongwana’s maiden budget was hailed by many as the first tangible puff of wind in Ramaphosa’s sails to power him out of the doldrums. 

And what’s not to like? The minister had a revenue windfall of almost R200bn, of which R182bn was a taxation benefit from the commodity price boom. Of course, it could have been at least double that amount had the government not choked the mining sector to within an inch of its life over the past couple of decades with an ANC-fashioned noose of regulatory uncertainty, electricity uncertainty, labour militancy, and community lawlessness.

But let’s not be churlish, at least the bonanza is being carefully spent. Any increase in the public service wage bill will be held below inflation and 45% of the windfall will be used to pay down debt, with no further debt creation on the cards. 

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The Covid-relief grant of R350 is extended for another year but there was no concession on a Basic Income Grant (BIG), which had been lobbied for hard by the ANC’s alliance partners and a large number of civil society organisations. Instead, there was an unexpected, small cut to the corporate tax rate, as well as an inflation-linked adjustment in tax brackets for individual taxpayers.

Godongwana promised “tough love” for the profligate and largely bankrupt state-owned entities (SOEs). In future, they should be self-sustaining and there would be no more bailouts.  

That is, except for Eskom (R88bn cash and a R25bn government-guaranteed spending voucher), arms manufacturer Denel (R3bn) and SA Airways (R1.8bn). And the door was left open for SOEs that could show that they are “serious about cost containment”, to get future relief.

One of the more enthusiastic responses to the budget came from BizNews editor Alec Hogg, who is normally unsparing in his criticisms of the government. “SA has been battened down for so long that it’s easy for pundits to conclude Ramaphosa and Godongwana are fighting a lost cause.”