Agri SA congratulates the Minister of Finance, Tito Mboweni, on his first Medium-Term Budget Policy Statement (MTBPS) as it contains several promising policy indicators.
“The successes cited in rebuilding investor confidence is certainly important, but the central policy issue at present is expropriation without compensation (EWC) of agricultural property, which will more than extinguish all other gains made,” said Pietman Roos, Agri SA Head of Corporate Affairs & Communication. “Building confidence in the farming sector is in fact the biggest priority at present.”
Agri SA comments on salient points:
- Drought support: Agri SA welcomes the R3.4 billion allocated to drought relief, the majority going towards upgrading water infrastructure. The severity of the drought conditions does however require direct assistance to farmers and rural communities to ensure that farms are able to remain active and to avoid job losses.
- Land Bank: Singling out of agriculture as an important driver of economic recovery is heartening, so too the reprioritization of support to the Land Bank.
- Moderating taxes: The R27.4 billion shortfall in tax revenue is of great concern and speaks to the urgency of addressing governance issues at SARS. The commitment to avoid increases in major tax instruments (unless the economy requires it) is also welcome. It would be fair if increases in excise taxes are set below inflation, given the already high rates charged and recent history of above-inflation increases.
- Government expenditure and guarantees: The commitment to reconfigure spending on state owned enterprises (SOEs) is clearly necessary, but the honest assessment is that similar statements have been made in the past with no sign of real progress. The key deliverable on this point is to reverse the tradition of debt commitments and cash-flow bail-outs worth billions of Rands.
- Rising government debt: The recognition of the role played by the ballooning wage bill in escalating government spending, and in turn debt levels, is appropriate, as well as the instruction to government departments to absorb salary increases rather than stretch the wage bill further. This item is admittedly the biggest fiscal challenge and will require several years to manage downward, if at all.
Agri SA is cautiously optimistic about several of the policy commitments and will engage with the Minister to ensure there is follow-through.