Another R500bn welcome stimulus, but what of the future?

Government needs to act fast and reshape its spending patterns and not rely on tax increases to foot mounting costs.

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22/04/2020 11:57:38

                                                                                                                                                                                                                      Another R500bn welcome stimulus, but what of the future? 

                                                                                                                                                                                                                      While OUTA commends President Ramaphosa for another calculated stimulus intervention aimed at alleviating pressure on the poor and most vulnerable, as well as providing assistance in the retention of jobs in the small business and informal sector, we have serious concerns about the longterm economic implications. 

                                                                                                                                                                                                                      “This massive injection will only offer temporary respite from an economic crisis that will not dissipate unless we can kickstart the economy as soon as possible and do government differently, whilst still doing everything possible to contain the virus,” says Wayne Duvenage, OUTA’s CEO. 

                                                                                                                                                                                                                      The President and his advisors have the difficult job of a precarious balance between death from starvation vs death from COVID-19. At this stage, the damage being caused from a long term economic fallout is beginning to weigh heavily on Government’s decisions to start up the enginerooms of business again, whilst keeping the virus from spreading too fast.

                                                                                                                                                                                                                      The increase of existing grants and the addition of new grant categories are noble and commendable, but this money will have to come from somewhere. International relief grants and loans offer temporary relief. While the President acknowledged Government’s understanding for a ‘new normal’ when it comes to managing the nation’s financial affairs, their long term plan needs to be made clear, especially in how they intend to stimulate higher tax generation by creating a more vibrant economy, as opposed to increasing taxes on an overburdened taxbase. 

                                                                                                                                                                                                                      We get a sense of change in Government’s appetite to dispose of non-core state enterprises that are a drain on the economy, but not enough urgency on the matter. This subject has dragged on for too long now. The real challenge, as with all necessary change, lies in the doing - something our Government struggles with.

                                                                                                                                                                                                                      “In addition to the need for civil courage by citizens to demand more transparency and accountability from public governance, we need to see moral courage from Government leadership in the drastic reduction of its bloated size and wasteful expenditure,” says Duvenage. “As citizens, OUTA will drive the demand for improved efficiency and productivity when it comes to Government’s affairs,” says Duvenage. 

                                                                                                                                                                                                                      OUTA will be studying the measures announced in the COVID stimulus package and will unpack our concerns in due course. 

                                                                                                                                                                                                                      Picture: Flickr/GovernmentZA

                                                                                                                                                                                                                      OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.