The DA’s seven point recession recovery plan may have some merit, but it fails to address the real elephants in the room: the massively bloated civil service and Cabinet, according to a leading economist.
Economist Dawie Roodt believes the only way to recover the economy is by drastically pruning the number of civil servants and by paying civil servants less.
“Politicians always want to tell us how to decrease taxes, and how to spend less,” Roodt said. “What none of them is willing to do, though, is address the elephant in the room, and that is that we simply have too many civil servants.
“They need to stop pussy-footing around and admit that the only way to fix things is by spending less and getting rid of some of them.”
DA leader Mmusi Maimane yesterday proposed his party’s recession recovery plan, following the announcement by StatsSA that the economy was now in a technical recession.
The DA’s plan represents little more than political posturing, since they are not the governing party, and the party hoped to entice South Africans with evidence of their plans to govern and create jobs.
Maimane said their proposals “represent a change in approach from the belief that more state intervention is the only antidote to the failure of previous state intervention. Instead, we pursue a lean, capable state that create conditions that promote investment in a broadly open, competitive, market-driven economy.”
“A healthy, growing economy will be able to collect the taxes required to fund better education and healthcare systems, a compassionate welfare programme, effective land reform and restitution programmes, and an effective police service, trained, resourced, and equipped to be able to maintain law and order, and keep people safe,” Maimane said.
Roodt, however, believes the DA’s plan, with a few exceptions, is not nearly enough to pull the country out of it’s economic quandary.
According to former finance minister Malusi Gigaba’s 2017 budget speech, the total government wage bill stood at R587 billion, and it was expected to grow to R630 billion by 2020. This represented a growth of 10.3% annually since 2009.
In May this year, Public Service and Administration Minister Ayanda Dlodlo warned that salaries for public servants have been growing at rates higher than inflation and swallowed up 35% of government expenditure in 2017.
Reducing this, Roodt says, is the only possible remedy for the country’s financial woes.
“Spending less is the only way,” he told The Citizen. “But no politician – not even the opposition – is willing to say it, because they fear the backlash.
“But what is very important is for all to understand one thing: we are in very deep trouble, and I personally don’t see us getting out of it.”
Roodt also recommends a drastic cut to the number of Cabinet positions. Instead of the cut to 15 members the DA proposed, he believes fewer than six ministers should suffice.
Roodt says government could do with only the ministries of health; education; police, defence and correctional services; infrastructure and local government; finance; and a deputy president, in charge of government business.
“Scrap small business, women, and all the rest. What on earth does a minister of sport do beside waste money?”
‘Cuts will affect the people’
- Organised labour understandably balked at suggestions of culling public servants.
- Patrick Craven, spokesperson for the South African Federation of Trade Unions, said the union “totally rejects the argument that civil servants need to be reduced”.
- He, instead, argues for the opposite, saying the main reason for the recession is the fact that too many South Africans are unable to afford the bare essentials, which has led to a stagnating economy.
- “Cutting the number of civil servants would increase the number of unemployed and struggling, and simply reduce the number of people capable of affording the basic essentials. It would also worsen the conditions for those who are dependent on institutions which serve the public and employ these servants, such as schools, hospitals and municipalities.”
- Craven acknowledged that there may be some areas where unnecessary jobs exist, but said these people must be redeployed.
- Craven criticised economists for failing to recognise the role of corruption, saying tax evasion, money laundering and more all contributed to the state of affairs.
- He believes both private and public institutions need to focus on long-term financial health and ensuring jobs and stability.
‘China is the winner’
- Economist Dawie Roodt’s argument against economic stimulus plans, which include a suggestion that government grants be increased, is that it will not benefit the local economy, but rather that of China.
- “Forget about this stimulus nonsense”, he said yesterday. “This is a typical Keynesian approach, which says we need to increase demand, and this will increase production. Unfortunately for SA, all this will increase is imports. It will stimulate the Chinese economy, and leave us even worse off.”
Earl Coetzee / The Citizen