Friday, 27 February 2015


For the data geeks who think they can discern the future in the numbers from the past this was a bonanza week. Firstly there was the GDP growth rate for the last three months of 2014  and then there was the National Budget for the coming fiscal year. And then it’s company reporting season and a deluge of financials is flooding the newspapers, despite the JSE saying it no longer requires them to do so. Odd that.
As usual the more one looks into any published data the more one wonders what it is that the compiler of those numbers doesn’t want to reveal.  Minister Nene’s budget speech managed to get by without once using the “austerity” word but in fact this is what is going to happen. So far it has yet to trigger any reaction from the usual suspects but soon they will spot that the government will be taking more but giving less. The fastest growing expenditure item is the cost of paying the interest on the government’s debt. This year it will comprise more than 10% of the state’s total expenditure and of course there is nothing to show for it. Worryingly, even with his finest spin, Nene is forced to admit that this ratio could be over 11% in just 2 years time. No wonder he wants to cut civil servants’ spending on catering, entertainment (what!?) and venues by 8%.  Home Affairs department is to get 18% less than last year. This won’t help us to get all those unabridged certificates that are required.
In defiance of these calls for parsimony, however, the Office of the Premier here in KZN has appointed a consultant to run the “I Do Right – Even When Nobody is Watching” Campaign. Aside from the disturbing grammar, the idea that such a campaign has become necessary and furthermore is underway is dreadful. Why not simply fire anyone not doing right?
Nene’s audience seemed pleased with the announcement that for the first time in many years the income tax rates would need to go up by one percentage point. But how many of those MPs have now gathered that in their salary bracket that translates into about an extra R1000 a month in tax deductions?
Also growing by 10% pa is the sum allocated (R47.8bn) for paying the R330 per month child support grant. That means that we are a nation where more than 12million children (out of an official population of around 56 million) depend on a very meagre state handout to survive. What a scandal and disgrace for this country. The sole hope for these kids is that their parents get employment but the dead hand of the socialism is throttling us all to death.
Another eye-catching figure in the budget was the almost R56n that government hopes to collect this year from the fuel levy. This amount is about R11bn more than the National Roads Authority’s debt and once again it is very hard to understand why the levy proceeds, which have been paid by motorists anyway, can not be used to extinguish that debt and SANRAL can sell those ugly and contentious e-toll gantries around Joburg to a scrap metal merchant.
The 4th quarter 2014 GDP growth was a very surprising 4.1%pa. The largest contributors to this still unsatisfactorily low figure turned out to be the manufacturing and mining sectors. Representatives from these areas seem bemused by the news. Investors however are thrilled and the JSE All Share soared to new highs so that February’s performance will be around 3.5%. The combined financial and industrial index (i.e. omitting the pesky resources shares) is up 27% year on year. The problem is that average earnings for the companies in that index are up only 15%pa. The valuation string is stretched really taut. Will there be a sharp snap someday? Probably.
The Proteas’ win over the West Indies this morning was very satisfactory. Our progress through the World Cup is reasonably comfortable. The Lions on the other hand are making a very bad start in the Super 15, although it was really unsporting of the Sharks last week to host them in several inches of water. Talk about a home advantage.
James Greener
27th February 2015