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Local Business reacts to #Budget2015

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Port Elizabeth based Nelson Mandela Bay Business Chamber (NMBBC) has complimented Finance Minister Nene on a balanced speech in Parliament yesterday and released the following brickbats and bouquets following the 2015 Budget Speech:

As indicated by the Finance Minister, this was an extremely difficulty budget to produce. But, we believe it captures the needs of the nation appropriately in the priority areas and trust that, all things being equal, the 9 focus areas will be implemented with the required diligence and participation of the private sector and all stakeholders to achieve results for the National Development Plan.

With the sluggish growth prediction of 2% for 2015 rising to 3% towards 2017, fiscal discipline is going to be a critical area of intense focus for government.

The security and reliability of energy supply appears to be top of mind and is considered the critical underlying factor that needs to be resolved to re-energise the economic growth of South Africa.

The NMBBC welcome the following:

  • Fiscal rebalancing, focusing on cost containment measures and intensified efforts to improve efficiency in expenditure. We hope to see more tangible positive results yielded from this approach.
  • The focus of targeting non –critical activities and limiting the growth in allocations for goods and services, catering, entertainment, venues and travel. The single digit cutbacks, are to be welcomed.
  • The re-prioritisation towards school books, the provision of medicine, police vehicles and infrastructure maintenance.
  • The R296 million allocated towards supporting the ocean economy over the next 3 years, the enhancement of climate change research, and the management of ocean resources.
  • We take note of the funding set aside for research into the regulatory requirements of shale gas exploration and hydraulic fracturing in South Africa, and trust that this will take into consideration the establishment of baseline studies, as well as the environmental impact of such exploration. We hope to see also the establishment of international best practice with regards to regulatory requirements
  • The R7 billion allocated to all provinces for emerging farmers. We recognise the importance of these types of allocations to assist farmers in growing the agricultural base, especially in the rural Eastern Cape, to address poverty, job creation and food security.
  • The R4 billion in the Jobs Fund Partnership with the private sector on projects to create new employment. We look forward to growing this particular partnership into the future as part of addressing the job creation needs of the country.
  • The R590 million allocated to the Green Fund over the medium term for strategic projects in partnership with the private sector, as this is becoming a more critical and strategic sector of our economy in the face of climate change and environmental challenges.
  • The R7.4 billion allocated to addressing backlogs in school infrastructure for the replacement of over 500 unsafe and poorly-constructed schools, as well as for the water, sanitation and electricity needs at these schools. This type of intervention will go a long way over the medium term to enhancing the norms and standards of school infrastructure. It will also go some way to providing an enabling environment for learners to receive effective tuition.
  • As noted by the Minister, South Africans are experiencing all kinds of infrastructure failure, most notably unreliable water supplies, damaged roads and collapsing electricity infrastructure. To this end, we welcome the over R80 billion allocated to 220 water and sanitation and local road projects, and trust that Nelson Mandela Bay would receive at least R360 million for the upgrade of the Addo road, R400 million for the Coega / Fishwater Flats , as well as the much-needed funding for the Nooitgedacht pipeline.
  • The R105 billion on housing and associated bulk infrastructure for water and sanitation, and look forward to seeing Nelson Mandela Bay continue to deliver quality homes with bulk infrastructure, in efforts to eradicate the bucket system that still persists in our region.
  • The initiative shown by National Treasury in meeting with mayors and City Managers across the large metros to discuss how to accelerate investment, improve infrastructure maintenance, and strengthen financial controls. These are key factors the private sector. We look forward to much greater engagement and detail on this initiative.
  • Underpinning this, we also acknowledge the efforts by Minister Gordhan with regards to his Back to Basics strategy, to support local government in ensuring equitable share, prioritising service delivery, building capacity, and strengthening systems of financial management and infrastructure delivery into the future.
  • We acknowledge and appreciate the sentiments of an unrelenting fight against corruption through rigorous financial management and effective systems in public service delivery. We need intense focus on corruption and inefficiency, and must produce results by raising clear examples of punitive measures taken by strong and decisive leadership.
  • The Eastern Cape should be grateful for the allocation of R233 million for its infrastructure and health facilities grants, based on the province’s quality of health and education infrastructure investment plans. We look forward to the fruits of this hard work being realised for the sake of civil society.
  • On behalf of SME sector, we are grateful to see that the 30 days payment to suppliers will now be prioritised. This is a welcome commitment for the cash flow of SMEs.
  • We agree that the tax payers wish to see value for money in the stewardship of public resources, and understand that under the current economic conditions, there has been a slowdown in lower-than-expected company tax, VAT and customs revenue.Against that backdrop, an increase in tax rates was expected.
  • On behalf of SMEs, we also welcome the tax regime proposed for qualifying business with a turnover of less than R 335 000 per year who will not pay tax, and that the maximum rate is now reduced from 6% to 3%. This, complemented by SARS establishing small business desks at its revenue offices, will assist in ensuring greater compliance with tax requirements among SMEs.
  • In light of the proposal of a temporary increase in the electricity levy, to assist in demand management, we would like greater clarity on what period that increase is anticipated to be sustained. In mitigating this increase, we welcome the proposed increase in energy efficiency savings incentives, from 45c/kWh to 95c/kWh, together with its extensions to co- generation projects. We believe this will accelerate the focus on efficiency and alternative energy generation.
  • We welcome Eskom’s application to NERSA this year for adjustments towards cost reflective tariffs, which the High Energy User Group and the Business Chamber have been advocating for extensively. While we welcome the capital injection of R23 billion into Eskom, we advocate and urge for visible signs of improved governance for real operational cost containment, to ensure that the tariffs for business are reduced rather than increased. This is going to require, once again, strong leadership, prudent oversight and a radical approach to driving costs and wastage out of the operation.
  • We welcome the DBSA’s continued management of the Infrastructure Development Programme for South Africa, in partnership with European Commission, especially in its support of Independent Power Producer Programme, which will be extended to include new generation capacity. We welcome the co-generation and demand management initiatives that will also be supported.

In conclusion, we compliment the minister on his very balanced budget speech, and look forward to the benefits of support towards the implementation of the National Development Plan, and the medium term strategic framework, in support of giving our economy greater impetus into the future, and hopefully, igniting our economic growth, especially in the Eastern Cape.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.