A copy of ex Finance Minister Nene’s proposed Medium Term Budget (MTB) has been leaked to various organisations in the interest of the public’s right to know. Nene’s MTB would have delivered the radical economic changes necessary to bring growth and prosperity back to South Africa. Will new minister Mboweni deliver Nene’s reforms?
According to Nene, most of SA’s problems are self-inflicted and can be put right by implementing good policy aimed at improving growth for all.
State Owned Enterprises (SOE).
Most state-owned enterprises are a drain on the the country’s wealth, diverting billions earmarked for the poor to the rich. Failed SOEs with no prospect of rescue, such as SAA, SA Express and Eskom, will be wound up or sold if private investors can be found.
The recently published draft IRP 2018 will be withdrawn, reconsidered and one form of energy will no longer be favoured above another – there will be a level playing field.
Long established existing policy adopted in the 1998 White Paper, and in the NDP, will finally be implemented. Eskom will be unbundled into generation and transmission entities as in all progressive countries. Government and private suppliers, regardless of whether using coal, nuclear, wind or solar power, will have to supply constant power at competitive bid prices. All suppliers will be free to “wheel” power over the privatised grid directly to consumers as well as over private grids.
Special Economic Zones (SEZs).
Following BRICs partner China’s phenomenal success in attracting investment and generating global exports, SA will introduce radical Special Economic Zones. These zones will be tax havens, free of stifling exchange controls, red tape, bureaucracies, labour laws, trade barriers and the like. SA’s SEZs will be even freer than those in China and will include the world’s most secure property rights guaranteed by both the Constitution and international insurance.
The National Health Insurance scheme in its present form is unworkable, unaffordable and the concept is misleading. Genuine health insurance will be introduced and government will pay for those who cannot afford to insure themselves. Citizens will be free to buy healthcare from whichever registered providers they chose. Government hospitals and clinics will be transformed into BEE opportunities.
Nearly 10 million unemployed, is intolerable. Decisive reform is necessary. The long term unemployed will be free to to sell their labour at any price subject to their right to terminate any agreement at 24 hours’ notice.
Minimum wages increase unemployment therefore the implementation of the proposed minimum wage will be postponed until unemployment has fallen to levels found in minimum wage countries without high unemployment. Central bargaining agreements will no longer be imposed on non-parties thus increasing competition and render workers and small businesses free to negotiate mutually acceptable terms.
The quality of school resuts must improve and teachers need an incentive. Teachers at government schools will be entitled, by a majority vote, to form a company to contract with government, in co-operation with parents, to take over their school and run it as a business. They will be paid tuition fees per student at the current cost to government.
Simple, Flat and Low Tax.
To attract risk capital, SA will move towards a simple, flat and low tax system found in the world’s most prosperous countries. SA tax rates will be globally competitive to lure investors here rather than elsewhere. Our new tax system will be fairer, broaden the tax base, improve incentives to work, minimise evasion, increase growth, put an end to capital flight, reduce unemployment, increase after tax wages, and promote local and foreign investment.
Red Tape Reduction.
Red tape is increasingly smothering the economy dominated by self-perpetuating unaccountable bureaucratic empires, including the Financial Intelligence Centre, Competition Commission, Consumer Commission and Twin Peaks. To relieve the burden of regulation, for every new law, five will be repealed until SA is one of the top ten counties on the Freedom Index Doing Business, Economic Freedom, Property Rights and Rule of Law indices.
As a gesture of goodwill all ministers have agreed forgo salaries until the next Budget, reduce salaries by 25% thereafter, and never again allow salaries to increase faster than the growth rate.
Rivers will run uphill.
Since farmers have been spooked by the threat of expropriation without compensation, and since they lack water the government has decided to help and reassure them by making rivers run uphill.
Of course, Nene’s Budget was not leaked to the FMF. But this is what should have been in it and should be in Minster Mboweni’s MTB if he and the government are serious about wanting South Africa to rise like China, India and Mauritius from being one of the world’s losers to being be one of its winning nations. The government has a simple choice: keep South Africans down, or let them prosper.
Note: This is a spoof. The serious bits should be in the budget. The full text of Nene’s Budget is not on our website.