24 October 2017
Finance minister Malusi Gigaba will tomorrow table his first Medium-Term Budget Policy Statement (MTBPS) in Parliament. Given the ailing economic environment, the new Minister is under intense pressure to reassure ratings agencies. The minister needs to ensure that the economy can grow at a rate which can lead to sustained job creation. Wasteful expenditure, for example, supporting poorly managed state-owned enterprises (SoEs), should be minimised.
Agri SA looks forward to the MTBPS as an organisation fully committed to the development and sustainability of agriculture in South Africa. We hope it will make adequate resources available to boost agriculture’s competitiveness and to support farmers, especially in the drought affected areas (Western, Northern and parts of the Eastern Cape). This will help the sector to continue producing quality food for the country and contribute towards job creation and poverty alleviation, as envisaged by chapter six of the National Development Plan (NDP).
As a point of departure, the minister should take time to thank the hard-working South Africans who pay their taxes and operate profitable businesses. It is these taxes which provide the National Treasury with the necessary funds for the government to make transfer payments, in the form of social grants, funds for land reform, bailouts to SoEs and other social services.
Agri SA would also appreciate it if the minister could specifically thank the South African farming community for its contribution towards economic growth and for helping to lift the economy out of recession during the second quarter of this year, despite the hostile environment farmers currently operate under.
We hope for a MTBPS which will focus on eliminating wasteful expenditure, maximising economic growth and reassuring ratings agencies of continued fiscal discipline in managing the country’s finances.
Agri SA is concerned with the view that government and the National Treasury seem to think that additional revenue can be raised through additional tax increases. Given the deep challenges our economy is facing at present, there is no space for further tax increases, be it of any kind. Our view as Agri SA is that an additional tax burden will not put the rating agencies at ease and will not bring about certainty, stability and confidence in the economy. Instead it will exacerbate the rate of unemployment and thus reduce revenue collection.
Our proposal to the minister is that he needs to take cognizance of the challenges the economy (especially the farming community) is facing. While the agricultural sector has started showing signs of recovery from some challenges, it is still confronted with an ongoing drought, high input costs and limited government support. The reality is that a full recovery of this sector will require a significant amount of time (for example, between 3-5 years) as well as a substantial amount of capital expenditure.
In this regard, Agri SA would like to ask the minister not to impose more burdens on farmers, but to commit to support the sector so that it can fully recover and continue ensuring job creation, positive contribution to the GDP and that South Africans are food secure.
Issued by Agri SA, Directorate: Corporate Liaison
Mr Hamlet Hlomendlini, Chief Economist, Agri SA, 012-643 3400 or 082 957 9064
Dr Requier Wait, Head: Trade & Commerce, Agri SA, 012-643 3400 or 073 304 0932