In October the National Treasury distributed more than R60bn to the various departments, deadbeats and the deserving destitute that are on their list of tax-eaters. While this was not a record – the September figure was R69bn – it was 25% more than the government managed to spend in October 2008. This figure I think explains somewhat why one continues to hear how busy it is in the shops and why the “What recession?” response is still common. The state is dishing out cash as fast as it can. And the beneficiaries are spending it just as fast.
This free spending approach to staving off the effects of the recession is merely following a wide-spread international model. And locally it conveniently provides a camouflage to disguise all kinds of dubious expenses like the alleged R65m refurbishments to the presidential family home. Government expenditure is now almost R750bn a year. This is a terrifying number for several reasons. Firstly it is more than 30% of the country’s GDP, up from any already worrying 26% just a year ago. Only wild-eyed committed socialists will be content with this trend. One wonders if at this rate there will be anything left to nationalise? Secondly the bigger problem for the present is that more than 20% of this spending is using borrowed money. Tax and other sources of government income are now yielding less than R590bn per year and are declining at a rate approaching 3%pa. Industrial shares annual earnings growth is now also negative. A few more months of these trends and one quarter of government expenditure will be deficit spending.
The total disconnect between the two sides of the national budget is severely worrying and there is no sign that anyone allegedly in charge cares very much. The most likely response will probably some fearsome tax increases being imposed quite soon. Brace yourselves.
About the only news to reach me during my holiday in the bush was about the collapse in the attractiveness of buying sand from people who have unlimited quantities of it. Even if the stuff has been arranged into islands with whimsical shapes like palm trees or national borders recognisable from the International Space Station, there is only a limited number of rich people who will fail to spot that a sand bank is a pretty ephemeral object and not, as the pamphlets insist, a lifelong investment. Did the salesman neglect to mention the hefty monthly levy to keep the pumps running? A low latitude desert kingdom is also not a wise location for a winter sports resort even if it is something to boast about. We can all be grateful to Dubai for having supplied us over the last few years with construction jobs, gee-whiz items to marvel at and a cheap but long way to get to Heathrow. It seems now that the game is over. Pity.
Tonight the World Cup draw will determine which teams will play in which venues come next June. Presumably that will initiate a scramble for tickets, once fans know where their teams will be playing and reduce the current alarming figure of 80% unsold seats. It will also provide a wake up call in South African geography for those fans as they pore over their old school atlases trying to figure out how to get from Nelspruit to Nelson Mandela Bay (where?) in five days. And then back to Tshwane (again where?) given the news that there is no longer a single plane seat available at that time. As far as I know, the trains have not made much effort to meet this kind of demand either. When I was at school, we were transported to away matches in the back of a Bedford truck. I wonder if they are still running. As we locals are fond of saying; “Africa is not for sissies”.
James Greener
4th December 2009.
