As the cost of living crisis bites deeper and deeper into the pockets of South African households, government shows no sign of responding.
With 81% of households reporting that they cannot afford to put enough food on the table and transport costs stretching budgets beyond breaking point, the DA has proposed urgent relief measures to reduce the cost of the food basket and to tackle the high fuel price. These urgent interventions can bring immediate relief, if government better manages our public finances and spends responsibly.
Government debt will increase from R4.7 trillion to R5.6 trillion and debt servicing costs from R332 billion to R380 billion by 2025/26. This excludes the transfer of at least R200 billion of Eskom’s debt onto the national balance sheet.
Debt-service costs have been the fastest growing item on the Budget while consuming an increasing share of GDP and revenue for the past two decades, and today, on average, 20 cents of every Rand collected in revenue every year will be needed to pay debt-service costs. As a consequence, interest payments on accumulated debt have crowded out spending on essential public services that include policing, public health, and basic education among others.
Government is unable to respond to the cost of living crisis because it has chosen to borrow money to bail out the failed state owned enterprises and to fund its bloated, corruption riddled administration.
Urgent action is required to bring our national debt levels under control.
The DA is therefore announcing our intention to introduce the Responsible Spending Bill to Parliament. The purpose of this Bill is to introduce statutory fiscal rules aimed at containing national debt and debt service costs. The rules ensure that the primary budget is in surplus, the wage bill is contained, and increases in government spending is dependent upon economic growth. These rules will apply to different debt level bands, adjusting as debt levels reduce. The rules will be binding on government, while allowing for reviews and exemptions under specified circumstances, and subject to Parliamentary approval.
The DA calls on all parties and institutions to submit comments on the proposed content of the draft Bill to email@example.com and to firstname.lastname@example.org by 17 December 2022.