Since Government started releasing the Medium Term Budget Policy Statement (MTBPS) in the fourth quarter every year in the run-up to the next budget, the February Budget event has lost some of its shine. With the macro-budget numbers for expenditure, revenue, and the budget deficit forming part of the MTBPS, the details to be filled in and which generate the most public interest are the tax proposals.
Government has also on occasion used the MTBPS rather than the National Budget for important policy announcements, for example on inflation targeting, foreign exchange controls, etc.
Successive state presidents have furthermore made statements about budgetary matters in the annual State of the Nation Address that reflected important policy initiatives, leaving it up to the Minister of Finance to fill in the details in his budget speech. The 2012 Budget to be tabled in Parliament next Wednesday will be no exception in this regard.
Although no explicit announcements regarding new policy initiatives were made in the 2011 MTBPS, the document does state that “the 2012 Budget will include an economic support package aimed at strengthening the medium-term recovery and giving impetus to the longer-term structural shifts required for faster growth and development”. According to the MTBPS, these initiatives will inter alia include investment in infrastructure and industrial development zones.
Subsequent to the MTBPS, the National Planning Commission released the National Development Plan (NDP), containing its thoughts on the required structural shifts to deal with the threefold challenge of unemployment, poverty and inequality, including suggested infrastructure initiatives.
More recently, the Department of Trade and Industry’s revised policy on special economic zones came to light.
In his State of the Nation Address at the opening of Parliament on 9 February 2012, President Zuma announced that Government has decided on a major infrastructure plan to boost economic growth and create jobs. Five major geographically focused programmes were announced, while mention was also made of other projects focusing on functional areas of importance such as health and education.
The geographic focus of the plan appears to be tied strongly to the proposals contained in the National Development Plan as well as the suggested special economic zones.
One therefore gets the impression of greater unity of purpose within Government. A renewed focus on correcting South Africa’s infrastructure deficiencies is of course commendable – for example, logistical bottlenecks have played no small part in restricting the growth in exports, especially in the mining sector. The argument that public spending on infrastructure will crowd in the private sector because of its positive impact on the ease and cost of doing business, has strong merit. The reference to the 2010 World Cup furthermore gives the impression that Government intends to follow a proven recipe in implementing the listed projects, increasing the chance that they will be successful.