Budget 2012 Lacks Grand Narrative on How to Deal with Poverty and Inequality in South Africa

24 Feb 2012

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Following the announcement of the 2012 budget speech on Wednesday, February 22, SACSIS' Fazila Farouk, spoke to Wits University Economist, Seeraj Mohamed, about President Jacob Zuma's now well-known infrastructure development program aimed at job creation, which received much budgetary support from our finance ministry.

We do need to spend on infrastructure, says Mohamed, the question, of course, is are we spending enough and are we spending in the right areas.

Within the budget speech, the minister of finance did mention, support for the New Growth Path and industrial policy. However, within the history of the South African economy since 1994, we need to look at how much is being spent and what's being spent within a particular context, which bears in mind that from 1996 with the launch of GEAR, there was a choice made to keep the deficit low and not to invest in infrastructure. At the same time, our government wasn't interested in thinking about industrial policy seriously or restructuring the economy.

So, for example, they kept supporting heavy energy users, while on the other hand, not investing in public infrastructure like public transport, which left people dependent on the taxi industry. So we have huge backlogs in that kind of public infrastructure, while we subsidized big business and big users of electricity and the middle class and private car users, says Mohamed.

Now South Africa has reached a point where we are sitting with a huge backlog: problems with electricity capacity, potholes on roads, traffic lights that are not working and so on, and its being sold to us as if this is a new developmental economic plan.

We really need to question this.

Moreover, much of what our government is saying it is spending money on in the budget is social spending, but one is not getting a sense that there is an integrated plan to think about how spending money on the poor is part of a larger development and growth plan -- and linked to things like infrastructure spending and industrial policy and other economic policies.

In this regard, what we are not seeing is our government coming out with a grand narrative.

Every year a budget is presented and it’s presented as if its "progress", with bigger spending on health, education and so on, but this is de-contextualised because at the same time, every year we come back and we say that inequality is worse or not improving and we’re not seeing enough jobs being created.

What the economics ministers, including the minister of finance, still have to do is show us is how they are going to increase spending in a manner that’s going to address, unemployment, poverty and inequality.

So, despite the rhetoric, there isn't a broader plan presented to the South African public for how to address poverty and inequality, and we are not debating it.

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You can find this page online at http://sacsis.org.za/site/article/1217.

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