Business, labour welcome MTBPS

Wednesday, October 28, 2009

Pretoria - Finance Minister Pravin Gordhan's maiden Medium Term Budget Policy Statement (MTBPS) has been welcomed by business and labour.

Gordhan tabled the MTBPS in Parliament on Tuesday, saying that government would over the next three years focus on five key areas to grow the economy and transform South Africa into a safer, healthier, more skilled country that is able to create and sustain more jobs.

Business Unity South Africa (Busa) said it believed the policy statement provided an accurate assessment of the prevailing economic conditions in South Africa.

South Africa entered its first recession in 17 years while the country's second quarter Gross Domestic Product (GDP) contracted by three percent.

Gordhan said government aimed to save over R27 billion a year by cutting down on wastage and slashing inefficient spending, a goal Busa welcomed.

"Failure, to improve efficiency in government spending will delay South Africa's economic recovery and prolong the need for government borrowing," said Busa's Chief Executive Officer Jerry Vilakazi.

He said it was important that all relevant parties were held accountable for government performance. "We are encouraged by the firm government commitment to improving efficiency."

Vilakazi said Busa fully supported the introduction of a longer term review of public expenditure as this would identify leakages and eliminate wastage.

"The commitment to policy continuity, albeit with flexibility to exploit 'opportunities for doing things differently' signals policy direction and is welcomed by BUSA."

In addition, Busa said it anticipated greater details on the social security and retirement fund reform and the introduction of the National Health Insurance (NHI,) adding that it believed public debate and consultation on these matters were overdue.

It also welcomed exchange control steps stated in the budget as well as additional assistance for small business.

"The MTBPS provides a balanced and clear view as to how public finances and economic policy are to be approached over the next couple of years," it said.

This was a sentiment shared by the South African Chamber of Commerce and Industry (Sacci).

While tabling the MTBPS, the minister said that government planned to create 4.5 million short-term jobs through the Expanded Public Works Programme over the next five years.

"Sacci concurs that job creation is a major challenge that must be addressed. The continued investment in infrastructure will be a major contributor to job creation," it said in a statement.

On the prospect of the possible introduction of additional taxes to reduce the budgeted deficit, Sacci said it trusted that the introduction of any new taxes would be carefully interrogated and subjected to a transparent process.

In its reaction to the MTBPS, Standard Bank said given the recession and the rise in social problems, the statement was a balanced one.

"Given the limited scope to maneuver that the minister had, the budget represents the best that we could hope for," said Standard Bank.

The National Education Health and Allied Workers Union (Nehawu) welcomed the underlying thrust of the statement and government's commitment to "doing things differently".

"We also welcome a commitment to create 4.5 million job opportunities over the next five years," said the union, adding that it would have preferred more detail on the NHI.