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From the horse’s mouth: Minister Nene unpacks yesterday’s “mini budget” speech

Tax hikes are looming

"We’ve laid out our plans for cutting expenditure – R10-billion now and another R15-billion in the following year - and in February we’ll lay out plans for increasing revenue,” said an ominous sounding Nene when pushed on whether tax hikes are imminent.

In Nene’s speech on Wednesday he promised not to balance the budget on the backs of the poor; a statement considered by some to signify imminent tax hikes. “We’ll be looking at increasing efficiencies in collecting so as to close the tax gap, but we’ll also have to make adjustments to tax policy in order to increase revenue,” warned Nene.

Civil service salary expectations need moderation

The civil service isn’t, according to Nene, productive enough in delivering social returns. “We must ensure that the money we put in buys us what we need,” says Nene.

The Finance Minister warns that Government simply cannot afford civil servant salary adjustments far above inflation. “It is in the interest of everyone in South Africa to make sure that we are alive to the environment we operate in,” says Nene. “Only when we’re on a path of much faster, sustainable growth will we be able to spend more on the civil service.”

Wasteful expenditure and corruption still not under control

“We are stepping up the cost containment measures of my predecessor,” promises Nene. “These measures have, in the past eight months, saved about R500-million. Having said that, we haven’t been able to completely stem the tide and we need to do a lot more.”

Size of the Cabinet

“If government is doing a good job then I imagine South Africans will be quite content,” says Nene when pushed on the size and cost of Cabinet. “However, it’s not my prerogative to determine how large Government should be.”

Privatisation

“We’re embarking on a review of state-owned enterprises,” says Nene. “The outcome of that review will inform us on what course of action to pursue.”

Pension fund reforms

“For our intervention to succeed we need the buy in of all affected parties,” says Nene when asked if Government isn’t being held to ransom by trade unions which have succeeded to put much needed pension fund reforms on the backburner.

Listen to the Soundcloud clip for more detail.

What others say

Bloomberg parliamentary journalist Mike Cohen discusses the five most important things you should know about Wednesday’s ‘mini-budget’:

FNB Chief Economist Sizwe Nxedlana unpacks Finance Minister Nene’s mid-term budget policy statement:

Konrad Reuss, Managing Director of Standard & Poor's in Johannesburg, weighs in on the medium term budget policy statement:

Tax Expert and Professor at Rhodes University Professor Matthew Lester shares his views on Finance Minister Nhlanhla Nene’s first mini-budget:

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