The DA says it will push for the adoption of a bill to stabilise national debt and debt service costs in SA should it come into power.
Outlining the party’s agenda for its first 100 days should it win the crucial elections on May 8, leader Mmusi Maimane said on Monday a DA-led national government would put in place fiscal spending rules that mitigated against the debt-to-GDP ratio spiralling out of control, by implementing a debt ceiling set at 60% of debt-to-GDP.
In February, finance minister Tito Mboweni said the upward trajectory of the debt-to-GDP ratio, which is set to reach 60.2% in 2023/2024 and 60.1% the following year, is a major issue of concern.
He warned that this trend will lead commentators to talk of the dangers of a debt trap and result on people believing SA could not manage its finances and might need assistance.
Mboweni said the debt-to-GDP ratio should be managed to below 40%.
Maimane said on Monday that SA’s financial situation was dire.
“This means that almost two-thirds of the value of everything SA produces in a year is needed to pay back the debt the ANC government has piled up. With more spending on debt, more bailouts for beleaguered state-owned enterprises (SOEs), and a dwindling tax base, there is an urgent need for reform,” he said.
Under a DA government, the finance minister would be required to report to parliament for compliance with the new fiscal spending rules and prohibit government guarantees to SOEs from increasing as a percentage of GDP.
Maimane said the party, if elected to lead the country, would reform legislation, mitigate fiscal risks, launch a voluntary civil service, upskill teachers, increase the child grant, create an enabling environment for small businesses to thrive, reduce the size of the cabinet and professionalise the police.
He added that within 100 days, the DA would introduce a jobs act, independent systems and market operator (ISMO) bill, and immediately place the ailing SAA under business rescue.
“This would stabilise the airline and cushion the financial risk [that] continues to weigh on government spending and the economy. This would be done with a view to selling off the airline in the long term, creating competition in this sector.”
Maimane noted a jobs bill would make provision for special incentives to local and foreign investors who met a minimum employment requirement. These incentives include repatriating international investment profits, easing forex controls for investors, creating medium-sized business access to a specialist department of trade and industry arbitration team to assist with costs, and to make hiring and firing employees easier through a labour market flexibility exemption clause.
The DA leader said the ISMO bill would add secure energy supply and make it much more affordable for all citizens.
“The bill will see Eskom split into a generation entity that can be privatised, and transmission entity to be operated by the state. This will enable independent power producers to connect to the grid, and open up competition in the energy market.”
Maimane said the DA was prepared to work with parties that shared the common values of a market-based economy that created jobs, a lean and capable state that delivered services for all, zero tolerance for corruption, and the upholding of the constitution that guaranteed its people their rights, including the right to own property.
Many political commentators and pollsters have suggested that the elections will bring about the possibility of coalitions, most likely at provincial level.
However, coalitions have proved to be problematic in recent times, with the collapse of the DA-led coalition rule in Nelson Mandela Bay in 2018 illustrating the fragility of such partnerships. -BusinessDay